The morning after
Article Date: Apr 09 2009There was a point this year when you could be forgiven for deciding to make yourself a placard, paint "The End is Nigh” on it, and start pacing the streets, exuding the resigned confidence of the damned.
Now the mood seems to be lifting as people come to terms with the changed circumstances and realise that business does indeed continue during a recession. That seems to be one of the messages to take from BDO Stoy Hayward’s latest Business Trends report. It found that short-and medium-term business confidence has risen simultaneously for the first time in 13 months.
Perhaps this indicates the sense of relief many entrepreneurs feel after surviving the initial blast caused by economic meltdown. BDO comments that the results suggest that the majority of businesses have taken ‘swift and decisive action’ by halting production or putting in place new employment strategies to keep down costs.
It goes without saying that only a fool would be breaking out the cigars and champagne and thinking the worst is over. A survey of the economy for the first quarter of 2009 by the British Chambers of Commerce shows a severely weakened service sector and manufacturing exports crashing to a ten-year low.
The BCC expects a decline in GDP of more than three per cent for the whole of 2009 and unemployment to peak at around 3.2 million in the third quarter of 2010. Without question, the squeeze will get tighter over the coming months, but at least people have adjusted and acclimatised to the different circumstances. There is less of the fear and hysteria that swept the globe as the banks and financials institutions collapsed like the proverbial house of cards.
The sensible CEO will be hunkering down and trying as hard as possible to maintain commercial equilibrium over the coming 12 months. Of course, the government has a role to play here in helping to keep CEOs rational, and the forthcoming Budget will be one of the most closely watched for a generation.
Many will be looking for more imaginative measures than the bizarre and ineffectual VAT cut. For instance, a reduction in the National Insurance contribution rate would be welcome, as would a tighter control over bank charges and a deferment of the rate increase of corporation tax.
Rather than embarking on economic policies once endorsed by the Weimar Republic and latterly Zimbabwe, it’s these sorts of measures that ought to help restore the brittle confidence of CEOs and make sure those apocalyptic placards stay firmly locked away where they belong.
