City View: Confidence alone not enough to pull away from recession
Oct 26 2009 by Graeme Brown, Birmingham Post
Confidence is often set out as the shining beacon that will light the way out of recession.
Countless initiatives to boost the housing market, the car scrappage scheme and the government quantitative easing programme have all been set up to bring confidence back to the markets and get people spending.
We live in a market economy that is driven by spending, and it is clearly important for people not to barricade themselves indoors and cut up their credit cards, but I have always held on to the good old-fashioned British sense of pessimism in this respect. I don’t think confidence alone is enough.
There is definitely such a thing as over-confidence. I have seen it on X Factor on Saturday nights.
Three poorly prepared students from Burnley will roll out in egg-stained T-shirts and assuredly proclaim themselves to be the next Jackson Five. They seem to be the only ones who can’t see the car crash that is going to happen. They proceed to strut around, pose and smile for the cameras before making noises more at home in an abattoir than a record studio.
It is this dose of cynicism I am falling back on in not diving for the bunker after the news of a sixth consecutive quarter of declining GDP in the UK.
A rise of 0.2 per cent had been predicted, but the country’s principle economic performance indicator fell by a surprising 0.4 per cent.
A shot in the arm for the economy would have been nice – and nobody wants to hear the recession is the worst since quarterly figures were first recorded in 1955 – but is there any merit in pretending things are back on track?
The business people I talk to remain positive about their respective plights, but the furrowed brows and gallows humour remain. Things are still tough out there. It is well documented that the West Midlands has been hit worst than most, but across the board credit remains hard to come by, manufacturing orders are not back to where they were and the housing market is anything but stable.
And even if we managed to avoid the dreaded sixth straight GDP fall, the VAT-cut stimulus is soon to run out and fears over public debt have never been higher. So with yet more crucial decisions to be made by the Monetary Policy Committee over quantitative easing, I don’t mind the fact that the newspapers won’t be filled with politicians and business people celebrating the end of recession.
A pat on the back has not been earned yet. It was a lack of common sense, and ignoring problems staring you in the face, that got the world into this mess. It would be nice to think we would emerge from it by setting our economy straight, rather than by statistical anomaly.
