Does the poltical rhetoric match the reality?

[Brian Walker]

Even before recession is an official fact – as distinct from a real, self-evident one – the news that a quarter of UK families will have no disposable income for those little extras that make the economy go round that bit faster is astounding. It must mean that Britain is floating on a sea of unsustainable personal debt that even zero interest rates would little to alleviate in the short-term.

Quotes from the Independent on Sunday story:

“A leading retail figure predicted that the next Nielsen/BRC survey, due in May, will show at least 25 per cent of families lacking the cash needed for minor luxuries. Andy Garbutt, director of retail at PwC, added: "The increase in unemployment and the falling level of bo-nuses mean it would be no surprise that about a quarter of families would not have disposable income. Food retailers are believed to have been almost as hard-hit as fashion stores over Christmas, according to Mr Robertson, but the supermarkets have come out fighting this month.”

Meanwhile as already noted, virtually all retail chains are turning into niche poundstretchers. While in the political stratosphere, Gordon Brown is representing the recession mainly as a global banking crisis which will ease as the banks begin seriously to lend. The implication is that there are no real structural flaws in the UK economic model. I would like to believe him. Wisely surely, a new full banking bail-out is being rejected in favour of an insurance scheme against bad debts. Will that, plus a public works package, zero or negative interest rates and some lower taxes begin to do the trick in 2009?

It would be great to hear what NI business thinks – or fears.

[Joanne Stuart]

Our cross border trade was £0.5bn, around 2.5% of consumer spend - significant! I heard that the ASDA in Eniskillen was the 6th best performing store globally! The problem is how long this will go on, as I am sure that the stores in the Republic will try to address the cost difference, although we have just moved the goalposts again with the rate cut today.

I agree with the comment that due to our reliance on the public sector, we will be one of the better performing regions in the UK although we will still feel the effects and predictions range from -1.5% to -0.5% growth in 2009. Our challenge will be our ability to come out the other end as with the debt levels of the UK government the amount of our subvention will be under severe pressure as public expenditure is squeezed. It is imperative that we grow the private sector.

[John McMullan]

Brian, thanks for the response. I wasn't picking the BBC out, in fact the problem is more associated with the more populist printed media. I do however think that it should be made clear when data is UK wide or only England and Wales. We can and do 'buck' national trends, for a series of reasons which may include 1/3 of jobs being public sector and a further 1/3 being underpinned by public sector spend, that if correct will have a dampening effect but not something to be complacent about, obviously.
I do think we in NI have a particular and acute problem with falling housing prices, which may be worse than the national trend and a banking system which is not responsive to passing on interest rate reductions that could ease pressure and encourage 1st time buyers back into the market.
I do enjoy your blogs.
John

[Brian Walker]

The "trend" is not all in one direction, it seems -- see John Lewis Xmas results and others.

http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article5452105.ece

As a journalist and a former senior BBC one, it would be good to know what the complaints are about the business reporting specifically. As I see it from outside business, the media are faithfully reporting what they're told and making honest assessments accordingly. I fail to see how the BBC has diverged significantly from say, the FT ,although it currently has an even more prominent place on the platform. While some have resented Robert Peston's alleged impact on a given day's market (i.e. the day Bradford and Bingley was saved on the brink of collapse), the fact remains that it would have been hard to exaggerate how close to collapse the banking sector came. Much of the sniping has come from the BBC's commercial rivals, remember. But if any reporting of other sectors is genuinely misleading or unbalanced, please pitch in with analysis and hard fact. Believe it or not, even journalists are gagging for good news, or at least correctives to excessive gloom.

[John McMullan]

Just read the comments after commenting on the strategem posting. I made the same point as Tim ,although less eloquently - the point is well made we need balanced or reflective journalism if we are not to be talked into a deep recession. It will be interesting to see if our retaillers have 'bucked' the UK trend and performed really well as a result of the euro shopper (RoI) bounce this Christmas & New Year

[Brian Walker]

Interesting analysis, Tim, and I for one would like to hear more. How does it square with the Nielsen/BRC survey? Or is the habit of the retailers' crying wolf rebounding on them? And be careful about shooting at one messenger - the Today programme is hardly alone!

[Tim McKane]

The interesting part of this is that in reality a lot of families have more disposable income than last year, and are buying in a market of reduced prices almost across the board. Lower interest rates and lower fuel prices which are both impacting on retail prices, and the competition levels on the High Street further creating a shoppers market - are being stalled by he continuous news of potential catastrophe. The administration of Waterford Wedgwood is presented as another in the line of crunch related failures, but that company has been under real pressure for a number of years, including through the boom years. One does wonder if those presenting Radio 4s Today programme will only be happy when they see a total meltdown and are able to say -"told you so".