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Friday, 27 April 2012

Wednesday’s Child is Full of Woe

By Chris Fletcher – Policy Director at Greater Manchester Chamber of Commerce

“It may well be a child’s rhyme, but there can be no doubt that last Wednesday brought with it some disappointing economic news. For the second quarter in succession, growth in the UK was negative, which as we all know, meant that according to the technical definition, the UK slipped back into recession.

I’m not one of those people that wriggles around definitions and is selective about which facts to use – the UK is technically in recession…..again - but does it feel like we really are?

If you’d tuned into any news channel on Wednesday, you could have been forgiven for thinking the world was about to end. Phrases such as, ‘the country has lurched into another recession’, were bandied around, and questions asked about how we were all going to cope.
We’ve been clear in our message at the Chamber that we would not enter a double dip, and our last QES results showed increasing confidence and resilience in most sectors – construction still being doggedly immune to pick up the slow growth in other sectors. So have things gone completely awry, and are we totally out of sync with reality? Absolutely not.

Let’s look at things in more detail. Firstly -0.2% is not a huge amount – this is only an estimate and I’m convinced that when figures are revised, this will creep up. From the information and feedback we get from our members, we have said for some time that we are in the middle of a low/no growth environment - there will naturally be periods of small negative results. This most recent occurrence just happens to fit within the definition of a recession. Things will bounce back.
Secondly, are the figures robust and accurate? More than ever before, huge scorn has been directed at the ONS about the figures used, and serious questions asked about how accurate they are. Hence the fact that this is a first estimate and as we all know, revisions are made at a later date; in this case 24th May is the date to watch.

But what happens if the figures stay the same or slightly worsen? Well to be honest, not a great deal. Did the world change on Wednesday? To be honest, the main impact tended to be political rather than economic, as Shadow Chancellor Ed Balls took maximum opportunity afforded to him by the figures. Most people I know simply shrugged and got on with things, as difficult as that is at present.

The media played their part too in ramping things up with ridiculous pieces on: ‘how are people going to cope with a recession?’ ...errr pretty much like they have been for the last four years really.

This doesn't mean to say that everything is rosy in the garden, far from it. I honestly think the Government needs to start to understand that growth doesn't just come from cuts. It isn't about wildly splashing the cash and the deficit has to come down, but what money there is, has to be used better and more intelligently than at present on the sort of things that add value, such as infrastructure.

Growth will return; the private sector will pick up the pace once again. Some sectors and some businesses have ploughed on through the last few years regardless of what economic conditions have been like. Others haven't, and there will no doubt be more bad news in the future, but please can we have a reality check on this and get more balance in the argument and reporting?

Lastly, this week on Wednesday, I went to visit the Chamber in Doncaster and whilst on the platform at Piccadilly, the London train pulled in. This was just about the time that the ONS figures were released and looking up from my e-mails on my Blackberry, an individual just caught my eye walking along the platform full of travellers. It was non other than Stephen Hester, the RBS CEO. It just amused me that on the day that the economy stuttered again, that someone who, lets be honest, has not enjoyed a great public image and has had the economic ills of the world placed at his feet, was walking completely unnoticed through Piccadilly station and not pursued by an angry mob waving flaming torches and pitchforks. Maybe they just didn't know who he was, or if they did, just chose to ignore him. Maybe, when the gloom and doom-mongers rule the airwaves, we should perhaps do the same and just get on with it.”

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