A mixed bag of economic indicators for 2011

HERE WE ALL ARE, ending an eventful year in which we’ve witnessed a change of government, the country coming out of recession, (albeit tentatively), announcements about huge public sector spending cuts on the way, and the ongoing debate about bank lending.

In 2010, we seemed to hear some good economic news one week, followed up quickly with not such good news.

Sorry to have to tell you, but I suspect 2011 will be a repeat performance.

On the plus side, I see bank lending start to get back onto a normal track, helping healthy businesses expand once more. Hopefully this will lead to the private sector recruiting some of the casualties from the public sector clearout. With the Eurozone and the USA expecting to see GDP growth of between 1 and 3% in 2011, i don’t see any chance of a double dip recession for the UK. If anything, we’ll see the slow road to recovery continuing.

From a business risk perspective, what worries me about the coming year is the impact of the VAT rise, the winding down of the HMRC tax deferral system, and the localised effects of public spending cutbacks on the financial viability of companies that provide services to local and central government.

I’m also beginning to worry about rifts appearing in the coalition government; political stability, not uncertainty, is what we really need in 2011. Senior Lib Dems, seeing their political support wane at grassroots level, should bite their collective lip for a little while longer for the good of the country, before deciding to stand up for what they really believe in and differentiate themselves as a party well in time for the next general election.

Merry Christmas to one and all!

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