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back to article BCC calls recession bottom

The British Chambers of Commerce has called the bottom of the recession. In its latest survey of 5,600 companies the BCC found some confidence returning, but warned it was early days to talk of real recovery. But the lobby firm warns that the government needs to act to protect their view that "the worst is over". The group …

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Bronze badge
Paris Hilton

There's still a lag though

Rather like when you turn up the temperature in your shower and it takes a few moments to reach the water falling on you, most of us won't notice any improvements until around the time of next election, when Cameron will get in power and claim he did it all singlehandedly. The populace will believe it and when they stop fellating him will vote Tory so often that soon they'll be as bad as Labour are currently.

Vote Paris.

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FAIL

@ Mycho

Well you obviously don't have a very good shower do you? No.

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Black Helicopters

@ Mycho

It could be the reverse, it's more than likely that the Tory's will be voted into government at the point when all the unhappy desicions need to be made, public service/spending cuts, increase in tax, to name a couple of the more obvious choices.

Don't get me wrong, I don't want these to happen and I care as much about Tory's as I do NuLabia but we need these sort of moves to get our economy and finances stabalised. This countries debts mean we're a missed repayment away from changing our status to a third world country and don't get me started on our failing exports and manufacturing industry.

AC as I'm not allowed to hold a political opinion (even though it's my lunchbreak, I'm not going to risk it).

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Alert

Hell's foundations are quivering

Didn't know this, being a Yank but "David Frost, director general of the BCC"? is this true??? Has anyone put a tachometer on Peter Cook's grave yet?

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But what shape bottom is it?

(Oh do stop sniggering!)

Is it a U, a V, a W or an L?

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I can see the path ahead, anyway

Even if things do pick up, the holders of the purse strings will not embark upon a sensible program of hiring permanent staff, and reinstatement of capital expenditure. No, what will happen is that the flow of panic running through their budgets will flip over from the 'freeze' setting to the 'spend' setting, and all those IT projects that have been on hold for months, will be shifted to Top Priority.

What will we get then? Yes. That's right!

Contractors.

Ah, contractors. Don't ya just love 'em? Nine swines, among 'em, for every solitary pearl, and since the swines can output nine lines of absolute crap, for each gem-like little couplet of programming efficiency that the pearl turns out, everyone (outside of the IT department) thinks the swines must be a herd of geniuses. I'd guess as much as four fifths of Britain's IT expenditure is used up, trying to unravel the nest of weirdness purchased using the other fifth, during a moment of ill-advised haste (it's amazing what a lifetime's worth of support, can be generated by six minutes of unfulfilled grappling in a darkened corner).

There's no point carping about inequalities, either: the rest of us have jobs, simply because of the sheer amount of really bad software that can be generated by those sixty-quid-an-hour guys. A few month's work by a contractor can generate a decade's worth of employment for an entire IT department.

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Pirate

Re: What shape

None of the above. It's going to be more like this:

\

\

\__

|

|

\

\

And that's when inflation will kick in and throw all the economic models out the window.

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Anonymous Coward

Optimists

Unemployment -> Reduced spending -> Company failures / staff cuts -> Unemployment

House price decline -> Negative equity -> Repossessions -> House price decline

Etc. Looks pretty grim from where I'm standing.

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@Optimists

"Looks pretty grim from where I'm standing."

Then do as the government does and address the *real* problem - stand somewhere else.

Always identify the problem and then solve another one (preferably one that doesn't exist), that is the way Nu Labia have operated for years.....

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Coat

Insulting it won't make it go away.

May I be the first to call the BCC "bottom" in return? Only a bunch of arses would claim they know what's going on (or what irrelevant stupid thing the world's governments may do next in the name of fixing a problem they are clueless about. too).

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Anonymous Coward

Push vs Pull, Causality vs Correlation

"David Kern, chief economist at the BCC,....benefits would only be maintained if short-term policy "stays expansionist" and "Quantitative easing should be pursued aggressively".

IMHO

Scenario 1: Growth as Causality for Inflation

Companies grow, they borrow more money to fund expansion, the money is created from thin air, the money supply grows (i.e. inflation) but the currency holds it's relative value because the money supply has grown as a result of real growth.

Scenario 2: Inflation as Causality for Inflation

Government spends, borrows money from central bank which prints money in response (a fake loan because the central bank never refuses it's own government loans).There's no real growth there, when the government stops digging holes and filling them in again, there is no new market created and the digging-filling industry is once again in collapse. For a while the money supply matched the growth, but the growth is from pushed money, (a blown bubble), not pulled money (sustainable growth). The spending stops and the growth goes away.

Yet both scenarios look like growth in an economists model, which is why economists make lousy CEOs, they don't understand real markets and can't tell the difference between blowing a asset bubble and creating a new product segment.

Worse still, when Governments spend money, they distort the market. They order 10 million blue widgets to help the blue widget market, but it draws money away from the orange widget market, which didn't need help.... when the spending stops, blue widget companies are everywhere but still nobody wants blue widgets and they've destroyed the orange widget companies.

They've delayed the restructuring of the blue widget market and damaged the orange widget market.

The end game here is a collapse in Sterling, to fund the next round of growth, Brown will have to spend more, and borrow more. Each round has to be bigger than the last round by at minimum the inflation he creates. Even if he does it quickly before the bubble collapses again.

If he waits for the deflate, he has to spend even more, but the result is inevitable, sooner or later the fake asset bubble he tries to create will collapse, because there is no real demand there that needed filling and so the supply is in excess of the *real* demand and must fall back.

Sweden has essentially gone negative on interest rates, which is to say that the Swedish Krona has no future as a currency, they can't sell it, they can't even give it away. Sterling, likewise will likely fail if Brown continues to print money to fund spending which is all that quantitative easing really is.

http://globaleconomicanalysis.blogspot.com/2009/07/sweden-cuts-deposit-rate-to-negative-25.html

My wifes employer (importer from China + Philippines) use to have to pay in US$, now she pays in Euros, as her trading partners increasingly price their products in Euros. I think it is because the Euro is run like it has value and is a proper currency.

I think GBP is not, and I think this BCC economist is making the same mistake all Keynsian economists do and thinking inflation is inflation is inflation whether it's from governments pushing money or companies pulling it.

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