At a time when the only thing we can be certain of is uncertainty, it looks almost beyond doubt that the UK economy, along with the rest of the world, is in for some kind of beating. How severe it is and how long things stay bad remains to be seen. Unsurprisingly, many economists can see things both ways. On the one hand, there is a case for the unprecedented fiscal and monetary stimulus packages keeping things short and sharp. On the other, should this action fail to overcome the downward pressures, we could be in for a long, painful quasi-depression, a period of mass unemployment, a calamitous drop in confidence and a continued credit squeeze.
Most politicians, here, across Europe and in the US, seem agreed that government action is required. In fact it is harder than ever to find people who don't agree that substantial state assistance for consumers and business is essential. But the political urge to be seen to be doing something must not lead to us repeating past mistakes. And, despite the unprecedented origins of this slump, we have been here before.
In the 1980s, the government poured money into a loan guarantee scheme that ended in tears for many. Banks threw their risk assessment books out of the window and agreed loans with almost anyone who asked for one.
Government support for business is welcome, market interference is not. Which category the £75m Capital for Enterprise Fund, the £1bn Enterprise Finance Guarantee Scheme and the £20bn Working Capital Scheme fall into remains to be seen.
Whether these schemes have the desired effect or not, many successful firms will be launched in this downturn, as have been in previous recessions. A survey by insurer Hiscox last year found that one in five entrepreneurs started their business as a result of redundancy. In this spirit of positive thinking, we have sought the advice of several experts and asked them for tips on how to best avoid the worst impact of whatever happens in the economy.
Thank you to all the readers who have written to us about recent issues, whether via the website or with old-fashioned paper and ink. Meanwhile, if you've got recession-busting tips of your own, drop us a line.
Richard Cree
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