Speaking in the run up the announcement of the national Budget on April 22, Chancellor Alistair Darling spoke of a nation with a 'fair, prosperous and sustainable future'. Given the dire state of the country's finances revealed by the Chancellor a few hours later, it is unlikely that many Britons will share his view. You need only look at the situation facing the country's student population to understand how 'prosperous' this future really is. The Association of Graduate Recruiters estimates that employers are taking on 5% fewer graduates than in 2008 while graduate recruitment website Milkround.com described 2009 as 'the worst year to be graduating since the 1980s'. The reality may be worse than these assessments suggest - at least students graduating in the 1980s did so in a country that was on its way up following the catastrophes of the 1970s (not that they would necessarily have known this at the time). Meanwhile, the AGR's surveys only tend to take into account larger firms which offer structured graduate training schemes despite the fact that only about a third of university leavers typically find their way onto organised schemes such as these; the rest are left to find other ways into the labour market, be it with smaller firms who only take on limited numbers of grads, or in positions not specifically aimed at university graduates.
The other danger is that those who do take on pre-set graduate numbers did so last autumn before the full extent of the recession had kicked in may now look to cancel or defer offers as the year unfolds. In March several City law firms (until now looked upon as safe havens by many university leavers), including Norton Rose, DLA Piper and Baker & McKenzie revealed they will be offering 2009 trainee scheme recruits up to £10,000 in exchange for deferring their starting date until next summer when they expect business to have picked up.
The scariest part is that a significant proportion of 2008 leavers have still not been able to find full time work, leading The Economist to predict that the level of unemployment amongst Britain's youth - having been amongst the lowest in the EU for the past few years - is set to overtake that in several Western European states such as France and Germany.
The future's bright, the future's... not British
The good news regarding the current state of the global economy is that hope is on the horizon. The bad news is that little of this hope appears to be directed towards the UK. Addressing Georgetown University on April 14, US President Barack Obama spoke of 'glimmers of hope' surrounding the US economy as he saw signs that his $800 billion stimulus package was beginning to have an effect. This, the first hint of good news for months, has been followed in recent weeks by a rally in US financial markets and positive first quarter financial results from the country's biggest banks, Goldman Sachs, JP Morgan and Bank of America.
Meanwhile, back in Britain the forecast is not quite so rosy. While the Government's optimistic prognosis expects a return to growth (a healthy 1.5% of it) by 2010, The Economist believes that 'Despite some encouraging signs, a robust recovery is a long way off'. It points to the contrasting forecast presented by the Organisation for Economic Co-operation and Development (OECD) that the UK's economy will shrink by 3.7% in 2009, the steepest fall since the 1940s. More worryingly, it does not see a recovery beginning in 2010, instead forecasting GDP to shrink by a further 0.2% with growth only expected to return in 2011. This is worrying news for graduates who might be able to cope with 'writing off' one year of employment, but when this becomes two years, or even longer, the implications become a lot more serious. They must also face the reality that for the employment market to recover to 2008 levels the economy not only has to stop shrinking but also has to start showing real signs of growth. Many observers fear that the impact of the downturn on the labour market has still not really hit home and unemployment will continue to rise over the coming year and beyond as the UK struggles to adapt to its new found situation after a decade of high growth. Business Monitor International, a London-based research house, expects UK unemployment to peak at 3.2 million in 2010, meaning that a further million jobs stand to be lost between now and next spring, bringing the unemployment rate to 11.2% - a fraction below the peak level reached in the 1980s. If jobs are still being lost in large numbers by this time next year it is unlikely that many employers will be in a rush to take on new recruits; the financial service sector will continue to bear the brunt of this with a further 57,000 City jobs expected to go within the next 12 months. To summarise, while the end to the recession is in sight, the country's recovery from the downturn is nevertheless expected to be long and painful.
The wider consequences of the country's changing fortunes are frightening; the financial services sector has become the backbone of the UK's economy over the last 20 years. Without it we could be faced with an economy that has to readjust, spluttering its way over the next decade, weighed down by the large amount of public debt which has been racked up (estimated to reach £1.2 trillion by 2012, a whopping 79% of GDP!) largely as a consequence of the government's spending undertaken to combat the recession. The legacy of this 'decade of debt' for Britain's youth looks likely to be cuts in public expenditure meaning fewer public sector jobs and higher rates of income tax, not to mention the added hindrance of rising inflation and higher interest rates. Add to this the continued depressed value of the Pound and you have a pretty gloomy scenario for any young person who is starting out in this country at the moment.
Fight or Flight?
