Saturday, 30 January 2010

Out of the woods?

This week we learnt that the British economy crept - limping - out of recession, posting 0.1% economic growth for the last quarter of 2009. So, after the worst slump since 1931, are we out of the woods?

On the downside, Pimco an investment firm gave international investors the jitters, advising them to avoid British gilts - because the government has failed to tackle its spiralling debt. Such concerns cast a shadow over sterling and the wider economy. Meanwhile, a survey today by Pricewaterhouse Coopers reveals widespread fear across business that we face a double-dip recession. But what's the local impact?

In November, I visited Jane Bourgeois at Walton, Weybridge and Hersham Citizens Advice Bureau - see below - a grass roots barometer for the local impact of the recession. On Friday, I went back again to get an update in light of the economic news. Comparing their data for the last quarter of 2009 against the previous year, I found:
  • A 10% increase overall in people seeking help.
  • A 28% increase in people seeking advice on consumer issues.
  • A 17% increase in people coming with debt problems.
  • A 20% increase in people coming with marital or other relationship problems.

This suggests that the economic and social ramifications of the recession are getting worse, not better. With VAT returning to 17.5% in January, the consumer will continue to feel the pinch. But perhaps the greatest risk is that we simply continue to limp - rather than stride - out of the recession with an economy that remains stagnant for a prolonged period. We sorely need a change of direction - and government - to give us an economic plan that gets to grips with government debt, and frees up business to pull us through the current economic mire. After so many grandiose claims from Gordon Brown about rescuing the UK economy, his Chancellor was this week forced to concede 'We are not out of the woods yet'.


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