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Gloom but not doom
Can you remember the last time there was a good news story? Social, political and economic turmoil across the globe has cast such a huge shadow over the lives of so many that you'd think we were heading for the End of Days. It's tough out there, agrees, Peter Burgess, but far from hopeless.
When are we going to get some good news? There must be many young people out there who think this is the end of the world as we know it. Every day there is bad news. Earthquakes in Japan, wars in the Middle East, riots on the streets of the UK, the Eurozone going into meltdown and the American Government at war with itself.
It's true that the UK economy is the most indebted it has ever been since 1945 - at which time, of course, there was the Second World War to blame for it. To even be making such comparisons indicates that things are pretty bad out there, however things are not quite as bad as the media would like to suggest. The trouble is 'really bad' sells more papers that 'nearly as bad as...'; economic armageddon is far more compelling than sustained discomfort.
So let us look at the facts. The economy is growing but only very slowly. If anyone thought the first six months of 2011 were going to be anything but dire then they were delusional. This was when the cuts kicked in, or at least people thought they did. This was the peak of consumer nervousness. People were scared of losing their jobs and worried about falling living standards.
In fact employment has held up rather well considering, and the fears of unemployment rocketing were unfounded. It is undeniable, however, that people's living standards are falling. Pay increases have been subdued and largely below inflation (unless you drive a London Underground train). We might not think that if our living standards fall by 2-3% it is really much to worry about. However across the economy as a whole this accounts for billions of pounds. These billions would have been spent in our shops, restaurants and hotels. So it is undoubtedly the readers of this magazine that feel the full brunt of a stagnant economy.
The reality is that this downturn will end at some point. But don't expect an announcement that the crisis is over. That never happens. Instead the doom stories get fewer and further apart until before you know it the next crisis is staring us in the face
Barring a major global disaster such as 9/11 or yet another destructive earthquake the world economy is on the mend. Europe, or rather the Eurozone (countries that use the Euro) are actually in pretty good shape. Yes I know, Greece, Portugal and Ireland are basket cases for now, but these are small economies. Were the Eurozone a country it would not even be hinting at crisis. The problems there are political. Does the very rich north, (Germany, Benelux and Scandinavia) want to share with the poorer south? They will have to, but they will do so at a price. That price will be these countries ceding power to Brussels. That will be a price worth paying if it stops them spending more than they earn.
As for America, there is a reason that very few countries follow the American version of democracy: it doesn't work. The problems in the US, but the real problem is you have an Executive (the Obama administration) going in one direction and a Legislature (Congress and the Senate) going in the other. Obama is trying to run a country with his sworn political enemies holding all the purse strings. No wonder their credit rating is suffering.
Even with a debt ceiling of more than $16 trillion dollars, it is always a bad idea to underestimate the Americans. It will pull itself out of this mess sooner rather than later. Debt is a problem but they can pay it back.
As for Britain, well no-one is talking about our AAA credit rating. Our deficit is hideous but the world believes that we too will sort it out. We Brits are taking the punishment for previous excess pretty much in our stride and already manufacturing is beginning to flourish. It is only a matter of time before our biggest trading partners start to recover and in their wake we will follow. By biggest trading partners I of course mean Europe and America.
There's at least another year of whingeing and hand-wringing to go but the light really is at the end of the tunnel. (unless of course mother nature or some horrid terrorist switches it off).
I am not being complacent. Weaker companies will fail, but remember, of the companies that have already failed in our sector, nearly all of them were pretty close to 'death's door' anyway. Trade will not be easy, especially for the big ticket items. The other problem is that the north-south divide is likely to get worse. London is in fact booming and with the Olympics next year this has to continue. Sadly much of the rest of the country is struggling to keep up. Of course a booming London is good news for all of Britain both in terms of taxes collected and in terms of the key role the capital plays in the fortunes of many nationwide businesses. There's also the genuine prospect of improved tourism revenue nationwide in 2012 as the Olympics acts as a magnet for foreign travellers.
In short, barring another tragic event, we are on the road to a slow, painful recovery. But you won't know it's happened until they start worrying about the next crisis.
