The United Kingdom’s crisis of confidence

A few people, including Mr Alan Sugar, see to think that journalists ought not to talk about and report the recession. I expect as a “trader” Mr Sugar understands the importance of confidence particularly consumer confidence, and knows that when consumers lack confidence they stop spending, and therefore traders cannot trade as much as they want to. Certainly, the press has a habit of talking up the economy and then talking it down, rather in the same way that they praise then criticise the latest celebrity. It sells papers and advertising on television.

The United Kingdom is now apparently in the longest recession since these things were first measured in 1955. That is not good, but we have to understand exactly what a recession is; a recession means that the economy is not in a steady state nor is it growing but the volume of business is shrinking. This state of affairs has existed in the United Kingdom for the past eighteen months. In the past year the UK’s volume of business has shrunk by 5.5%. In the last quarter the economy has shrunk by 0.4%, but that figure is within normal margins of error and when readjusted it may be that the economy has shrunk less than we imagined; time will tell. Continue reading