We keep on working through economic shifts

Political tub-thumpers will argue about George Osborne's Autumn Statement for a few days.

The Right will tell us how the cuts have worked and we've all made sacrifices together for the greater good as the economy improves.

The Left will tell us that any improvements are based on flimsy house price rises, an unpredicted rise in customer spending, that we're all worse off, and the recovery is slower than Osborne predicted.

All good stuff, and the politicos will enjoy the distractions from buying Christmas presents.

For most of us, though, the bottom line is that times are still tough and we're working as hard as we can to pull through this. We understand that the country's finances have been in a bad state since 2008. We hear that the Eurozone is suffering too, and about the rise of China's economy compared with that of the US. We hear that the UK's economy is improving, that energy prices are for ever on the rise. We're grateful that petrol prices have been stable for a couple of months.

For those of us who run our own small business, we look for smarter ways to work as technology moves on apace (one example this week: car tax discs will be scrapped), and we look for better ways to advertise our services among the tangle of social media (Facebook, Twitter, Google+, blogs, Tumblr, Flickr, Pinterest - where will it end?). We also try and predict what will shape our business and the work we do in years to come. And we work as hard as we can.

Predicting the way the economy will turn is beyond us (and them!).

We'll continue to work through it.

UK growth is looking good

So the UK economy is recovering nicely.

Its growth is one of the highest in the Western world.

Business confidence is at its highest for ten years according to a survey by the Institute of Chartered Accountants.

This is excellent news for the country and, of course, for the Government and Chancellor George Osborne. However, the latter might come under pressure to share some of this recovery wealth with taxpayers, many of whom will not recognise this apparent good news story.

The third quarter showed growth at 0.8% in the UK, and Christmas spending, good demand in construction, and increasing business investment could produce a fourth quarter figure of 1.3%. Time will tell.

In the meantime, heads down, let's keep the growth going.

"Fragile" recovery for UK economy forecast by CBI

The CBI has predicted that the UK economy will show a gradual improvement in 2010, but the economic recovery will be “fragile”.

The group believes that the end of the UK recession will end in the fourth quarter of 2009, with a boost to consumer spending coming in December, prior to VAT going back up to 17.5 per cent in January. Despite that, however, the forecast is the economy will have reached pre-recession levels even by the end of 2011. Its latest forecast for the peak of unemployment is 2.8 million – lower than its original prediction.

John Cridland, CBI deputy director general, said: “Although the first few months of 2010 will be difficult, growth will gradually pick up and increasing confidence and demand will lead the UK into a more positive 2011.

“Consumer spending looks to be slightly more resilient than we first thought, and a weaker pound will help to support export growth.

“However, the economy will be on a fragile path of very slow growth, as we continue to feel the lasting effects of the financial crisis.”

Some of the CBI’s forecasts:

• Annual growth of 1.2% in 2010, followed by growth of 2.5% in 2011.
• Wage growth will be constrained during 2009 and 2010, then average earnings will rise by 3.9% in 2011.
• UK interest rates to start rising in spring 2010, reaching 2% by the end of the year.
• Inflation (CPI) to rise sharply following the rise in VAT in January, before easing back and falling below the Bank of England's target rate of 2% in 2011.

UK economy stays in recession

So, whereas the French and German economies have come out of the recession, the UK economy stayed firmly in recession in the third quarter with a contraction of 0.4 per cent.

This is particularly bad, because most experts had forecast that we would come out of recession, with perhaps a 0.2 per cent growth.

It is now six quarters of consecutive negative GDP growth – the first time this has happened since records began to be collected by the Office of National Statistics (ONS) in 1955.

The fact that other major European economies, plus Japan, have come out of the recession while the UK remains firmly in it, makes you wonder about PM Gordon Brown’s comments in September 2008: “…at root our economy is better placed to weather the global storm than it was in the seventies, the eighties and the nineties".

Three weeks ago the Prime Minister said: “We are now coming out of recession as a result of the actions that we have taken. I think you will see figures pretty soon that show the action that Britain has taken yielding effect.” Expect him to take a battering in the Commons in the next few days.

Upon release of the figures the pound fell more than a cent against the US dollar, as traders displayed concern that the UK may be left as the only major economy still in recession.

Despite stimulus measures taken by the government and the Bank of England, the economic decline has continued.

David Kern, chief economist at the British Chambers of Commerce, said: “Continued intervention - including help for businesses to access finance, and incentives to promote investment - is still needed. Above all else, business confidence must be nurtured, to ensure that recovery is not further delayed."