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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”.

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