Wednesday, 26 January 2011
Today though, there are bears running riot in every paper and on the Opposition benches. The UK is doomed, the economy is weak beyond belief, everything is terrible.
However, this is far from the truth. No one knows what happened in the figures produced yesterday and they may yet turn out to be well off the mark. Business confidence is at a high level, fewer companies are going bust, people are repaying their debts. Of course, some of this is going to look like GDP fall, but by most measures this is a rebalancing of the economy away from Government debt splurging.
In fact, even the Government borrowing was under the expected amount for December.
Things just are not so grim in the UK to get too over-excited about one GDP number. And Mervyn's point about living standards is correct, which is why having assets like shares, precious metals and commodities is so important to maintain above inflation returns; but we have known this for a long time now.
The real threat to the UK comes from a sclerotic Europe and weak Euro. This is our export market, if the Euro crumbles and Sovereign debt concerns rise about Spain then the UK is next in line and I will be a lot more worried.