Nearly there with the economy?

Just hang on

Nearly there? Nearly there?
In free climbing you are obliged to hang on. We are told that Gordon Brown's idea of a good time is to watch videos of his favourite football team, Raith Rovers; but you never know, perhaps our PM has been watching free climbing and getting ideas, just hang on, onwards and upwards.

It was clear that this recession would come to an end at some point, they all do. It was also clear that Brown would try to cash in, rather like the surfer waiting for the wave to take them into the shore, a free ride. But enough of these sporting analogies, we all knew Brown would simply hang on, nothing skillful or noble just pathetic.

At the start of this week we were told, again, “it's all over”. I think we've been here before. The recession, for some, is what they read about in newspapers, it's never reached them and never will; while for others life has been hell. Anyway, the Institute of Chartered Accountants delivered the good tidings and the BBC dutifully joined in the gushing. The word 'confidence' leads us into their report. Unfortunately confidence is also what actors must have, in plenty, to get you to go along with their act.

Now Pravda has written this up and included numbers taken from the ICA 'index', but without explaining how this index works. So the numbers are presented going from a minus figure, -28.2, to a positive figure, 4.8 in just a few months. Further on we are told that the ICA predicts a growth in the UK economy of 0.5%, this follows a recorded shrinking of 0.8%. So are we to believe that a little down then a little up is the reason behind the leap of euphoric faith in the ICA index; or perhaps there has been an unusually high level of 'activity' among Insolvency Practitioners, hence the confidence?

So here we are at the end of the week and there are yet more numbers to digest. In the Telegraph there's a story headlined, Fears for economy mount as business investment falls. The article tells us how things are at their worst for 44 years and how 'business investment plunged 18.45% in the second quarter, compared with the same period last year, to £29.9bn. This was the largest decline since the data series began in 1965'. All this comes from, the Office for National Statistics (ONS). The Telegraph article also tells us that, “investment during this recession has fallen much more sharply during this recession than it did in the recessions of the early 1980s and early 1990s, according to Michael Saunders, economist at Citigroup”.

On a long car journey to the coast children get fretful, hence the game, 'first to spot the sea'. Some children lulled by the motion fall asleep and have to be woken up upon arrival, for others it's possible to see Hayling Island just south of Winchester! It's a bit the same with economic recovery, there is an element of exaggeration.

But this buoyant attitude is considered acceptable, it has helped raise UK share prices by 15% in two months. As the credit crisis has its roots in the period of giving mortgages to people who could not afford to take them on and pay back the money, is it wise to base a recovery on something so flimsy?

Here is another example, similar to the one from the ICA, this time from Screwfix, a company who supply tradesmen with basic essentials. Screwfix have their own 'index' to measure the economy called Trade Pulse, a report is in the Telegraph The monthly survey (by Screwfix) of 250 professional tradesmen reveals a more optimistic outlook for the next 12 months. It shows that 38pc expect the economy to improve during the next year, compared to just 5pc in July 2008. Note the word 'expect' in there.

Also we have a quote from John Mewett, Screwfix marketing director, who said: "While they may be positive about the next 12 months, this optimism does not follow through to their own spending habits. When asked about their own finances, only 14pc said they expected to spend more on major purchases than last year. " This could explain why my local branch of Screwfix is no longer open on a Sunday!

So yes it will come right in the end but we don't need to pretend this is so. But then there is a general election coming soon so look out for exaggeration.