PracticeConsultingLeader – The wrong type of recession

Leader - The wrong type of recession

As the leaves begin to fall onto the nation’s railway lines, this is as good a time as any to be embarking on the wrong type of recession.

Like the wrong type of snow, so famously blamed by rail operators for winter train cancellations, the wrong type of recession is something that just should not happen. Around the globe, interest rates are falling and inflation is stable. In classic economic theory this should be the calm before the boom. Instead markets are in freefall and credit is being squeezed.

In the UK many accuse the media of talking up a recession. Flattering the media by overstating its influence is as old as the printing press itself. Far more culpable are the men and women who run the world’s banks and those who speculate on international equity markets. Their herd like instinct, while the economic fundamentals remain strong, is as baffling as it is stupid.

But when the markets lose their heads, accountants have a vital role to play. As the guardians of financial reality they often find themselves prophets without honour in their own organisations. As things get worse this ability to point to the financial facts, irrespective of what the markets may say, is an essential counterbalance.

The generally strong financial facts should speak for themselves. The profession owes it to its own principles to make sure that financial reality is not swamped in a tide of recession panic.

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