It’s not really bad – it’s far worse

Dec 24 2008 by Peter Jackson, The Journal

IT’S not only generally accepted now that we are in a recession; there’s a growing consensus it’s going to be a bad one.

Government minister Tessa Jowell let the cat out of the bag last week when she said that the downturn is expected to be “deeper then any that we have known”.

Given that “we have known” the Great Depression of the 1930s this is a pretty scary admission for a cabinet minister to make. Let’s hope she’s wrong.

There is one thing about the recession, whether it’s going to be severe or shallow, and that is that it will be the first recession of the internet age. We will now learn whether the internet truly is recession proof, as some claim, and how the internet will, in its turn, influence the course of the recession: will it exacerbate, or will it mitigate, its effects?

The optimists argue that online advertising will continue growing, despite the fact that advertising revenue is normally an early casualty of economic slowdown. They point out that, unlike the collapse in 2000, there has not been the creation of a dot.com bubble based on unrealistic expectations of future developments.

But there are those who take a more pessimistic view and they seem to be growing in number. Jimmy Wales, the founder of online encyclopedia Wikipedia has said that, while there will not be a bloodbath, internet companies will suffer a serious downturn. And his warning comes just after he has been forced to lay off one in ten staff at Wikia, a search engine he set up in 2004, and only weeks after Yahoo announced 1,500 job cuts and a fall of two thirds in quarterly profits.

However badly or well internet companies fare, they will certainly help shape the recession and the kind of economy that emerges from it.

It is not unlikely, for instance, that on-line retailers will do considerably better than their competitors on the high street. Expect, after Christmas to see a lot of shops – including big names – going into administration.

Peter Jackson is a freelance writer and former business editor of The Journal – p.jackson77@btinternet.com

We will now learn whether the internet truly is recession proof, as some claim