UK Q2 GDP at new risk of downward revision tomorrow

Generali

Badger2000 wrote: »

These guys think it did http://www.telegraph.co.uk/finance/financetopics/recession/6105239/British-GDP-shrinks-less-than-feared-car-scrappage-scheme-helps-break-fall.html

I guess it depends on how you define success.

vivatifosi

Generali wrote: »

Quite possibly. That would certainly explain why investment started at a lower point although would not explain why the drop is so much greater than in previous recessions.

My suspision as to why the drop in investment is so big is because the UK is up poo creek without a paddle. We'll see how normalisation of the economy works out.

I agree. In terms of recent falls (as opposed to comparisons against previous recessions) business investment is in a mess. I'm from an industry where business investment is a key driver. I've never known a recession as bad as this and I've looked in depth at the previous two as they related to my previous industry.

Going to Stevie's earlier point, what was interesting last time round is that the companies who did do well in my sector then were precisely those who were able to use the recession to capacity build counter-cyclically. They got good deals on premises, machinery at up to 50% off previous highs and in some instances government incentives. Because they entered the downturn lean and profitable with low gearing they were in good shape compared to their competitors. I'm also surprised that more companies don't invest this way.

Overall though I agree Gen, business investment is in for a tough time. Companies are for the most part more dispassionate than individuals, they don't make emotional purchases and the drivers just aren't there in many industries to undertake big capital spend projects.