Somehow, this image from a 1970s vintage television sitcom brings to mind our present predicament vis a vis turmoil in the financial markets, failing banks, gross indebtedness and heaven knows what else besides. Despite the sages’ endeavours to quell our anxieties, we cannot help but fear the worst is just around the corner. But are we quaking in our boots unnecessarily – or, at least, prematurely?
Our friends on the other side of the pond apparently see recession as an inevitability; the Federal Reserve’s actions to slash interest rates a few days ago smacks of panic – an all-too-late reaction, some would have us believe, to the rot that started to set in back in September 2007. Nevertheless, as reliant as the pundits say we all are on the continuing good health of the US economy, are we, too, on the verge of a recession this side of the Atlantic?
I’m certainly no economist and therefore probably not qualified to comment, but a layman can perhaps draw some sort of conclusion from the vital signs. The UK economy, we are assured, is in good shape. Indicators like falling unemployment and reasonably steady inflation tend to belie the more pessimistic forecasts for the coming year. The CBI has – admittedly with reservations for the future – turned in some heartening figures for its most recent manufacturing survey. Weakening Sterling could bolster our export performance and on the corporate side, despite share prices going into freefall, company profits and growth forecasts are, well, not bad actually.
Overly optimistic? Perhaps so. The Governor of the Bank of England, in his recent speech to the City’s Great and Good, more or less told us it’s ‘steady as she goes’, though he doesn’t rule out the odd ‘Dear Alistair’ letter later this year as inflation is expected to move ahead of its target level, largely thanks to the inexorable rise in energy prices.
There are certainly challenges ahead, and not least of these will be the need to establish a global consensus on climate change and to launch a concerted effort to tackle it by whatever means we have at our disposal. With this mammoth task ahead of us, perhaps this is not the best time to be talking ourselves into global economic recession.
What do you think? Let us have your views and we will publish a selection on the DPA website and broadcast them in our next newsletter.
Les Hunt
Editor