One option for graduates reluctant to tough it out in the potentially grim environment of 2010s Britain is simply to jump ship. Hot footing it overseas has long been a favoured option for Britons hit by disfavouring economic conditions, from the hordes who made their way to the opportunities offered by the 'New World' hunting ground of North America, Australasia and Southern Africa in the eighteenth and nineteenth centuries; to the million or so Brits still scattered around the globe as a result of the economic strains of the 70s and 80s. There is wide expectation that more and more young British graduates, faced with limited opportunities in their home land, will opt to make a fresh start oversees, drawn by the promise of better job prospects, sunnier climes, and generally greener pastures.
One such graduate is Simon Glenday, who graduated with a Masters in Engineering from the University of Manchester last summer. After moving back to his parents' home and taking a temporary job in a call centre for a mobile phone operator, he decided to try his luck down under, moving to Australia with two friends, also recent graduates, at the beginning of March. Simon attributed his decision to the difficulty in starting out as a graduate in the current environment with limited professional experience. 'The major problem I encountered was having no experience. Whereas a couple of years ago I don't think this would have been so much of an issue, when I left uni nobody seemed to be willing to give me a foot on the ladder.' I asked Simon what he expected to gain from upping stakes and moving to another country. He replied that, the way things were, he hadn't really got much to lose. Though the job market is not quite as strong as it used to be, he felt that Australia offered him better opportunities while the cost of living was also substantially lower. Provided he could overcome increasingly stringent work permit regulations, he expected to remain in Australia for the foreseeable future, happily sipping beers in the sunshine.
It could be worse, couldn't it?
Governments in other nations face a similar, if not greater headache as to what to do with potential armies of unemployed graduates. Take China, where student numbers have been rising steadily since the beginning of the decade with 6.1 million students expected to leave the country's universities this summer, six times as many as graduated in 2000. Meanwhile, employment prospects for young, educated Chinese have been deteriorating rapidly. The effects of the global recession have not escaped the emerging market powerhouse and its once booming industry and business sectors have been forced into scaling down their workforce. Many graduates have had to look for work outside of the cities, accepting menial positions in rural communities. As in the UK, the government has made sure it is being to seen to be helping. In recent weeks it has announced several measures to support its graduates, offering loans to business graduates so that they can start their own businesses. Leavers who join the armed forces or who accept positions in villages in western China stand to have their university tuition fees refunded. Businesses in major cities have also been given incentives to take on recent graduates.
The world is your oyster
The one major plus point for British graduates is that, along with those of the United States, our universities are universally recognised as being the best the planet has to offer, long attracting the cream of young talent from Europe and beyond. If opportunities do not arise in this country as you had hoped, in theory you should be able to pick from a whole host of hosts; a degree from a Russell Group institution still holds a fair amount of clout, whether you find yourself in Beijing or Buenos Aires. China, for all its current struggles, is likely to bounce back quickly, returning to10% annual GDP growth, or there about, during the next few years, meaning that taking a course in Mandarin or Cantonese might be not be a bad idea. Asian banks are likely to be one of the big winners from the financial crisis, taking on a bigger role within the global banking sector as was proved by Nomura's acquisition of several Lehman Brothers departments last autumn. Japanese, Chinese and South Korean banks may increasingly be on the lookout for top European graduates, as Beijing, Shanghai and Seoul look to stake their claim as global business hubs over the coming decade. Look too towards the up-and-coming financial centres dotted across the Middle East. Though Dubai's fledgling financial sector has hit a sticky patch as a result of the global slowdown, when things pick up expect Gulf States Abu Dhabi, Qatar and Saudi Arabia to become happy hunting ground for British grads over the next few years. Other countries also look safe bets for long term prosperity. The traditional bolt-holes of Canada and Australia should offer longer term economic stability than the UK, backed by plentiful national resources and good business links with Asia and Latin America. Their relatively small populations mean that highly skilled graduates - engineers, lawyers, doctors and business majors - should find themselves welcomed with open arms as their governments try to compete with bigger and more powerful rivals.
So, is Britain really a failed state? should we all be on the next flight to Beijing? Beware the media's overly sensationalist portrayal of the recession - for all its problems the UK remains an extremely wealthy state (the fifth richest in the world by GDP size, according to the IMF), while its level of unemployment, at around 6%, is still below that of most Western nations. Meanwhile, recent signs within the economy suggest the country is on the road to recovery, however long and painful this might be.
Nevertheless, we should not automatically assume that things will return to the way they were in the hallowed decade between 1997 and 2007. Britain has been burnt by the global economic downturn to a greater extent than many industrialised nations and faces a lengthy period of readjustment that could last years or even decades. Meanwhile, its business and financial sectors are at a real risk of being overtaken by those belonging to more dynamic nations, notably upward economies such as China and India and smaller, resilient Western nations such as Australia and Canada. For those set to graduate this summer, or even further ahead, you may well find that the best opportunities are no longer on your doorstep but instead lie further afield. It might well be worth putting any remnants of that interest-free student loan towards a plane ticket.