We shouldn’t start banking on a recovery just yet, judging by two influential studies out this morning. The British Chambers of Commerce said economic indicators remained weak, despite a slight improvement – scotching any hope of a rapid return to growth. And this bad news for the Government was compounded by the latest output figures from the Office of National Statistics: they showed falls of 0.6% and 0.5% in industrial and manufacturing production respectively – when both were expected to rise. Clearly we shouldn’t be getting ahead of ourselves…
The BCC’s latest quarterly survey (of nearly 6,000 firms) strikes a distinctly gloomy tone compared to recent offerings. On the one hand it suggests that ‘the worst phase of the recession is over’ – key indicators like orders and confidence have apparently improved in the last three months, suggesting that the decline in the manufacturing and service sectors is starting to bottom out. However, it reckons that ‘serious downward pressures persist across all sectors and regions’, making any talk of a swift recovery premature. And today’s disappointing output figures – which were up last month, and expected to climb a further 2% this time – do seem to vindicate this view.
The answer, says the BCC, is for the Bank of England to redouble its efforts to get cash pumping around the economy, by extending its quantitative easing programme and keeping interest rates low. It also wants the Government to steer clear of tax hikes until we’re back on track. In the run-up to a General Election, that’s one recommendation that Gordon Brown and co are likely to welcome.
Some big companies are clearly still having big problems. Take Ikea: the home retail juggernaut has seen a big decline in sales and margins, and its founder Ingvar Kamprad told a Swedish newspaper today that the retailer will have to cut more jobs (on top of the 5,000 it has already shed) and scale back its expansion plans as a result. Kampard may not be on the executive team any more, but nobody knows the business better, and he still acts as an adviser to the group (in fact he seemed to suggest that the current lot had failed to heed his warnings that the group was growing too fast).
But because we’re cheery souls at heart, we thought we’d leave you with a positive story slightly closer to home. Restaurant operator Clapham House may have reported a big loss this morning, thanks to a write-down in the value of its Tootsies chain. But it also said that its Gourmet Burger Kitchens and Real Greeks in Central London were going great guns, thanks to all the tourists flocking over here because of the weakness of the pound. Every cloud, and all that...
In today's bulletin:
We're not out of the woods yet, says BCC
JJB supports chairman in bid to diffuse Ashley row
Editor's blog: Ecclestone and getting things done
Companies profit from post-Lehman M&A deals?
Graduates feel the squeeze as job market tightens