End of the recession?
The economic news and data we are receiving is mixed.
The financial crisis within the banking system looks to be behind us but we now have a new threat of the ability of sovereign states to deal with their debt.
Greece is only the first country to come under the microscope – Spain, Portugal and other EU countries are likely to follow.
January has seen a slow start to the year – the boost provided by the re-stocking required by operations looks to be losing steam and consumer demand is weak.
All in all is the recovery going to be v-shaped or w-shaped with another dip still to come?
This all leaves governments and central bankers with a difficult balancing act as regards the removal of government stimulus – take it away too soon and risk stagnation and further recession as happened in Japan in the 1990’s, remove it too late and risk inflation in the future.
Studies indicate that in the medium term too much government intervention and debt discourages growth. So it will be up to the private sector.
When it does rebound, unemployment will fall and budget deficits will decline.
Lancashire has always had a very strong manufacturing and business focus – we have always looked outwards and thrived on our trading base.
Despite what a cursory examination of the statistics appears to say, manufacturing in the region is still very strong. Many clerical jobs in manufacturing companies have been reclassified and in East Lancashire direct employment in manufacturing is 16% (against 11% nationally).
However, indications are that our economy lags behind the national average and on many socio-economic measures we are weak.
This may mean that we will be slower to come out of recession than other areas.
Despite all this, there are many impressive success stories.
The aerospace industry and its support network is second to none and there are many, many examples of highly innovative and high tech operations throughout the region in engineering, automotive, textiles, footwear, paper and wallcoverings, computers and chemicals.
Impressive growth in both the service and tourist sectors further enhances our prospects for success.
Tony Brierley, partner, PM+M Chartered Accountants.