Reasons to be cheerful

So after delaying publication of the latest GDP figures due to concerns about their accuracy, we’ve been put out of our misery by the Office for National Statistics. On a positive note, what the revised ONS figures have done is confirm that Britain emerged from the recession in the fourth quarter of 2009.

On a less positive note is the fact that the revised GDP figures show that the recession was more severe than first thought. In fact, the ONS data shows that the negative growth experienced in 2008/09 was the worst since the Great Depression of the 1930s, with a decline in GDP of 6.4% between the second quarter of 2008 and the third quarter of 2009 rather than 6.2%. It may not seem like a huge difference to the man in the street, but wiped an extra £2bn off the economy.

But hey, that was then, and this is now. At least, that appears to be the attitude from the City. The stock market in London dipped on publication of the stats but remained nonetheless positive. Economists, meanwhile, say the figures have not changed their view of the gradual UK recovery.
 
And there are more reasons to be cheerful. Administrations have dropped to a pre-credit crunch low for the first half of this year, according to figures from Deloitte. The first half of 2010 saw a 43% decline in corporate administrations compared with the same period last year, and a 25% drop compared with the same timeframe in 2006. Retail was badly hit by the recession but has also seen administrations fall 57% in H1 2010 compared with the same period in 2009.

To suggest that the UK economy will be anything but challenging over the foreseeable future would clearly be misleading. Perhaps that’s why optimism among the UK’s CFOs is showing little sign of improving. If anything, finance chiefs in across UK plc are more inclined to believe the UK is heading for a double dip recession now than they were in the first quarter of this year, if another Deloitte survey is anything to go by.

But there is hope. The balance of respondents reported a more optimistic outlook on their company’s finances this quarter than last quarter and nearly a third think their companies will benefit from fiscal tightening measures over the long term.

Uncertainty may be rife, but concerns about liquidity and credit are, by all accounts, easing. CFOs are focusing more on how to capitalise on growth, bank borrowing has regained its pre-recession appeal and an obviously more attractive and available supply of bank credit is driving growing demand for bank borrowing over the next year. Let’s focus on the plus points!