UK growth for the last quarter has been revised up from 0.2%
to 0.5%, which the coalition is heralding as a success. RFT
have just experienced one of the poorest Octobers on record,
but we aren’t alone on this. I was in the office of
one of the UK's biggest parcel delivery networks, and their
actual number of parcels delivered in October was 40% down
than when we were in recession. We have hanging garments in
the warehouse which would have normally been delivered 2 months
ago, but lack of sales have meant that clients are paying
to have their stock stored.
We can expect big discounts on a lot of items in pre Christmas
sales, probably more than last year. Consumer confidence is
unlikely to improve in the near future. Several companies
we regularly deal with are complaining about lack of funding
from the banks, with several national and international haulage
and delivery firms running short of work. With the information
we have gathered from our clients it is looking more likely
that the next quarter’s growth could be 0%.
UK double Dip?
The EU problems, compounded by the uncertainty of the Greek
position, could help push us into a double dip recession.
The instability and uncertainty of the EU and the Euro have
made many companies wary of bidding for contracts where payments
are made in the Euro. Last month we had two contracts we were
asked to quote for, normally we would spread the risk by asking
other companies to take on part of the contract with us. With
the problems associated with the EU and the Euro, we couldn’t
manage to find enough partners willing to participate.
If we do go into recession in 2012, it will be a lot harder
than the last one. A lot of companies don’t have the
resources to help see them through, and the chances of firms
reducing costs to compete for business is less likely than
in the previous recession.
There are countries where their growth is still healthy or
expanding. Others such as China appeared to be keen to bolster
the EU with cash, the unexpected news from Greece about the
bail out being held back due to the intended referendum, and
the possibility that they may default and withdraw from the
EU has sent shivers down the stock markets worldwide, and
left the position of China helping the EU up in the air. This
also affects Italy who is expected to ask for a much bigger
bailout, and Spain is also expected to need money from the
bail out fund.
It could be argued that if Greece does accept a 50% write
off on their original bail out, this could set a precedence
for other countries to do the same.
won't lend to Euro Bail out
Britain will not contribute to the EU bail outs, but it will
lend money to the IMF [International Monetary Fund] which
lends to about 50 countries world wide. David Cameron justifies
the UK bolstering the EU through the IMF, on the grounds that
no country lending to the IMF has lost money.
There is always a first time for everything David.
Remember the general public haven’t had to bail out
so many banks before, because we haven’t had a banking
crisis like this before.
news, Greece scraps referendum.