Comment: Good news welcome, but the recession isn’t over yet

Spencer Dale, a member of the Bank’s monetary policy committee, echoed the comments of the governor Sir Mervyn King last week that there were signs of life in the economy. They must be putting something in the tea in Threadneedle Street.

What happened to all that talk about more years of drudgery and the worst of the public sector cuts yet to come? Certainly there has been a bit of a mood swing this past week. Housebuilders have continued to report robust figures and businesses say they are already reaping the benefits of the Treasury’s Funding for Lending scheme. Top Shop owner Sir Philip Green called the bottom of the retail slump. This week is expected to produce more positive news for embattled Chancellor George Osborne with the second quarter GDP figure likely to be revised upwards.

But there is a danger of calling the end of the recession too soon as former Chancellor Norman Lamont will painfully recall after he first used the term “green shoots”. No policy maker since then has dared repeat it for fear of tempting fate. In his interview on Channel Four last week the Bank of England governor stated: “I am not going to use that phrase.”

His comments about recovery received wide and welcoming coverage as an indication that things were looking better. But closer inspection of what he actually said is another matter.

When asked how long the “bust” would last, he replied: “At the beginning of the year I said this will be a zig zag year, some quarters down, some up. The last quarter was down and I think the next quarter will probably be up. I think we are beginning to see a few signs now of a slow recovery, but it will be a slow recovery. After a banking crisis, one can’t expect to get back to normal and I fear it will take a long time.”

It doesn’t sound like an unqualified argument for calling the beginning of the recovery to me.

Daft policies damage business

THE Scottish Government again committed itself last week to putting the economy first, but it still doesn’t really get it. Efforts to stimulate growth still focus on how much money Holyrood can pump into creating jobs, with largely nebulous schemes and initiatives that can guarantee no such thing.

Equally important is to create supportive policies backed by appropriate legislation that nurture rather than penalise business.

For all their fine words there are few politicians who take much interest in what companies actually do, what challenges they face and how they can be helped. I could count on the fingers of one hand how often a politician has called the business desk of this newspaper this year. That’s how much they want to engage.

Businesses need only the conditions that allow them to develop their product and get it to market as cheaply and quickly as possible with maximum return. Yet businesses complain that they are still hampered by red tape, by an inefficient transport system and a tax regime that regards them as a cash cow.

While the finance secretary John Swinney complains about being strapped for cash, taxpayers are lumbered with daft policies such as universal free prescriptions (which wealthier people say they would be willing to pay for) and the ideological resistance to selling off assets such as Scottish Water. These constraints on the budget are entirely self-inflicted.