Tuesday, 11 January 2011

Events dear boy, events!

I had planned to start the blogging year off (albeit belatedly) with an optimistic look forward to what we can expect this year, both economically and politically, but events have, once again, somewhat overtaken me. The shooting of a Congresswoman in Arizona certainly deserves a mention (an excellent article by Richard Cohen in the Washington Post can be read HERE) as does the Government’s refusal to take on the bankers at RBS over their bonuses (I mean we only control 70 per cent of it for #*%$’s sake!).

However, media reaction to the British Chambers of Commerce economic numbers have got on my goat today. Instead of concentrating on another set of outstanding numbers from the manufacturing sector we have more fears voiced about a double-dip recession and a bemoaning of the poor performance of the service sector in Q4 of last year.

Frankly, putting hyperbole to one side for the moment, this was to be expected. What we are hopefully seeing is, at best, a slow but sure rebalancing of the economy, away from services and finance and towards manufacturing (this is no bad thing) and at worst just a reaction to the weakness of Sterling. Consumers in turn are slowly deleveraging their personal debt which leaves slightly less money to spend on the high street, hence the 0.3 per cent drop in like for like sales.

I’ll go out on a limb. Barring a massive unforeseen shock to the economic system we aren’t going to have a double dip. I’ll go further, I can actually see the UK economy coming out of this fairly quickly by mid-year. Why? Because we have a very flexible labour market, we are not in the Euro and interest rates are at historic lows. All we need is for the banks to lend business some money and all will be right in the world.

Right, back to those positive thoughts!


Post a Comment