When will we get growth again?

itsnever2lateisit?

Generali wrote: »

Good point.

Personally, I am hard pushed to see what will lead the UK out of recession. Export markets (Western Europe and the US for the most part) are in as bad or a worse position than the UK so exporting the way out seems unlikely.

A falling pound should mean many essentials that are for the most part produced abroad become more expensive (eg food, clothing, furniture and cars) so a consumption led recovery is unlikely.

I don't see the mechanism for recovery for the UK if it can't be domestic or external. It doesn't seem to leave anything unless you think that QE (aka printing money) can lead to extra production and thus rising GDP.

Perhaps I'm missing something. Any thoughts?

That's the key IMHO. There must be an increasing economic case for switching production to the UK, so bringing down imports. It wont increase exports, as the goods produced will be for domestic consumption, two examples

Even before the motor trade fell off the cliff, (along with the £)Honda had taken the decision to produce the new model Jazz in Swindon. So later this year we will see UK built Jazz's instead of Japanese/Chinese ones.

Also today I bought cucumbers and tomatoes produced here in the UK, and it is only April. These goods have come from 'Thanet Earth' a massive greenhouse complex in East Kent that has just come on stream, and will provide 10% of the UK's salad foods when it is completed. Again this project was underway when a £ bought you €1.30, so it is even more competitive now.

A few more things like that will go a long way to helping the economy to recover

fc123

I voted for the last possible option...

The trickledown through to us 'ordinary types' will last longer than any 0.001% growth figure that shows up at some point.

It's that effect that most people who come to MSE will feel the most.

I know of small businesses who are only just starting to feel things getting tough for them. The savings have run out and trade had dipped....and is staying at the lower level.....but the overheads are increasing

It feeds down on layers, affecting different sectors at different times.

However, could I just add that clothing manufacturing based in UK is to the max. No factory I know of has any spare production capacity left.
OK, there aren't many left, but those that survived the decade of the cheapy import are making up for it now.

michaels

Very much with you on this one tomterm, my take so far is that there was a major credit shock to both consumers and suppliers in H2/Q4 last year resulting in an even bigger inventory correction in Q1 this year (witness Germany, Japan and the UK car sectors) but that given more sophisticated stock management than previously should pass through very quickly.

The Trillion dollar question is the impact this will have on the economy going forward. Consumer spending and the service industries are holding up due to the income effect of the rapid interest rate reductions and QE - assuming a return to more normal levels of industrial production once the unanticipated build up in stocks has been cleared the question is whether the support to demand from monetary and fiscal measures (hopefully now starting to come on stream) is enough to outweigh the second round effects of the inventory driven industrial production plunge and resulting income falls and lay-offs and the impact that has had on consumer sentiment.

I went for non-neg growth Q3 this year.

Shame this seems to be an anonymous poll, would be interested to see peoples opinions.

tomterm8 wrote: »

I put in Q4 of 2009, but I feel like I'm cheating.I expect the kind of anaemic growth that you get from an inventory bounce in late 2009, simply because retail sales are increasing.

It's like in the 1980's recession, where there was a blip and GDP went positive for a quarter. Followed by a couple more negative quarters.

That will be followed by more recession, not by a great deal of recovery.

A_fiend_for_life

The pound is low, exports are low, manufacturing is impoverished though as mentioned clothing is at maximum and one car production is being switched to the uk. Any other sectors that are ripe for a boost?

Someone once said when the economy is going down hill 'get people to dig holes and fill them in'. A bit like cutting down wrought iron railings and burying them.

If the recession is going to last as long as many people say it will, 10 years, we will end up with an energy crisis that will really slow down any recovery and new energy investment. The sooner we adopt a viable energy efficiency strategy rather than talking about it the sooner we can become a net exporter of energy at a good exchange rate. An energy efficiency strategy benefits people, businesses and the public sector - it also improves the income stream of UK energy companies and creates jobs. We're in a prime location for renewable energy production and one the most energy inefficient countries in northern Europe. Sounds like we have a lot of digging to do.

Thrugelmir

Q4 2010 - Motor Plants will be up and running by then to meet demand for scrappage scheme.

treliac

Thrugelmir wrote: »

Q4 2010 - Motor Plants will be up and running by then to meet demand for scrappage scheme.

What demand?

Thrugelmir

treliac wrote: »

What demand?

Cars are still being sold although demand is down. With Honda effectively closed 5 out of 6 months. The stock pile of new vehicles will be used up at some point.

posted_2

Is growth real growth if it is paid for with an interest bearing buy now pay later scheme. The next govt will have a lightbulb moment at some point, and then taxes will have to rise to pay for the mess, which will probably stagnate the system for years to come.

StevieJ

posted wrote: »

Is growth real growth if it is paid for with an interest bearing buy now pay later scheme. The next govt will have a lightbulb moment at some point, and then taxes will have to rise to pay for the mess, which will probably stagnate the system for years to come.

About time you had a lightbulb moment.

Thrugelmir

posted wrote: »

Is growth real growth if it is paid for with an interest bearing buy now pay later scheme. The next govt will have a lightbulb moment at some point, and then taxes will have to rise to pay for the mess, which will probably stagnate the system for years to come.

As 50% of the UK economy is SME's. The Government is limited in the measures that give a confidence boost. Particularly pre election.........