We’re not doing quite as badly as some may think

Apr 9 2008 by Andrew Hebden, The Journal

CRISIS? What crisis? The results of our Business Barometer published in nebusiness today will make surprising reading for some people, especially those who interpret the state of the economy through the grey-tinted spectacles of the national media.

Yesterday’s announcement from the Halifax that the fall in house prices witnessed during March was the biggest since 1992 prompted Gordon Brown to speak out to calm growing concerns.

And today a report from Experian warns that North East homeowners could be among those worst hit by the UK’s own sub-prime crisis.

So how does our Business Barometer fit in with this mood of gloom and despair? Almost half of the firms who answered our questions said that the turmoil in the finance markets has had no impact whatsoever on their business.

Perhaps it shouldn’t come as too much of a surprise to regular readers of these pages. Over the past few days, we have featured countless stories focusing on deals being done, facilitating the expansion of businesses based here in the North East.

True, the Government’s inexplicable and bumbling decision to bludgeon business with an even greater tax burden as of Sunday evening has hastened the pace of many negotiations. But the fact is that these deals are happening and that is itself a good barometer of business confidence.

There are some warning signs in today’s survey and it would be naive to think that this region is operating in a rosy bubble. For example, companies which are not in the fortunate position of having finance in place are finding it tough to get funding.

The Prime Minister refutes claims that he is in denial over the state of the economy. But he was certainly spooked by yesterday’s economic data, which moved him to reassure us that the Government is not a mere spectator in the current situation.

Brown was at pains to stress that any parallels with the early 90s were misguided, and our survey today is further proof that this economic downturn is a complicated business.

There will be no one-size-fits-all solution. But a cut in interest rates tomorrow, perhaps by more than the widely-expected 0.25%, would be a good start.