That recession argument again

You might see the odd report today about the UK recession.
Beware those that say figures show that the UK 'is still in recession'. The figures don't show that and it's unlikely that we are anymore.
Today's reports are based on the fact that the Office for National Statistics (ONS), which collates all the data about the UK's economic performance, has had another look at the numbers for the three month period from the start of July to the end of September.
Originally, it said those figures showed that our economy contracted by 0.4%. Now it says it was 0.3%.
Two points to bear in mind about those figures.
One is that we now know that they were were heavily influenced by poor performance in July and August (summer holidays, anyone?) and that things were picking up in September.
The second point is that it's now nearly December and the economy has moved on since then. In all likelihood, the next set of figures from the ONS will show that recession is already over.
This doesn't mean there's been a sudden leap in business activity. It means that sometime in early summer the UK economy hit its natural trough - the point where there is too much of the bare necessities of life going on for productivity to sink any lower.
It follows that things are bound to pick up and the only issue is how much and how fast.
'Not a lot' and 'as a snail' are the consensus replies.
But just as the last set of figures probably got warped by a couple of slow months, so the numbers for October, November and December may be flattered by the influence of the natural peak in consumer spending in the run-up to Christmas.
The truth is that we won't get a feel for how well we'll recover from recession until spring and early summer next year, when we'll have had a chance to look at a normal run of business activity.
By that time, of course, politicians will be muddying the waters in a big way during the course of an election campaign. In which case, it could even by autumn 2010 before we know which way the wind's blowing.
Either way, beware of anyone who says happy days are here again in January.

Could Donington do a Notts County?

I'll give the administrators of Donington Ventures their due: they have a responsibility to get the best price possible for a business that has run into terminal financial trouble, so there's every reason why they should talk up its prospects.
But there’s one small problem with their claim that the track might still host a Grand Prix in 2011: it's called Silverstone.
The Northants track has been negotiating to regain the rights to stage the British Grand Prix following Donington Ventures' failure to secure the cash it needed to bring the track up to Formula One standards.
Those negotiations will not have been for one race but for a multi-year contract. So if Formula One Administration, the company owned by Bernie Ecclestone, does sign a deal with Silverstone it won’t be for 2010 only.
In which case Donington would have to wait years before it could get another look in.
Now, there are still a couple of faint chinks of light for Donington. One is in those Silverstone negotiations, which have hit a stumbling block in what the track is willing to pay Ecclestone.
I'm guessing, but I suspect they are refusing to pay the top dollar Ecclestone was due to get from Donington. While Ecclestone knows he won’t get top dollar from Silverstone, an offer which this famous hard-bargainer regards as too low will see him drop Britain from the calendar and head off somewhere rich.
Somewhere rich also represents the other chink of light for Donington: are the administrators hoping that foreign money will stump up for Donington Ventures?
It may sound like a long-shot to most people in business, but stranger things have happened.
Look at Notts County...

Another Sugar-coated message

You might have seen some reports on TV news yesterday that appeared to show Alan Sugar getting unnecessarily shirty with a BBC reporter.

There were indeed bleeped-out expletives and rolled eyes when the reporter asked him a question about how we get out of recession.

Lord Sugar was having none of it: “Can’t we get off this bloody recession kick once and for all?”

The reporter thought he’d have the last word with a voiceover pointing out that it was the Government that Lord Sugar is an ambassador for that had produced figures “which show Britain is still in recession.”

Only that’s not quite right.

The figures which the reporter referred to said the country was in recession during the three months to the end of September.
Some people are a bit suspicious about those figures (which often get revised upwards at a later date). The consensus among quite a few business people is that if it was then it’s not now.
And Alan Sugar’s central point is this: moaning about recession will not get your business out of it.
Now, the media can sometimes get a bit recession-happy (though not as much as it was in the early 1980s, when the end of the world seemed nigh on News at Ten), but the longest recession in living memory isn’t something you casually brush aside.
There’s also the feeling that Lord Sugar is far too much of a straight-talker to be a frontman for Government economic strategy.
He’d be in good company here: Digby Jones, who was also ennobled and made a Government adviser on international trade, would regularly vent his frustration at the way that same Government did things.
As anyone who went to see Lord Sugar in Nottingham will know, his recipe for business does not include calling the doctor when your company feels unwell.
Indeed, the Alan Sugar Theory of Business Management boils down to this: stop whinging and get on with it.

