You may have seen the recent the news that there has been a 1.5% fall in manufacturing output in January. It’s our opinion that there is more bad news to come, especially when these figures feed directly into the first estimate of UK gross domestic product – a way of determining whether Britain is back in a recession.
With recent fears about the slump in the UK economy over the past six months, we believe that the only realistic option is for the Bank of England to add more stimuli into the economy at the next Monetary Policy Committee meeting. It is also worth remembering that the Bank Governor, Sir Mervyn King, voted for more Quantitative Easing (QE) at last month’s meeting and this will need addressing as soon as possible. But is QE the answer, or should the government focus on building more houses? This will inject some money into the struggling construction sector which in turn will help other areas of the economy, and will also help address the massive shortage in affordable housing that we’re facing right now.
As we all know, industrial production is struggling but in January, there was a considerable drop of 1.2% – much worse than the 0.1% increase economists had predicted and expected. This has been blamed on the recent poor weather but is this really the main contributor to the sizeable drop? It’s unlikely that this is the only cause, and is probably yet another excuse from the treasury and other bodies to conceal the fact that the current economic strategy of the government is not bringing us back into growth.
We’ve met with several banks over the last few weeks and the general consensus is that the economy looks to remain as it is for the not too distant future. However our question is, what is happening to the Quantative Easing that is supposed to be passed down from the Bank of England to the retail banks and eventually to their business customers? The banks tell us that they are open to lending which should stimulate growth! That said, we do understand that the banks only want to lend to businesses that can repay, and unfortunately it’s the ones who are in danger of defaulting that need the money the most.
What are your thoughts and has the weather affected your business? If the weather is not the only contributory factor, what else has impacted your business? What is your experience on the banks openness to lending? Please leave your comments or email us at firstname.lastname@example.org if you would like to talk about your business and how we may help.
Image sourced from bisgovuk.