It is important for businesses to look for things that are upbeat, given the current financial climate, advised economic commentator Martin Vander Weyer at last month’s AM Executive Breakfast Club meeting.
Vander Weyer, business editor of current affairs magazine The Spectator, said the double-dip recession that economists talk about is a real thing, and can be seen in any small town, with closed shops and vacant offices.
But dealer group leaders must observe their localised booms.
There will be elements of the business and leisure communities which are thriving.
He said in general the double-dip has not been as disastrous as the doomsayers had predicted.
The Euro did not fall apart last year. UK inflation has not skyrocketed.
The USA’s ‘Fiscal Cliff’ was averted at the last minute.
Unemployment since late 2011 has dropped from 2.7m to 2.5m.
Since 2010 there have been 950,000 new companies registered at Companies House, as a result of a combination of entrepreneurial spirit and investors seeing little point having savings sat in banks making little interest.
“Messages of gloom have to be taken with a pinch of salt, just as messages of extreme optimism should also be, because you can observe that the worst things generally don’t happen,” said Vander Weyer.
“We shouldn’t lose sight of the fact that economies work in cycles and where we are now is broadly at the beginning of a recovery phase.
Almost everywhere in the world is now in that position except mainland Europe.”
He said the recent collapses of retail chains Jessops, HMV, Blockbuster and Comet were not such an indication of a bloodbath in retail commerce but more an indication of the habit of shopping online for certain consumer goods.
In certain categories the consumer does want to spend again, but they do it shrewdly and shop for the best prices, meaning leaner margins for retailers.
“There is a level of commerce which has simply moved into cyberspace which isn’t as easy to see as the shops in the street.”
Vander Weyer said the relatively low level of insolvencies in this recession is a positive, as he hadn’t seen the banks being less ruthless.
He expects around 1% growth in the UK economy for 2013 and almost 2% in 2014.
But he warned that holding the country back is a great nervousness and low levels of investment by the business sector.
Figures suggest the entire corporate world was sitting on £750 billion of cash.
Equally, the banks are under pressure to deliver so they’re doing what’s sensible, but that’s not helping the economy nor businesses, he said.
Vander Weyer said the UK economy has traditionally followed a step behind the USA, which is now considerably improving, with 150,000 extra private sector jobs per month, a housing market that has turned the corner and a banking system that is normalising.
It is a good sign for the UK. However, public borrowing is not coming down as fast as the Government planned, and there are still more cuts needed in the public sector to help rebalance it with the private sector, he said.
The Government’s sympathy to UK manufacturing is because of the trade deficit. T
he country needs, if possible, to have a positive trade balance in manufactured goods to strengthen the economy, said Vander Weyer.