Financial Directions September Update

Share and share alike
Employee participation in share ownership schemes has plummeted to a 16-year low, according to accountancy group UHY Hacker Young, using ONS statistics. Only 520,000 employees were granted Save As You Earn share options in 2007-08, 60% below the peak of 1.3 million six years before. The firm blames HM Revenue & Customs for cutting the interest rate on SAYE accounts to just 0.54%, “radically reducing the attractiveness” of the scheme.

The price is flat
UK consumer price inflation was flat at 1.8% in July compared with June, though market expectations were for a fall to 1.5%. Food and petrol prices were weak as expected but there was surprising strength in the prices of furniture, DVDs, CDs, computer games and communications. Economists at Bank of America Merrill Lynch say this “raises the possibility that higher import costs and insufficient downward pressure on employment and earnings growth have contributed to firms raising prices”. They still expect CPI to fall to 1% over the next couple of months.

Never break the chain
Three-quarters of companies are taking a more hands-on approach to dealing with their supply chain risks as a result of increased threats from insolvency and swine flu, reports Aon. There has even been a 20% increase in the number of companies investigating their suppliers’ suppliers and a 20% fall in the number of companies using insurance as the only way to mitigate risks.

Yes we can
New orders in the construction industry grew by 18% in Q2 2009 compared with Q1, though they were 21% lower than in Q2 2008. The biggest increases came from the public sector (excluding housing and infrastructure) and from private and public sector housing.

I quit (but not yet)
While the current state of the job market ensures that everyone stays put, one-third of employees are considering leaving their employer when the economy improves, the CIPD says. Of these, around half are considering switching industries or changing careers. Bank sector employees were the most disgruntled; the public and voluntary sectors were the favoured destinations. The CIPD said it was “important for employers not to take the loyalty of their people for granted”.