I'm only happy when it rains

Slaughter and May discuss the effects of the economic crisis.

The Credit Crunch will affect every sector of the economy in coming months, but some industries seem to have been in the front line when battle was joined. Financial services are to bear the brunt of casualties, with the Oxford Economics think tank predicting losses of 40,000 City jobs in 2009, but the hospitality, retail and construction sectors are also suffering.

The likely effect of this on graduate recruitment prospects is a disputed issue. The Association of Graduate Recruiters reckons that 2009 will be a year of "good predicted growth", whilst by contrast a leading consultancy recently released a study stating that August 2008 showed the lowest number of permanent positions available since 2001. The one certainty to emerge from the events of recent months has been the danger of making predictions, and the ultimate fate of the next crop of graduates is likely to depend upon developments that even the bravest economists might hesitate to call.

This does not, however, mean that a student looking for their first job has to embrace pure fatalism. Certain sectors are booming, either because they are partly insulated from the pressures of the global slump, or because their business is counter-cyclical. Counter-cyclical businesses are those whose fortunes are inversely linked to the movements of the rest of the economy.


When the Credit Crunch first began to emerge as a mainstream news item towards the end of 2007, it seemed that, like climbers linked on a mountainside, corporate and commercial lawyers would watch in horror as the investment banks lost their purchase and then disappeared off a cliff, knowing that they were going to follow them down into the abyss. So have the advisors managed to cut the cord, or is the line still paying out?

Sarah Lee, Graduate Recruitment Partner at Slaughter and May, explains the present relative stability of major law firms in the following terms; 'Law firms offer a broad range of services. It depends on the structure of your practice, but if you have a strong presence in corporate recovery, restructuring and litigation, like Slaughter and May, this helps in a downturn.' So, whilst some firms who specialise in property or securitisation work may be more vulnerable, and specialist departments at even some Magic Circle firms have recently seen redundancies, it seems likely that demand for graduates from law firms will remain strong.

The one down-side for students? 'We are noticing more CVs from highly qualified candidates who might otherwise have gone into banking.' With the financial services industry faltering, it seems many good candidates who might previously have gone elsewhere are looking to take shelter in the law, so the longer the crisis endures, the fiercer competition for placements with law firms is likely to become.

Fast Food

The good times have seen tremendous growth in exotic and organic food products, together with increased dining out at restaurants and a media-inspired boom in home cooking. Whether the organic and ethical concerns of the consumer will be subsumed by price as the downturn in the real economy gathers pace remains to be seen, there are already companies benefiting from the shift in consumer attitudes.

Domino's Pizza is aiming to open 50 further stores this year, and has seen like for like sales increase by 8.8%. According to Domino's, the counter cyclical virtues of such large chain stores lie not only in affordability, but also in their delivery service, with consumers increasingly seeking the comfort of eating in their own homes.

So, any graduate looking to move into business management is likely to find an increased number of placements with fast food companies, many with global profiles.

Luxury Retail

If you want to make something recession proof, make it really, really expensive. Whilst the profits of retail enterprises aimed at reasonably well-heeled customers have suffered in the recent downturn, goods aimed at the super rich, despite some falling off since the collapse of Lehmans, have remained comparatively resilient.

The counter-cyclical qualities of luxury brands may lie in the fact that the rich are turning to such goods as a source of retail therapy to alleviate the stress of the vacillating markets (this is the reason attributed by the Telegraph to the recent run on Jimmy Choos and Bremont watches). Such products often have a more international consumer base (Fortnum and Mason indicate a rise in Japanese and Russian visitors), who can benefit from a weakening pound.

In recruitment terms, the resilience of luxury brands is good news for any graduate looking to enter the more glamorous side of retail.

Public Works

Although it is perhaps too early to call this one due to a lack of firm detail on how plans are to be implemented, graduates with an interest in engineering, construction or public sector management jobs should have one eye on the next pre-budget report. Large capital investment projects could soon prove to be the greatest counter-cyclical story of all.

Brown and Darling have promised to 're-prioritise' government expenditure in 2009, the Chancellor saying, "You will see us switching our spending priorities to areas that make a difference". In practice this is likely to mean borrowing vast sums of money in order to bring forward large scale capital investments, giving an injection of cash that will hopefully inoculate such projects against the effects of a downturn. Eventually, so the Keynsian theory runs, this spending splurge will help to kickstart the wider economy.

Although details are as yet unclear, likely candidates for hefty investment are Building Schools for the Future, the Trident submarine replacement, construction on the 2012 Olympic site and the London Crossrail project. Next year's graduates could be greeted with the exciting prospect of increased recruitment on infrastructure projects of national importance.

So, although certain industries look set for a bumpy ride, job prospects for graduates with a flexible outlook on their future careers look set to remain robust. There are even those who see the shrinkage of the financing industry as a positive phenomenon for graduates, as the best and the brightest who might previously have been distracted by stellar bonuses divert their talents instead into industry, science, engineering and business. If that happens, in the long term it could benefit us all.

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