Recession, recession, everywhere?

David Smith’s column in today’s Sunday Times caught my eye in part because of my recent experiences with suppliers the party uses. He wrote:

Something odd is happening. Recessions are grim but you expect compensations such as quiet roads, empty trains and helpful shop assistants.

This may be a London thing, but to me roads are busier and on train and Tube journeys I get closer to fellow passengers than is comfortable. As for shops, maybe the retail trade is too miserable, though it is common to find that, when you are ready to buy, the item is not in stock.

In the last couple of months, suppliers who I deal with have generally tightened up their terms for payment and become keener to ensure that the invoice has been received, payment is on its way etc. But there has not been nearly as big a shift as I would have expected given the overall state of the economy. And overall whilst they are tightening their belts, they don’t seem to be running into serious financial problems yet.

But there’s no doubt that there is a real, nasty recession out there which is bringing hardship to many. Why the gap in experiences though, just as David Smith highlighted?

The answer perhaps lies in the huge range of results recorded in the latest range of economic indicators:

Unemployment (ILO measure): +290,000
Manufacturing output: -5.2%
Industrial production: -5.0%
Service sector production: +0.6%
Retail sales volume: +3.9%

(All figures are for the three months to November, compared with a year ago. Source: The Treasury, 23 January)

Now may not be the time for me to go into the chocolate manufacturing business.

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6 Comments

  • Martin Land 25th Jan '09 - 7:41pm

    Well, Mark, to put it in terms you would most feel familiar with, is it a sort of Creme Egg recession, hard on the outside, but smoother and more creamy the deeper you dig?

  • David Evans 26th Jan '09 - 9:00am

    I wonder how hard David Smith had to work to come up with a different angle on the recession. 10/10 for effort; 0/10 for shining any light whatsoever on the situation.

    One reason suppliers tighten their terms is because orders are down and they need the cash now. Whatever you do don’t pay in advance of receipt, some of them won’t be there when delivery is due.

  • Matthew Huntbach 26th Jan '09 - 11:10am

    5% fewer people in the shops, or 5% fewer people in the commuter trains isn’t going to feel hugely different. So you aren’t going to see the heavy effects David Smith claims ought to be there. My own feeling in London is that sometimes I do think “hmm, seems quieter than normal”, sometimes I don’t. All last week I managed to get seats on my normal train into work whereas in the past I was usually left standing, but this morning it was packed out. It’s like climate change – you don’t notice the slow drift as things bounce up and down but it’s there, and you do notice when something cracks. If it carries on long-term, we will look back and think “hey, it didn’t use to be like this”. Just like with climate change – right now we’re thinking “Oh, we’ve had a bit of frost and snow, it can’t really be happening”, whereas a deeper thought would be “We’re experiencing what once would have been a normalish winter, and were thinking it’s really cold”.

    Those of us in jobs will only be feeling better off properly if we think those jobs are safe. If we fear they’re not, then we’ll be using any extra income to pay off debts and put by a bit of saving for fear that extra income won’t be coming in for long. Many of us do seem to be experimenting with living a lower cost life not because we have to right now but because we want to re-assure ourselves we could do it if we had to some time soon.

    I hope this will eventually lead to some green shoots – we’re not properly going to recover by going out and spending lots on imported goods though this would save jobs in retail and finance, but if a make-do-and-mend attitude combined with a low pound forces us to look to local suppliers and repair people, eventually a different sort of economy emerges, a more sustainable one. It needs planning to get us there (but planning was a bad word), and since it’s going to hurt big time for many who didn’t deserve to get hurt, it needs an “all pull together” attitude which accepts those still in jobs should expect to pay a bit more to support those who aren’t and to build a long-term and sustainable future.

  • Martin Land 26th Jan '09 - 3:23pm

    It’s a funny old world though, isn’t it? I’m self-employed and have a number of sources of income and if one were to go down, I’d just have to raise another one up. As most of my income comes from working for the LD’s I’ve never been troubled by savings or speculative investments, so I’m fairly ‘recession-proof’. But nonetheless, in what must be the result of some sort of herd instinct, I find myself paying bills more quickly than normal and reducing spending.
    I think that’s what recessions are all about. The herd instinct. If that’s what others do, we find ourselves following. I suppose they stop when enough of us get fed up and start having a simultaneous binge. My bet is next Christmas.

  • David Allen 26th Jan '09 - 5:44pm

    Wouldn’t it be “comforting” if some bankers plunged to their deaths from skyscrapers, like 1929? Then the rest of us would be able to recognise that it is real.

    (It’s just Catch 22 if you’re a commie, isn’t it? 1929, the stockbrokers take the high dives, they pose as victims, they get sympathy, the revolution doesn’t happen. 2009, the bankers take bailouts and bonuses, most people can’t see any real victims, the revolution doesn’t happen.)

    Seriously – Victims there certainly are, though. They won’t feel well disposed to us if we don’t properly recognise their hardship.

    Why aren’t we calling more loudly for national unity, all hands to the pumps, etc? Cameron is clearly playing it all negative and partisan, Brown is equally putting Labour recovery ahead of UK recovery. The public won’t like it. Instead of all this “Only the Lib Dems can…” stuff and nonsense, why don’t we just promise constructive critical support to get Britain out of the mire?

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