Is our economic outlook starting to look somewhat better?
June unemployment claimant count predicted to see a fall of 8,000. This is clearly better than an increase in the claimant count and chimes with the message emerging for the Lancashire region from the British Chamber of Commerce Quarterly Economic Survey. It feels like the straws in the wind are gathering and there is, just perhaps, a palpable sense building that, at long last and in spite of / because of government policy our economic outlook is starting to look somewhat better.
But there are challenges which will need to be addressed if any nascent recovery is to establish firm roots and begin to flourish. There are several which vie for the title of ‘most important’ – often whether you prefer one over another boils down to an individual’s personal political beliefs. But one which is important is the effect of the continuing wage squeeze. Headlines today report annual inflation at 2.9% but wages rising by, on average, some 1%.
Whilst we are trying to rebalance our economy away from consumption to investment (whatever those terms actually mean in practice) and to grow (with some success) our manufacturing exports any recovery worthy of the name will be dependent upon the man and woman in the street spending. With many still labouring under a personal debt overhang from 2008 together with reduced capacity for discretionary spend – see above – it is hard to see where this extra spending will come from.
Perhaps consumers taking on more personal debt? But that assumes that a) there is a supply of such credit and b) there is a desire amongst consumers to take on debt. The supply of debt is improving. But perhaps the bigger problem is trying to persuade consumers to take on more debt when they have less surplus income to service that debt, they fear for job security and they are told a mixed message which often seems to boil down to debt = bad thing for the state; debt = good thing for private individuals.
If you would like some more information with regards to this topic, please contact Stephen Gregson on 01772 821021.