City view: The British economy needs its own El Alamein

Jun 29 2009 by Tom Scotney, Birmingham Post

This isn’t the end of the financial downturn. It’s not the beginning of the end. But it is, perhaps, the end of the beginning.

I’m paraphrasing Winston Churchill here, after the Battle of El Alamein provided the first green shoots of recovery for the Allies in the Second World War.

And now the tide seems to be on the verge of turning in our own financial struggle, people are looking for a concrete sign to hang the recovery on.

The latest news is in the financial services sector, where research from PricewaterhouseCoopers and the CBI indicates volumes will be rising in the sector next quarter for the first time in two years.

This would mean the road to recovery is in place for the lawyers, financiers and accountants that have had such a difficult time in this “white collar recession” – good news for Birmingham too, with such a successful professional community.

While some sectors were still struggling relatively – with securities traders and investment managers predicting further declines – insurers and bankers all said they were looking forward to things taking a turn for the better.

Of course it’s always key not to get caught up in surveys, especially when 59 per cent of statistics are made up.

But still it’s good to see optimism out there. Finally, the banks can open the windows to enjoy the sunshine without having to worry about employees making a jump for it.

And where the professional services sector starts, hopefully this indicates a wider recovery in the fortunes of the country’s, er, fortunes.

But while this is all well and good, it takes more than a study to properly convince that things are turning round. While research shows one thing, people only have to look at what’s going on at the likes of Wragge, KPMG, or the now-defunct BNB Tax Consultants, to see things aren’t getting better everywhere.

Because so much of the economy is based on consumer confidence, economic pessimism or optimism is in a way a self-fulfilling prophecy. If people believe the economy is doing well, then that’s a good step towards making it so.

So while it’s all very well throwing around facts and figures, what the country needs is a visible sign of recovery. Where are the firms that are hiring again? Who is increasing their profit again?

It’s difficult for anyone to sound optimistic – it’s not the done thing to mention success while other companies are losing money, shutting up shop, or laying off workers.

Once one company breaks cover and is happy to talk about success again, it open the gates for a wider recovery.

The British economy needs its own El Alamein – who’s going to be the first to provide it?

Tom Scotney