Stefan Stern: Tin hat time?

'It’s being so cheerful as keeps me going,' as Mona Lott, the less than cheery laundress from the BBC’s popular war-time radio series It’s That Man Again (ITMA), used to say.

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Last Updated: 31 Aug 2010
How’s this for a little foretaste of what we can look forward to in 2008? Falling demand, rising inflation, a continuing credit crunch, rampant late payment by the big boys, rising debt, misery and death (the last two may not turn out to afflict everyone).
 
In the Bible it was said that we should expect seven fat years to be followed by seven lean ones. We have just lived through 10 buoyant years of rapid economic expansion. We can only hope we are not about to enter a decade of misery.
 
But recession is not inevitable. The world economy has changed radically since 1997. Whether you believe in the fashionable concept of 'decoupling' or not, there is no doubt that China, India, the oil-rich nations of the middle east, and the new all-mighty sovereign wealth funds do represent a deep and potentially helpful pool of demand, that may have emerged just in time to make up for the stalling US economy.
 
And in the UK things are not too grim - yet. Members of the British Chambers of Commerce still report healthy activity, and wonder out loud why all those media types in London keep talking the economy down. The CBI’s latest economic bulletin has downgraded its growth forecast, but its still expecting UK GDP to grow by around 2% in 2008 - hardly calamitous, and miles away from real recession, which involves, as everyone knows, two consecutive quarters of negative growth (i.e. a shrinking economy).
 
One thing is clear. Managers will be on their mettle next year in what will be much tougher trading conditions than those we have lived through recently. Many bosses under the age of 50 will have never managed in markets like this.
 
End of the business cycle? I don’t think so. Tin hats on, as Mona Lott might have said.

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