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Positive reflection during UK recession

Ten months into the recession, the UK and the UK job sector specifically remains among the countries hit worst by the economic crisis. The UK however has shown its ability to keep its head above the stormy economic seas, in some cases more so than other Western economies. This recession has resulted in negative air filtering the streets on a daily basis and can hardly provoke a smile from those affected by it.
But isn’t it time to see past this pessimistic curtain and try to do something about it?

UK vs. other Western economies

According to the International Monetary Fund (IMF), the statistics on Britain's actual economic performance show that it had been influenced less than the US, Japan, Italy and Germany.
During the last ten months the US economy has reduced by 3.3pc since its peak last year, making this the worst recession in 50 years. Exports also shrunk by 30pc and investment dropped to 37.9pc.
The UK’s problems have been worsened in Q4 2008 by the decline of the Sterling. The currency depreciation creates an increase on the price of imports and the UK’s economy is expected to reduce by 1.3pc by the end of 2009.

The road to recession

The current recession is the aftermath of the global fiscal crisis, which started in 2007 with the collapse of the US sub-prime credit sector. Difficulty in the financial sector spread rapidly to other parts of the American economy and affiliated countries.
Escalating unemployment, decreasing housing markets and the dilemma of acquiring credit, lead to consumers cutting on spending. This had a dampening effect on domestic output and exports, not to mention placing further strain on jobs in most sectors but especially the property, retail and automotive industries.

Further implications in the labour sector

With the global collapse in demand for exports along with the ailing banking system and the UK’s property industry turning bleaker, Britain’s manufacturing, construction and finance jobs were entering a period of uncertainty. Manufacturing and construction output both fell by 4.9pc and the catering and hospitality industry is also doing poorly.
“The pub industry has been ravaged by a combination of negative factors over recent years, and the recession is likely to put further pressure on an already difficult trading environment. We expect our recent prediction of 4,000 pub closures by 2010 to sadly remain on course,” said Stephen Broom, hospitality and leisure director at PricewaterhouseCoopers. It seems however, that jobs in the public sector are showing signs of flexibility.
Dermot Finch, the director of the Centre for Cities, said: “UK cities will be hit harder by this recession than they anticipate. Nearly all say they are well-placed to weather the storm – but they can't all be right.”
According to the Centre for Cities economic prosperity index, jobs in London followed by jobs in Reading are currently the safest.
“Cities will lead us out of recession – but they can't just rely on action from Whitehall. Each city needs to plan how to keep its jobs and retrain workers,” Finch added.

Crisis upon crisis

First a credit crunch, then recession followed by numerous job losses and while everyone is rethinking their budgets and tightening their spending belts, life still needs to go on. As oil and food prices continue to rise, house prices fall and families in the UK all feel the blow.
With all the economic tragedies due to the recession, news of recovery is the only therapy for this burden. But then a horrific earthquake hit Italy, killing 150 people, injuring 1,500 and leaving tens of thousands homeless. And now Swine Influenza threatens the entire world, restraining tourism and forcing consumers to stay home, causing further damage to the economy.
It is even harder to be optimistic about the economy when natural disasters influence it as well.

Silver lining

The recession is affecting the personal lives of normal citizens of the UK. Karen Webber (29) from Manchester commented, “everyone knows someone who has lost their job as a result of the recession. Both my sister and her husband were made redundant and they were forced to sell up and move back in with our parents for the time being”
“I said that the first quarter would be difficult. That is the case but the measures we are taking in the UK and internationally will take effect,” said Chancellor Alistair Darling in an attempt to calm the UK population.
At a time like this when good and bad news change with the ebb and flow of the ocean it is not wise to put all your faith on the judgement of only one source. It cannot be wise to sit back and wait for things to change by themselves either. UK citizens need to be sharp and innovative as many others around the world have been in order to ride out this storm.
During the previous economic downturn in 2001, Apple introduced the Apple iPod and Procter & Gamble brought White Strips to the market, both products that until today are doing extremely well. Or how about BOCOM International, a leading exporting company based in Cameroon, Africa, who found success in the export of lead from motor batteries to other countries. The global recession has encouraged the company to diversify manufacturing and find creative ways to salvage the plastic from these batteries as well. The plastic is now being used to construct synthetic roofing tiles.
Maybe recession can be implemented positively by improving your skills on every level of your own life, both professionally and personally. “The recession brings with it a re-evaluation of what’s important,” comments Amy Joelson, a Manhattan psychologist.
Improvement can already be seen in how UK households have started to save. Households have repaid £900 million more than they borrowed in the last three months of last year, something that was last seen in 2001

What the future may hold

Some economists predict a long period of time before recovery for the UK could be apparent, whilst politicians and other more optimistic economists grasp at “green shoots” of recovery.
“UK output is likely to fall by more than 2pc in 2009 with the first signs of recovery early next year as interest rates fall close to zero to stimulate the economy and to counter deflation,” said Stephen Gifford, Grant Thornton's chief economist.
What is the truth? Who can we believe? The secret in the economy lies in the signs that will bring forth recovery.

Signs of recovery

Firstly if there is an increase in consumer confidence it can be seen as a positive sign because consumers feel confident to start buying again.

The Treasury committee’s chairman, John McFall, confirms this by saying that when looking to the future, “the rebuilding of consumer trust is key”.
Secondly, when fewer jobs are lost and the unemployment rate starts to decrease it will mean that companies are doing better and job security is on the up, which is likely to stimulate consumer spending. 
Finally, if there is a growing need and consumption increases, particularly in the exporting sector as well as investment, this too will have a positive effect on the economy of the country.
The US has started to show some of these three signs. Retail increased by 0.3 pc in March, taking it 1.5 pc above the level seen in the same month last year, while import and export picked up in the ports of Los Angeles and Long Beach. 
Home sales increased to 3.2 pc in February and March, leading to a boost in construction materials like copper and also boosting jobs in the construction sector.
Taking into account that the US was hit first by the recession - as well as being hit the hardest - a positive light on the American economy might reflect positively on that of the UK in due time.
Through the past ten months companies and households in the UK have been taught a tough lesson in borrowing and living within one's means.
We can either choose to take these valuable lessons and convert them into something useful that could in turn encourage economic recovery, or we can sit and wait out the storm whilst moaning and shifting the blame.
The real question is...
What are you doing?