2008 will be a year to be remembered, or forgotten, depending on how you look at it. The largest financial crisis since the Wall Street Crash has been matched by a housing sector crash and the onset of a recession across many developed countries. Meanwhile, 2008 saw the first black American president make his way into the White House.
Most of us are hoping for a quieter year in 2009, but with a recession beginning to take hold, the expectation is of a long and painful hangover destined to give us all a headache. The Gateway consulted the experts to find out what they are predicting to take place over the course of the coming year.
Doom and gloom remains the general consensus across the media. According to The Daily Telegraph, the UK's economy will shrink by 2.5pc in 2009 meaning that in terms of economic growth the year ahead is shaping up to be substantially worse r than any experienced either in the early 1990s or the 1970s. A number of economists in fact predict that it will be the worst year for the economy since 1947. The weekly news publication, The Economist, estimates that the UK will be amongst the ten fastest shrinking economies in 2009, second in the EU only to Ireland and behind the United States.
The good news is that the financial broadsheet, The Financial Times, is hopeful of a recovery - meaning the resumption of economic growth, however small - which is expected to be on the way in 2009 for most developed economies. The bad news is that the UK wont be one of these as is the case for the US, Spain and Ireland. The rest of continental Europe, along with Japan should, with any luck, begin to move out of a recession towards the end of the year. As far as stock markets are concerned, the expectation is that there will be no dramatic falls, akin to those witnessed this autumn.
Obama's election back in November was largely the result of the US's dire economy which 6 out of ten voters gave as the issue which they believed to be the most urgent at the time. The president elect wasted no time in revealing his plan to get the economy back on track with a huge $800bn fiscal stimulus programme which aims to create job and spur the economy back to life through large scale investment in building new infrastructure. The Financial Times is wary of comparing the plan with Roosevelt's 'NewDeal' which was largely credited with dragging America out of the Great Depression and market the birth of the social security system in the US, but believes it will be effective in ending the recession, though not before 2010 at the earliest. More interesting will be if and when Obama will look to implement his promise to create the free healthcare system America so badly needs.
In 2008 markets only went one way. Down, London's FTSE exchange endured its worst annual fall in at least 24 years, down 30.9% while in Europe and Asia, some markets ended the year by notching up their worst performances since records began. In the US, The Dow lost 33.8 per cent, its worst annual decline since the index fell 52.7 per cent in 1931. Will there be a market rebound in 09? Unlikely according to The Times. Markets should remain fairly consistent but with business confidence extremely low we may have to wait until 2010 for a substantial recovery.
The ugly side of a recession, when those who otherwise hold little interest in economics or politics are forced to sit up and take notice. The media has been unabashed in its forecasting of large scale job cuts over the year ahead. With unemployment current hovering at 1.86 million, The Telegraph expects another 600,000 jobs to go in the UK during 2009 with the number of unemployed potentially reaching 3 million during the course of the current recession, nearing the total reached in 1984 when the level of unemployment reached 12%. Those who keep their jobs are expected to page wage freezes or may even be made to accept a cut in salary. Quoting The Chartered Institute of Personnel and Development, the paper expects the beginning of the year to suffer the greatest losses as businesses prepare themselves for a difficult year ahead by shedding staff. Relatively good news for soon to be graduates at least if we are to infer that things should have cooled off towards the end of this year.
Graduate positions starting in Summer/ Autumn 2009 have not shown a decline on the previous year, at least in theory. The numbers of graduates taken on by firms are comparable with the previous year. As the recession worsens over the coming months, however, the class of 09 may find that firms are forced to cut their original forecasts and reduce their intake levels. There is also the risk that many companies will be forced to rescind offers already made to students who have been offered position for the coming fall. The Economist underlines the likelihood that 09 leavers will find things remarkably tougher than their predecessors as five years of continuous growth in the graduate recruitment market will grind to a halt. For the brightest sparks, however, the publication expects a degree of flexibility: 'Some would-be high-fliers will simply switch from one A-list career to another'. By this it expects top graduates to switch their aspirations from banking and finance to other professions such as law and management consultancy. It also forecasts a spurt in the number of top graduates, particularly those with quantitative degrees who would otherwise have gone into finance to choose the teaching profession which has traditionally struggled to attract the best graduates. Equally, it predicts a significant rise in the number of leavers opting for postgraduate study. During the last recession in 1992, 30% of students chose to stay on at university rather than look for work.
Whatever 2009, has in store for you, however, it certainly promises to be an interesting year on all fronts. If you make one resolution, it should be to stay tuned to The Gateway for up to date analysis on what lies ahead.