Looking out for signs of a recovery

Jul 9 2009 by James Ramsbotham, The Journal

BARONESS Vadera sparked a media furore in January of this year when she told ITV News that she was witnessing the first "green shoots of recovery".

On reading a full transcript of the interview, you discover this statement was heavily caveated, but the minister’s words of caution were lost in the subsequent fallout over what others saw as a false dawn.

For some time now, the media has been keen to find someone of status to trumpet an end to recession and a concrete statement that growth is on its way.

At one level I am delighted by this. I was among the people concerned that we accelerated our descent into recession by over-hyping the downturn.

However, I also feel we need to be cautious at this time about heralding the recovery too soon. Swallows and summers spring to mind.

The latest NECC North East Business Barometer, the largest survey of its kind in the region, does sound a more upbeat note than our previous quarterly reports on how our members are faring.

Like many commentators, I would not say that we are out of the woods, but the NEBB demonstrates that companies are more confident of survival even if they fall short of outright optimism.

The business barometer reported that respondents are more sure of their future turnover and profitability than they were three months ago. There are fewer firms reporting a drop in UK sales and orders and there are indications that future employment is stabilising and companies are beginning to think more about investment.

On the whole, this data is moving in the right direction. But, we must soon face up to the worrying reality that the UK is seriously in the red.

There are two main approaches to solving the incredible debt problem that is in front of us.

The Government can either look to fill the black hole via taxation and, with an election looming, it is more likely to knock on the door of businesses than individuals.

Alternatively, it will have to find ways to spend less. For the long-term future of the UK economy this is the only realistic option.

We need a full and frank assessment of public spending to decide where money must be spent to deliver much-needed services and where savings can be found.

We cannot delay this discussion, despite how difficult it will be. If we do not address it head-on, we will feel the aftershocks for years to come.

James Ramsbotham is chief executive of the North East Chamber of Commerce