In Pursuit of a Balanced Recovery
Many political observers and economic commentators are now asking questions about the recovery: is it irreversible? Is it sustainable? Will unforeseeable events knock it off-track?
Despite the positive signs and discussions now taking place, it has to be said that, due to factors such as Scotland, the EU election, next year’s General Election and likely interest rate rises, the recovery is neither balanced nor sustainable at present.
Recently, the Bank of England’s Yorkshire Agent Juliette Healey presented to local businesses the Bank’s pursuit of a sustainable recovery and similar conclusions were made: output still below pre-recession levels, persistent international risks, bank lending easing but more work to do, exports disappointing and a housing bubble emerging in the south.
So the champagne goes back on the shelf and doesn’t reach the bucket, but let’s just test that rationale:
- The number of start-up high growth businesses have outstripped those in London by some way according to the Entrepreneurs Index
- Firms are hiring more people and that trend looks likely to continue
- Income and wages are growing for the first time in many years
All in all, not a bad picture locally and nationally but how does it feel for you?
The two main concerns relates to consumption-fuelled growth leading to potentially more debt, and low productivity among firms, which remains low compared to our competitors.
So if wage rises are maintained and productivity not improved then inflation will reappear.
Therefore, promoting exports will continue to be one way to focus on achieving a better balance. Let’s hope decisions in the 12 months ahead don’t de-rail the progress made to date.