highway, countryside, wales

My view on the current recruitment market 2024?

Most conversations I have these days involve the phrases “potentially cutting back” and “reassessing our options” which are indicative of the current jobs and economic situation.

Having spoken to several fellow directors it appears that in today’s highly competitive marketplace, the interplay between the UK banking sector and the broader economy has a profound influence on a company’s capacity for growth and recruitment expansion. As we grapple with the challenges and opportunities of 2024, it becomes ever clearer that the financial markets are both a driving force and a potential obstacle for companies here in Wales.

The health of the UK economy, which has been exhibiting modest growth with a forecasted GDP increase of 1.5% in 2024 according to the Office for National Statistics, is a double-edged sword for businesses. On one hand, stable growth signals a fertile ground for expansion and hiring; yet on the flip side, this is tempered by inflation rates lingering around 2.7%, nudging the cost of living upwards and applying pressure on wages.

Companies rely on the banking sector for loans and financial services to fuel their growth trajectories. However, the current climate of uncertainty surrounding Brexit has led to a cautious approach from banks and borrowing costs have seen a slight uptick. Interest rates, now at 1.25%, remain historically low, but banks are increasingly risk-averse — a trend that echoes the global financial atmosphere.

The tentativeness of the banking sector significantly impacts companies planning to boost their workforce. Start-ups and SMEs here in Wales are finding the once-open doors of credit gradually closing and are facing the squeeze. In particular, tech startups, the pioneers of innovation are feeling the pinch. Amidst a recessionary environment, the struggle to secure finance is intensified by investors’ wariness. With the 2024 VC funding dipping by 20% compared to the previous year, according to TechNation, the dreams of rapid scale-up are being tempered by the stark realities of economic sobriety.

The wariness to invest stems from several reasons. First, the profitability horizon for startups is often long-term and laden with uncertainty; a less-than-ideal prospect during economic downturns! Lastly, the recession leads to reduced consumer spending, directly impacting the bottom line of tech enterprises that thrive on market adoption.

With each ripple in the financial markets and each policy adjustment, UK businesses must navigate with caution and creativity. For tech startups in the eye of the recession storm, the path to raising finance is fraught with challenges. Yet, it’s a testament to investors and government organisations we have in Wales that allow innovation to continue to persevere and drive expansion.

I do believe that post March 2024, in the new tax year for many, things will improve but with companies continuing that watchful eye.

We keep on!


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