Just as we thought the economy was back on its
way up, Q3 has seen an unexpected contraction crushing hopes of an early end to
the downturn and instead, making this recession the longest on record. Analysts
predicted a 0.2 percent rise, but between July and September, GDP fell by 0.4
percent. It's the first time since 1955 that the economy has contracted for six
successive quarters.
Britain's slow recovery may prove a difficult
hurdle to overcome for the Labour party, with many other countries showing
signs of an upturn over the past few months. While these latest statistics have
shown that analysts' forecasts are more fallible then usual, the government are
running along the lines of "the longer it takes to turn around, the stronger
the recovery will be". There's no necessary correlation between the delay
and the strength, mind, but with growth expected to resume by the end of the
year now, and a peak-to-trough GDP fall of 5.9 percent (less than in the late
'70s/early '80s recession), it seems this is nothing more than just another
hitch.
The figures have been blamed on a surprise
decline in the services factor - the sector saw a 0.2 percent contraction, with
the distribution, hotels and catering sub-sector showing a 1.0percent quarterly
drop.
In
Europe, the ECB has published a legal opinion
criticising the EU's hedge funds directive. The paper suggested that the
directive will be counterproductive and could drive funds out of Europe, and
criticises its all-inclusive approach and muddy definition of terms. The
report, signed by Jean-Claude Trichet, president of the ECB, proposed that the
directive "could be tailored in a way that better reflects fundamental
differences". An internationally shaped out solution is far preferable,
according to the opinion, with global implementation to avoid the
"consequent risks of regulatory arbitrage and evasion".
Now where does future success lie? Where should we be looking to for a
new post-recession paradigm? Entrepreneurship, of course. SMEs are on the up,
and this government are proving supportive of the independent business sector
in spite of tax and regulatory policies suggesting rather to the counter. The
recession has given people the incentive to start their own businesses, and
we're looking increasingly to the private sector to create new job
opportunities. London, the south-east and east Anglia will be the hubs for new
businesses, and many of these will be "virtual", i.e. with an address
but no specific place of work. It's an exciting development, a sizeable
positive to have come out of the economic crisis, and one that we hope remains
strong post-election and for generations to come.
