Editor's blog

It was as wet as November and windy as March

Doom and gloom?

07/09/2011 10:08:31

Oh dear. It's not looking very good out there is it? And I don't just mean the view from my window which suggests that the extra vest and woolly socks might be required sooner rather than later.

The papers (by which I mean the general news media, websites, twitter et al) were full on Monday of what can only be described as doom and gloom because of, in no particular order - falling output on the high street, lack of confidence in the Euro, lack of business in the services sector, the fact that America created no jobs at all in August and, of course, the fact that construction orders seem to be going backwards.

Mind you, September is always a bit grim. There usually seems to be an expectation that September is a new start, a time to get going again after the summer lull in time for the Christmas slow-down but it invariably fails to materialise.

All those bankers who jetted off to wherever for their summer jollies were always going to come back and get the jitters on discovering that the money fairy hadn't put everything back together just the way she found it.

So we have their concerns about the state of the Italian and Spanish economies, the Office of National Statistics (assuming they got their sums right this time) finding that new construction orders are as low as they've been since 1980, and the lack of anyone spending any money anywhere. No wonder the fears about the possibility of (whisper it) a 'double-dip' sent the FTSE nose-diving.

Frankly, I'm not surprised that the 'services' sector and the high street have found that things are quieter. After the last few years of belt-tightening and cutting back, one gets used to not spending money on things that simply are not an absolute priority. As Chancellor George Osborne told the City of London last night "We have all had to revise down our short term expectations over recent weeks".

Osborne acknowledged that he would have to cut his forecast of UK growth when he delivers his autumn statement to parliament on 29 November because recoveries from financial crises are invariably slower and choppier than recoveries from other types of recession - although I would have said that a recession is a financial crisis; I'm not sure what other type there is.

He said: "Bad news about economic growth, particularly in the US economy, has been compounded by falling confidence in the ability of political systems on both sides of the Atlantic to respond decisively to the challenges they face. And, I suspect, most damaging of all, the impact of a sharp oil and commodity price shock is still working its way through the global economy.

"At root, however, this short term instability has been driven by powerful long term fundamentals. For, as I have said many times now, this is not a normal economic recovery. We cannot just sit back and wait for numbers that went down to come back up, or for lost ground to be made up, as has happened many times in the past.

"Globally we are living through a painful and fundamental re-adjustment of a model of global growth that was badly broken."

Blimey, if even the politicians are admitting it then we really must be in trouble.

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