We must keep up confidence

Nov 18 2008 by Karen Dent, The Journal

IT IS impossible not to hear, see or read something truly depressing about the current state of the economy. The wording used to describe it has become interesting, this time last year the words used were that of a “credit crunch” but we are now talking about a recession.

The current market conditions are possibly the worst we have seen since 1991/1992, although we did have a “blip” at the turn of the century when the dotcom bubble burst in 2001. In reality, things were worse than the dotcom boom disappearing – Enron, Worldcom and Arthur Andersen ceased to exist after the last economic crisis.

As a rule, markets correct themselves every five years. This correction is worse than we have seen for a while because it has affected consumer spending and the housing market.

It is absolutely vital that we do not let this affect confidence.

When people lose confidence, the entire system slows down. Much of newspaper commentary has been about banks not lending to each other, which is damaging market confidence.

However, everyone has a part to play. If you go into any business and ask people about their personal spending habits, you will see caution creeping into everything everyone does.

This sort of caution has a knock-on effect on the whole economy.

By constantly talking down the economy, a recovery will be slow, so looking for positives is not just a cheap morale booster, it is vital to stimulate recovery.

Looking for positives in the North East, we have a range of funds which can help stimulate growth in the SME sector.

Many are now fully invested but many still have funding to assist start-up and growing companies, such as the Regional Investment Fund (Entrust), the NEL Growth Fund (NEL), Proof of Concept Fund (NSEI) and the North East Investment Centre (Business Link).

Now it seems doubly prudent that, in a time of recession, we have lines of funding which some parts of the private sector at present do not.

Neil Warwick is a partner and head of Kudos department at Dickinson Dees LLP