Drop in Growth

In the Budget, the Government said that economic growth would fall to 1.75% this year and subsequently to 2.25% next year before recovering its normal growth pattern of about 3%.

The CBI thinks the Government is being far too optimistic for next year and discounting the downturn too much, as it may last longer than they think. Their forecast for this year at 1.8% is really close but they are predicting 1.7% for next year.


Contractors Effected

Whilst worse times have been experienced, the downturn of the early part of the decade, being a case in point, IT Contractors would still feel the pinch as companies cut back on their spending. But even during the worst of the last downturn, the economy was still growing, while this is in contrast with the OECD forecast for the British economy which showed UK economic growth predicted to be growing at an upgraded annual rate of 2.4% in the first 6 months of 2008.


Three Opinions

So, which of the three is right, the Government the CBI or the OECD? I suppose the general feeling is that it is in the interests of the Government to talk up our economic growth chances. However, Gordon Brown has frequently met or exceeded his own predictions all the way through his Chancellorship (and hopefully beyond).

He has made his frequent critics in the City eat their words over and over again.


CBI

As far as the CBI is concerned, members want interest rates to be slashed and money infused into the economy and/or support tax cuts, so you would hardly expect them to be calling for interest rates to be kept up. The OECD has got the British and world economies right far more often than wrong.


ITContractor.com Prediction

Of late, I have been saying that a small downturn in the UK economy could be expected this year accompanied by recession. Sensing that this would have some effect on IT Contractors, I have been advising them to take renewals and keep in work.


Gut Feeling

However, my gut feeling tells me we may have seen the worst of the Credit Crunch.

The Stock Market has already fallen by more than 15% but efforts in the US and the UK to pump more liquidity into the market has lifted it out of the probable mess. This recalls the events of 1997 than 2001, when stock markets had toppled and the Central Banks intervened to avoid a downturn in the economy.


Too Soon

The usual signs are missing and it feels just too soon for a new major downturn. The anticipated boom before the bust, as in the previous IT Contractor downturns, has not occurred. The IT Contract market is not in a frenzied state bandying ridiculous rates and easy money, and no gossip or stories of IT Contractors buying fancy cars etc. are doing the rounds, like before.


Instinct

My instinct is that the IT Contractor market is going to be fairly stable for this year and the next. It may severely hit the housing market in the banking sector but the economy and the IT Contractor markets have grown before whilst the housing market has been falling.  

OK, here we go.  My prediction is that there is going to be no major effect on the IT Contractor market this year and next. The next major downturn in the IT Contractor market is not round the corner, it is still about 4 years away. 
 

Keep This

You can keep this for the time when IT Contractors will be thrown out of work in droves this and next year. But something tells me we could call the last upturn and I think we've got this right too.