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HAMISH MCRAE: Reflect now…then back to work

HAMISH MCRAE: These dog days give us chance to think about our work, lifestyles and finances – and we should grasp that opportunity as best we can

It’s time for reflection. The holiday season is on us, and the August break is always a good time to think through our ideas and priorities. But this year is special. Many of the fears we have had about the future have receded. 

The economy has not crashed and is recovering at a decent clip. Jobs are plentiful, almost too plentiful, as KPMG reports that companies are bidding up salaries in a desperate hunt to attract staff. 

The housing market is solid; retail sales are strong; and many families have a war-chest of savings built up during the shutdowns that gives them a cushion through the months ahead. 

Thinking ahead: The holiday season is on us, and the August break is always a good time to think through our ideas and priorities

There are shadows, of course. There will be the surge of inflation through the autumn, now belatedly accepted by the Bank of England – the new forecast in the Inflation Report is 4 per cent. 

For many businesses still struggling to recoup the losses of the past months there will be the long slog ahead. Some have gone under through no fault of their own, and that is utterly miserable for everyone involved. Indeed, the whole pandemic has been monstrously unfair at a human level as well as a financial one. And looming over everything there is that uncomfortable feeling that the economy and the markets are being puffed up by the money printed by the world’s central banks. 

However, there are always uncertainties and if this past 18 months have taught us anything it is that we should make ourselves as bullet-proof as we can against whatever is thrown at us. Three thoughts. 

First, everyone in work needs to think about how we earn our livings. The work from home experience has, for many of those who have been able to manage it, been a liberation. No more packing on to commuter trains or fighting through rush-hour traffic. But that is for those of us who are established in our careers and are comfortable in our homes. For most people starting out and with 40 years or more of work ahead, it will have been a disconcerting time. Is building a career really about sitting in a shared flat and staring at a screen? 

The point about the job market being so strong is that this is the time to make a move if that is what you want to do. The risk is lower than it would be in more normal times, the potential rewards greater. 

True, the furlough scheme is yet to end completely, and there will be a great churn in employment in the coming months as the economy settles down. But while all career decisions depend on personal circumstances, the odds are stacked in employees’ favour. This is, as KPMG reports, the strongest rise in starting salaries since its survey began in 1997. 

The second thought leads on from this. It is about work patterns. Here, a note of caution. Come September, a lot more people are going to be back in the office. Everyone has their views as to what extent the old work pattern will resume. For some jobs, such as working in a school or a hospital, there will be no change. For others who knows? Many say they would like to work more from home, and some will. But we don’t know the long-term downside of WFH. 

Paul Johnson, head of the Institute for Fiscal Studies, recently pointed out that while the IFS had managed to get through the pandemic in good shape, it relied on the social capital built up by face-to-face meetings in the office. 

The senior team all knew each other well. Staff turnover had been modest. People knew the culture of the organisation. But gradually, month by month, that social capital was being eroded. The conclusion is that what works all right for a business in the short-term does not work so well in the long. The same applies to individuals. Anyone trying to build a career needs to think about that. 

The third thought is about money. The country is awash with savings – some £200billion of ‘excess savings’, according to the Bank of England. Some of that will be spent in the coming months, and it looks as though people have also been taking some equity out of their property. 

However, for many this is a once-in-a-generation opportunity to put their finances on a sound footing. Savings are not excessive if they give people the chance to be financially secure for the rest of their lives. 

How we do that depends on our circumstances. My point is simply that these dog days of August give us all a chance to think about our work, our lifestyles and our finances – and we should grasp that opportunity as best we can.

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