Last week the BBC was hailing the end of the recession, quoting Google’s healthy profit, which was gained over three months from July to September this year, as proof that the worst of the downturn is over. BT Business released survey results revealing that SMEs are optimistic about the coming year, with 75 per cent of the 7,200 small businesses surveyed expecting an upturn in 2010 and 61 per cent confident about their business prospects for the new year.
But then, a couple of days later, Ernst & Young ITEM Club’s latest forecast hit headlines, stating that, despite their prediction of some growth in the second half of 2009, the economy would realistically struggle to achieve even one per cent growth in 2010.
In another big blow to confidence, the FSA announced its plans to tighten lending criteria to prevent borrowers from lending to customers who can’t repay. A major goal of this string of measures – including plans to ban self-certified mortgages and impose new affordability tests on potential buyers – is the aim to create a more stable property.
What’s got people worrying is the possibility of house prices declining and the process of lending becoming more expensive for financiers. If these reforms are made law, we can expect a fall in the number of buyers. Activity in the manufacturing sector continues to slope downwards. The elections are approaching. All this adds up to even greater uncertainty.
BBC headlines today state that "business leaders are optimistic", despite the release of figures indicating that "the economy unexpectedly shrank 0.4 per cent between July and September, making the recession the longest since records began".
So, is the “the worst of the recession clearly behind us”, as Google chief executive Eric Schmidt would have us believe, or is it “too early to declare recovery”? How do we really know what to believe?
Citywire’s Deborah Hyde did what any decent curious person would do. She got an opinion from as many economists as possible. Read what she find out here.
Is business picking up for you? Or are you still feeling the pinch? Tell us about it by posting a comment below.
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