Waiting for proof on recession exit
Much excitement and optimism abound in early January as a stack of financial events point towards an economic recovery.
We’ve seen a string of retailers – including John Lewis, Sainsbury’s, Tesco, Next and Matalan – announce better than expected sales figures for the Christmas period, leading the British Retail Consortium to declare that consumer confidence is back.
We’ve heard how industrial output in the UK rose faster than expected in November last year, the National Institute of Economic and Social Research (NIESR) believes we saw growth of 0.3 per in the last quarter, and the financial markets hit a 16-month high in January, buoyed by the New Year optimism.
With stats like these, many analysts are saying that the UK is already out of recession, at least in the technical sense of returning to positive growth.
Businesses and consumers will want to see the hard proof before committing to major investment decisions, but confirming this won’t be possible until January 26 when the preliminary estimate for Gross Domestic Product (GDP), our official measure of economic growth, for the fourth quarter of 2009 is published.
I am certainly hoping the commentators are proved right, for while many maintain the figures are merely academic to what’s happening on the ground, the headlines that will go with news the UK is officially out of recession will help sustain Britain’s returning self-belief.
Of course, if the figures show we’re not quite there yet, it’s not a disaster, but it will be a further dent to confidence and, I dare say, a dent to the pride of the UK, whose European counterparts all left their recessions behind in 2009 along with the US.
Either way, there’s still a long way to go before the recession becomes a distant memory and we must be prepared to deal with further setbacks throughout 2010. As I’ve argued in previous articles, we need to make sure we don’t let every little bump in the road prolong our agony.
So regardless of what happens next Tuesday, stay positive, continue working closely with your professional advisors, and make the best of the opportunities that come your way.