THERE is a real danger that we could talk ourselves into a recession. News bulletins inflamed by injudicious announcements and scaremongering emanating from certain quarters of the business community risk exaggerating the economic difficulties we are now encountering.

Excessive talk of imminent recession is premature, and may invite the very circumstances that the purveyors of such talk presumably wish to avoid.

Certainly, there is no shortage of reasons to be anxious. The ability to borrow is being rationed and the ability to pay is being scrutinised. Where they are not falling, house prices are stalling, and food and fuel prices are rising-together with taxes. Prospects for employment are darkening, and the economy seems to be suspended somewhere between inflation and deflation.

So if we wanted to talk ourselves into recession there is plenty of material with which to start a conversation. The real danger is that once it has begun such a conversation would be almost impossible to stop. It is vital, therefore, that we remind ourselves of the many things that are right about the UK economy.

While certain exposed sectors, such as housing, retail, hospitality and entertainment, are having a rough time, the economy as a whole remains robust. Revenues are up, profitability is high, borrowings are low and balance sheets are strong. Export orders continue to come in, and talents and skills of every kind are flooding into Britain.

So what about the credit crunch? First, this is not a catastrophe, but a reality check. The major banks are not out for the count. So far the sums written off by the banking sector amount to just one tenth of one per cent of total assets of nearly £7 trillion! The problem is not one of credit or of capital, but of confidence, and it is confidence that must be restored.

And this brings me back to where I started. Irresponsible and reckless talk of gloom, doom and recession just around the corner does no one any favours.

So let us all try and take a measured look at what is happening and gain a better perspective on events.

  • Contact Steve Rankin at the CBI on 01252 360420