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About In House Tax

About In House Tax

This weblog is a news and views site for tax professionals within the UK and international in-house tax community.  You will find information about appointments and people moves in and around the in-house tax market, issues affecting the in-house tax professional, opinions on the state of the tax job market, updates on tax technology, and other general thoughts of the day.

Hope you find it useful.

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Location: St Albans, United Kingdom

This site has been developed by Simon Godley, who also runs the niche tax recruitment company Talentpool Selection . Simon spends a lot of his time placing tax specialists into FTSE companies, large in-bound groups and some professional services organisations. He also recruits and is well networked around the UK tax technology and VAT markets.

Tax News

Recession, Redundancy and Re-hiring.......and tax recruitment

Thursday, 26 June 2008

By Simon Godley

I read an interesting article on a recruiter newsletter this week, which gave some analysis as to how the stock market, the broader economy and the employment market interact, and the time lags between events in these markets. Basically, it suggested that if the stock market crashed, then quite often (not always) this would lead to an economic downturn 6-8 months later. Redundancies may quickly follow this, then as the recession (if it is a recession) runs it course, then it could take a further 2 years before businesses are confidently re-hiring again. This is on the basis that a recession has historically lasted, on average, about a year.

So, this means that from stock market crash to businesses re-hiring would be a minimum time frame of 2.5 to 3 years. The last stock market crash started in March 2000 when the dot com bubble burst - I remember this because I sold some highly inflated priced biotech shares to pay for my now wife's engagement ring in March 2000, which is the only time that I really profited from the stock market. Then there was the downturn (which wasn't called a recession) and then finally re-hiring started to take place at the end of 2003, so almost 4 years. So the last downturn and then recovery took longer than expected.

So what should we expect this time. No-one can really predict with much accuracy. My feeling is that this time we haven't seen a stock market crash, but a burst in the credit bubble. Let's say this started in September 2007. So according to the above theory, the broader economic downturn should be felt May 2008 onwards. This seems to be the case - property prices are falling quickly, inflation is rapidly increasing, and some businesses have stopped hiring. There have been some redundancies in pockets of the labour market, but not (yet) in the tax market. This will undoubtedly happen, and let's see what the Big Four do over the next 6 months. Thus the prediction from now (June 2008), following the above theory, is that a recession will run its course over the next c.1 year, but the re-hiring won't start until March 2010, and this is being optimistic. It could be into 2011 when firms feel they are understaffed again.

2009 could be an interesting year for recruiters! Watch this space.

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posted by Simon Godley


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