Schrodinger’s economy

It is not from the benevolence of the butcher, the brewer, or the baker,
that we expect our dinner, but from regard to their own interest

Are we in a recession or are we out of a recession? Were we in a recession or were we just teetering on the precipice like a middle-aged Mum contemplating a paddle at Hastings?

As usual, it all depends on your point of view and the particular set of statistics you choose to illustrate that point of view.

Technically speaking, The UK economy is no longer in recession, as, according to the Office for National Statistics UK GDP grew by a better-than-expected 0.6% between January and March. Economists had predicted the figure would be 0.4%. It got to that stage thanks to the strongest economic performance for three years, and left everyone in the Treasury feeling, well, a bit smug probably. Maybe.

So, hurrah, we’re all in the money again. Except we’re not. Most people will still feel poorer going into this upcoming general election than they did going into the last one, in 2019. Obviously not all of that can be blamed on the current government, no-one expected Covid, no-one expected war in Ukraine and non-one expected war in Gaza. Having said that, students of international political history could probably have had a good stab at predicting the last two, and anyone with an interest in virology probably knew something like Covid was a possibility. The fact that they came one after the other though, is what caused the recession/not really a recession in the first place.

This industry is particularly susceptible to that most ethereal of things, consumer confidence, which is usually a measure of how rich people feel they actually are. Oh dear: living standards in the 2022-23 financial year dropped at their fastest pace since records began, with the Office for Budgetary Responsibility forecasting that household disposable income won’t recover to its pre-pandemic peak until 2025-26.

Consumer spending rose by only 0.2% in the first quarter and was down by 0.4 % on a year earlier. Not helped, clearly, by the appalling weather in April, which, according to The British Retail Consortium kept consumers away from the high street, their purses firmly shut.

Closer to home, of course, March and April played havoc with anyone hoping to do business at the groundworks or drainage end of the construction food chain. Anytime anyone dug a hole in the ground, it just filled with water.

There are, dare I say it, a few signs that things are improving. A good stint of dry weather will get things moving and the word on the street is that things are looking busier than they have been for a while for merchants and manufacturers. It’s still patchy though, which doesn’t help with forecasting or planning.

The government may well feel that they have dodged a bullet, but it probably won’t be enough to save Sunak’s proverbial bacon come polling day.