Cheer up already !

Crunch. Crisis. Downturn. Recession. It's not even the end of January and Business Correspondent RICHARD BAKER has already had enough of the 2008 gloom-fest

Is it possible to talk yourself into a recession? This is where we all get worried about being worried, which is daft when you think about it.

It's also annoying for business, because there is often a significant difference between the kind of gloomy economic sentiment you see flying around in the media and what's actually happening in the offices and on the shopfloors of Notts firms.

But one can sometimes affect the other.

This week, you'll hear a huge amount of noise about some major retailers not making as much money as they'd hoped for around Christmas. It's believed that Marks & Spencer and Sainsbury's are among the 'victims'.

Earlier this week, the Confederation of British Industry, which represents many of the medium and large business in the country, said the financial services industry was having its worst time in more than a decade.

And we've already been told that the housing market is stuffed by countless surveys that speak of falling prices and dwindling mortgage approvals. For all I know, they've also warned about the end of civilisation as we know it.

But what does all this gloom, doom and despondency actually mean? My take is that it means we are in danger of letting two entirely separate problems be seen as one deep, dark menace.

And they're not.

Let's look at the shops. Ignoring Christmas (when spending is always higher than the rest of the year), the amount of money people are spending on the High Street has been dropping back for months.

It's been falling because five interest rate rises made it more expensive to borrow money, and because we've all got less spare cash anyway as mortgages, fuel, council tax bills and other staples have all gone up significantly.

So a retail downturn is fact.

What about John Lewis, though: haven't they bucked the trend? Up to a point, yes. Through a combination of good products, good service and welcoming environments (not to mention a car park and a coffee shop in the Vic Centre), they have succeeded in keeping hold of shoppers who are looking for something more than the cheapest price.

They are certainly doing better than the likes of Currys and PC World, who I reckon will have to radically rethink their High Street shops if they are to stem the tide of customers who see little point coming in when they can click their way to a bargain.

But with Christmas out of the way I suspect that not even John Lewis will escape a spending downturn.

There's a big difference between that and a retail recession, though. Even though money is tight, people will still want to enjoy themselves - they will still spend on new clothes, new gadgets, the odd meal out and a decent holiday.

So retailers will have to find a way of making that happen - cheaper products, longer finance terms, some way of offering convenience, of making shoppers feel like you want them to come back again.

Most of all, they have GOT to start doing something about product knowledge and customer service levels that seem to have hit the deck while sales have hit the heights. There are still far too many shops out there who seem to think shoving something on a shelf constitutes service.

It doesn't, and those stores that fail to invest in well-trained staff and attractive shopping environments - in loving the customer - risk losing everything to stores that do or to the internet.

But I digress. The retail downturn is one issue and it started early last year when rate rises began to take effect.

So what's the other issue? This is what you'll see described as the 'credit crunch', the 'financial uncertainty' and a variety of other ominous phrases. What it boils down to is the billions banks have lost on bad loans and bad investments.

Again, it's a fact, and we shouldn't under-estimate its impact: the sums involved are well into turn-your-hair-white territory.

But while the banks will now take a more discriminating approach to doling out credit, it doesn't mean they'll stop doing it. Indeed, the CBI survey I mentioned earlier suggested bank loans to business might pick up in the next few months.

The retail downturn and the credit crunch didn't happen together. But some people seem to think they are connected, and have started looking for the next piece of negative sentiment that floats past as a sign that bruised consumers and wary banks will form an unholy alliance that wrecks the economy.

To quote Victor Meldrew, I don't believe it. While there are some serious risks floating around, there are too many people with a vested interest in keeping the show on the road for the economy to come to a shuddering halt.

Consumers will spend less, but they will still spend in a shopping city like Nottingham. While loans will be on tougher terms, businesses will still borrow to invest. While people who simply liked the idea of somewhere bigger and better may bide their time, others with sound reasons to make a move will still buy and sell properties.

In business, people who've built their empire on borrowed money may struggle. But sound businesses run by people who are up for a challenge will still thrive.

This won't be an easy year for businesses by any means. But neither should we assume that because it won't be brilliant it will therefore be disastrous. Keep smiling!