Britain coming out of the recession according to ICAEW
The headlines this morning (apart from England winning The Ashes – well done Freddie & co!) profess that, all of a sudden, Britain is almost out of the recession. Brilliant!
Thanks to a study into the “confidence of business professionals”, it seems the recession, according to some commentators, was just an overnight problem after all. So, no need for all the fuss then.
Forgive me, but I’m slightly sceptical when I hear “confidence of business professionals”, but it’s over-confidence which worries me. It always tends to over-value things…ring any bells?
While Japan, Germany and France all report actual growth in their respective economies (see the below chart for how ours is doing) and the beginning of what may lead them from recession, we have what seems to be little more than a feeling.
It is no surprise whatsoever that these countries are amongst the world’s largest exporters. It is also no small coincidence in the role exporting has played in their economic growth. Our trade deficit is seriously lagging behind, but we do have confidence.
UK GDP 'growth', 1990-2009. Source; BBC/ONS
Are you feeling better?
As I write this I wonder if I might have missed something. Yes, we do have predicted growth this quarter (which I do believe could well happen), which would officially see us emerge from the recession, but this is still dependent upon factors that don’t offer long-term stability – like consumer spending, for example.
Also, the knock-on effects of any recession is always felt for a longer period than the initial slump, so even though good feelings may be at a premium, I can’t quite see where all this confidence is coming from (and I like to see myself as a professional, too!). As a business owner, I would like to see a little more about what is being done to redress our trade deficit, because I’m not too confident about that.
Ultimately I think we shouldn’t get carried away too quickly with something that will be big news for a week before fading into memory – I know the launch of the latest ordeal of X-Factor (which gladly I won’t be following) started this week. It’s perhaps a fitting analogy, not to get over excited about something that may not prove to be worthwhile – the economy won’t recover quickly, nor will it recover easily – or at all – without the right action. That action lies in boosting UK export.
The moral of the story? Admittedly I am slightly sceptical, so please, be confident (because that does help!), but beware of a recovery that isn’t on a solid footing.
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- UK recession ‘almost’ over. Does anybody care?
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