By Adam Walker, Economics Correspondent
With the release of the Business Retail Consortium report this week confirming larger-than-predicted sales figures in retail due to the increased footfall from the recent warm weather, the ICB has raised its forecast for UK economic growth from one per cent to 1.2 per cent in 2013. Furthermore, the past quarter has seen the FTSE reach its highest point since the pre-credit crunch era in 2007 and unemployment rates dropped to 7.4 per cent in June. So the question is, are we, as an economic body, out of the recession?
Cautious, yet sustained growth…
There are many indicators and confidence from both consumers and UK businesses that the economy has been growing in strength, but John Cridland, CBI director-general, was quick to add that these are initial predictions, saying “the economy has started to gain momentum and confidence is picking up, but it’s still early days.” A point that was reinforced by the ONS announcement of 0.6 per cent growth in Q2, the economy has now recovered roughly half of what was lost in the 2008 crash indicating there is a long journey both behind and ahead of the UK.
Furthermore, where high street retail saw a boost in sales from the heat, online shopping was hit for the same reason, with sales seeing their slowest growth since January 2010 dropping by two per cent between June and July, according to the CapGemini e-retail sales index.
Following the news on Monday, the markets have seen a fair amount of turbulence indicating that the nervousness surrounding Western economies is still very much with us. Many believe this to be symptomatic of how we as a society and economy view fast growth. Before the financial crisis, growth was fast, generous and predominantly unchecked with the resulting chaos being blamed on unregulated, and unsustainable, growth. Now, with the markets beginning to show recovery, the prospect of long and sustained growth seems doubtful.
Progession vs Stagnation
The question remains over the UK economy of how we move forward and improve confidence within our financial sectors? With financial services accounting for 9.6 per cent of GDP alone there is a definite need for investment and progressive funding within these markets. With the housing sector showing strong growth and the manufacturing industry gathering momentum the recovery of the UK economy is well under-way. However, both consumer and commercial confidence rely heavily upon reciprocated behavior in the markets which, to date, has not been the case.
Many believe that investment within small businesses, with the aim of closing the import/export gap, is the next logical step to strengthening confidence in our own economy. Mr Cridland reinforced this message urging the UK government to get behind small business and to help penetrate and develop future global markets.
The Road yet to be taken….
It should be noted that this is, by no means, an edge-of-the-knife situation. The economy is growing, spending is up and confidence is returning to the economy, albeit slowly. The question that remains on everyone’s mind is; are we ready to trust rapid growth again? Are we prepared to invest the resources into monitoring financial expenditure and encouraging economic progression? Will this newly evolved western market mandate drastic investment revolutions?
One truth remains in the long-term prospects of this country’s economy. For a more stabilised and secure economy we will need to rely on optimism from all sectors, with the younger generations’ attitudes towards entrepreneurialism becoming more positive and new industries, such as shale gas, requiring increased investment our outlook must encourage similar optimism and positivity.