Are we about to lose our voice in Whitehall?

You may neither know nor care what the Nottingham-based East Midlands Development Agency is or does.
And even if you are familiar with it, you might be among those who think that Government agencies with £160m-a-year budgets should go and get a dose of the real world.
But what would you think if someone suggested that a body that has played a key role in driving through some of the most significant developments in Nottingham’s economy should be axed?
And how would you feel if someone said that the region Nottingham is part of was going to lose its influence in the corridors of power?
If Government changes, there’s every possibility that could happen to Emda and its 277 staff.
So are they worth hanging on to?
If you don’t know it, Emda was set up 10 years ago to try to put some focus into the long-term growth of the economy in a region which suffers two fundamental problems: a weak identity, and a tendency to indulge in the kind of partisan political in-fighting last seen before the demise of Yugoslavia.
So this was no easy task.
At the time there was little centralised knowledge about what the East Midlands economy was beyond a general awareness of key sectors and big businesses.
So Emda gathered some statistical data, identified where the opportunities for growth were and, to make it understandable, said we should become one of the top 20 regions in Europe by 2010.
Why do we actually need a regional strategy? Because businesses don’t stop at city or county boundaries – their markets tend to be regional or national, so are the chains of companies they work with. An economic strategy based only on political boundaries ignores the way the local economy actually operates.
When Toyota decided to build a car factory at Burnaston it wasn’t just good news for Derby – people from Notts work there, companies based in the county do business with it. Indeed, Toyota has built a training academy in Nottingham.
And the man who currently chairs the East Midlands Development Agency is not a civil servant who has never stepped beyond his desk. He is Bryan Jackson [pictured above], the former boss of Toyota in the UK.
Five minutes in Bryan Jackson’s company is five minutes with a business high-flyer who wants to do only one thing: get on with the job. A faceless civil servant he ain’t.
There is another point: it isn’t clear exactly what the alternatives to Emda is.
How about handing over its powers to the Government Office for the East Midlands? It could do statistical work, but Government Offices (originally set up by the Tories, incidentally) are mainly here to keep tabs on what councils and health authorities get up to in the Government’s name.
Neither am I sure that it would save much money: quite a few Emda people are ex-Government Office staffers, so they may simply transfer back to their old payroll if that happened.
How about councils then? Some are better than others, but most lack the skills and ‘big picture’ vision necessary to make large scale decision about strategic investment.
They’re also naturally biased to their own patch and their own political priorities, which is at the heart of some of the seemingly infantile squabbling they get up to. Witness the frayed relationship between Nottinghamshire County Council and Nottingham City Council, the uneasy peace between Derby, Nottingham and Leicester, and different economic initiatives in different cities which appear to promote the same thing.
Publicly, councils will tell you they don’t mind where investment goes as long as the East Midlands benefits. Privately, they want the glory for themselves - that’s politics.
But both business – and, frankly, government – tends to walk away when this internecine warfare goes too far.
So there appears to be a plausible argument for maintaining some kind of structure that understands the dynamics of the wider East Midlands economy and knows how to hook them up to the decision-makers in Whitehall.
Up in the North East, they’ve already cottoned on to that, with a campaign underway to preserve their own RDA, One North East. Some are cool on the organisation, but they don’t want to lose the voice it gives them.
Will the East Midlands do the same? Next year’s election is almost certain to be in May. We have only a few months to make up our minds.

All that glitters...

