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Thursday, April 26, 2012

Double dip recession? What double dip?


I find it all quite bizarre. The Office of National Statistics publishes a number and all of sudden it’s all doom and gloom again. Oh no, we are in recession. Oh no a double dip!  Woe is us!


What a load of nonsense!


Show me some hard evidence that we have been out of recession since the end of 2007?  The reality is we haven’t. Just because the “official statistics” have to show we are negative for two successive quarters to be “technically” in recession, does not miraculously mean that if it is positive – no matter how small – that all is well. Of course it isn’t.


This time around we shrank by 0.3% in the last quarter of 2011, and it seems by 0.2% in the first quarter of 2012. However, when you look deeper, the new number for the past quarter is based is an estimate using only 40% of the data available and subject to two further revisions. So, to add insult to injury all this hype is about an intelligent guess based upon less than half the facts!!


As the graph shows (courtesy of the BBC) with just one exception when we have been positive since the beginning of 2008 it has always been below 1% …not something to write home about.


Until we get sustainable growth (well above the 1% - remember China has been in double figures for years) then the UK, like most main industrialised nations will just keep bumping along the bottom. We need a pick-me-up, an injection of adrenaline to get something moving, and not fill up all the headlines with “oh dear a double dip recession”.


We have been here all too long – nearly five years!  No Government initiatives, no amount of talk, no analysis has moved us on.  And, if we are not careful that is how it will stay for a good while yet unless something changes. Most small businesses, those that employ 97% of the UK non-public employees, are just keeping their heads down waiting for the storm to pass. In the meanwhile they are doing nothing, not innovating, not taking risks, not moving forward. Like a frightened animal they need encouraging out, reassured, incentivised and shown a better option.


I am not entirely sure what the right answer is. Perhaps no-one really knows. But it certainly isn’t nonsense schemes like the new National Loan Guarantee Scheme, which does not do what it says on the tin!  All this appears to be is a scheme to very slightly reduce interest costs, it does not guarantee anything, it does not encourage lending, and it does not encourage the banks to change their attitude towards the propositions they are seeing. We need something that will change the landscape, not play around with it!


So, let’s be serious here. We need the leaders of smaller enterprises to change their behaviour. What is going to make that happen, so we can get real growth and prosperity? Certainly not the media worrying about how many times we have dipped within a sub one percentage point band!

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