January is traditionally a time for looking back and looking ahead to the coming year.
Looking back, I was amused by the irony of the chancellor’s autumn statement taking place in December as winter snow was falling all around – but unfortunately that was one of the few things that made me smile.
The cancelling of the rise in fuel duty has got to be a relief for individuals and businesses alike, but it doesn’t do anything to alleviate the damage already done. The £5 billion infrastructure investment over two years is also a step in the right direction, but a very small step.
Don’t get me wrong, I am not saying the government should make our debt situation worse, but as I look into 2013 I can see no real plan for stimulating the economy, and without that, the air conditioning market is unlikely to improve.
The only way an economy can grow is if new money comes in from somewhere.
The Bank of England tried to do this with quantitative easing – literally printing new money – but this seems to have disappeared into the banks and has not been seen again.
The government is reluctant to boost public sector spending because it will further derail its attempts to get its debt down and leave us vulnerable to downgrading by the ratings agencies.
The private sector is doing what it can, but it too is reluctant to invest in an uncertain climate. Why should companies take on more debt that they may not have the customers to repay when the government is reluctant?
Also, those businesses with the courage to want to borrow are running up against banks that are reluctant to lend.
Don’t count on consumers
In previous recessions in recent years it has been consumers that have dragged the economy out of the doldrums, but that is not going to happen again. Even those people who still have credit cards are leaving them firmly in their wallets.
There were some signs that consumer confidence was growing and there may even have been a reasonable retail Christmas, but this is likely to subside when the government’s message that we will be in an age of austerity until at least 2018 hits home.
Everyone knows that to get out of this recession we have to boost the economy somehow, but no one seems to want to take the first step.
Now I’m just a businessman, and I try to stay out of politics as much as possible, so I’m not calling for one of the above groups to take all the risk, or even for the government to abandon Plan A, but we do need at least a Plan A Plus.
This needs to map our way to growth and give all parts of the economy the confidence to spend and even borrow for investment once again.
Until this happens, I cannot see 2013 being any better than 2012.
Happy New Year everyone!