You can't have failed to notice the sudden wave of adverts on TV from companies offering to buy your gold jewellery for hard cash.
So what's it all about?
The reason why these businesses are apparently springing up out of nowhere with readies in hand is that the price of gold on the investment market has rocketed during the past three years.
It's risen significantly mainly because tangible assets like gold are viewed as a safe place to put your money at a time when savings accounts pay diddly squat and even banks look wobbly.
So there's clearly a rising market among investors wanting to buy gold and other precious metals.
But be careful out there if you're a seller after a useful wodge of notes.
What most of the gold-for-cash companies will offer you is based on what's known as the melt value – in other words, what your ring/pendant/bangle or whatever may be worth when it's put into an industrial furnace and turned into molten metal.
But that quoted melt value will be a) discounted, and b) significantly below what you might fetch selling your gold ring to someone who wants to buy a gold ring. Basically, it's the scrap value.
But when you put all that melted gold together it adds up to ingots which are currently worth a whole load of dosh.
May be you don't care about all this and just need some cash.
Or may be you could reflect on the fact that those tenners they handed over are well below what they'll make flogging it on, or what a jeweller might tell you it's actually worth.
One more point: I wonder just how long this rising price will last? I remember another tangible asset which, three years ago, looked like it would only ever go up and up.
And look at house prices now...

Let's hear it for Uncle Sam

I've steered clear of dreary economic analysis for a while now as I get the feel most people have had enough of it.
One thing caught my eye today, though.
The US economy – the real engine of the world – grew by 3.5% during the past few months. That's a sign that a huge lump of the world economy may be picking up.
Three points to think about.
With the economies of Germany and France – two of Europe's biggest markets – also beginning to pick up, it suggests that the global economy is finally on its way out of what was at times a frightening black hole.
But contrast that with last week's news about the UK economy – which was still stuck in recession during the same period.
That contrast won't go down well with Gordon Brown, who is desperately trying to find some good news he can sell voters as we approach election year.
It also raises questions about whether all the measures taken to stop UK plc imploding really were soon enough or big enough – just what has been happening to all the money the Bank of England has been pouring into the economy?
If our economy doesn't come out of recession in the next set of figures we'll be in danger of being seen as the sick man of Europe.
There is an opportunity in all this gloom, though. As anyone who's recently hopped across the Channel will tell you, the pound ain't worth what it used to be. The flipside of that is that Johnny Foreigner can get British goods on the cheap.
Now, it's all very well people talking about opportunities in China and India, but both of these markets are complex and - certainly in China's case - remain an awkward place to get a foot through the door.
British firms do need to make the most of foreign markets, because exports look like the most obvious opportunity for growth right now. So may be it's time to catch a flight to the States.

A Sugar-coated message: life sucks

Some of the people who went to hear Alan Sugar talk business in Nottingham yesterday might have come away wondering what hit them.
There they were in the presence of a genuine business icon hoping to lap up some pearls of wisdom which they could then use to achieve business success.
And what they got was a genuine Sugar-coated message – but not, perhaps, the one some of them might have been expecting.
You can sum it up like this: "Got a problem? Well sort it yourself – there's no magic wand."
Anyone who knows what makes the now Lord Sugar tick shouldn't be surprised at his blunt message. The bristling intolerance which sometimes boils over on The Apprentice is no act – it's a natural part of the self-made multi-millionaire's make-up.
If you think about it, his help-yourself message should be a natural part of the approach for anyone who has a burning desire to make it in business.
If you look at people like Alan Sugar the formula is not complicated. Over decades, what he has done is identify a market, source the right product or service and then do nothing other than push, push and push again.
One of his most telling comments yesterday came when people started moaning about the amount of red tape they have to get round these days.
"Imagine yourself as a baseball bat. Every time someone puts something in your way, whack it out of the way!"
In other words, don't waste time complaining: either comply with it or do things differently. Either way, get on with it.
As a Government business ambassador, Lord Sugar did the decent thing and said people could use the Government-funded Business Link service to find advice if they wanted.
But I bet he's never been near it. In his view, you don't need an expert to tell you why a business succeeds or fails. And if it does fail?
"Life sucks, that's the way it is."