The recession we find ourselves in is unpleasant but it is not dire. It is a long overdue correction of an over buoyant market, fueled by ignorance, greed, excessive borrowing, vested interests and foolishness. Equally, the reaction of most of the population to the onset of the recession has been extreme and is making the problem worse than it needs to be.
We hear on an almost daily basis the bad news about businesses laying off staff and about the unemployment figures and home repossessions. Yet this ignores two important fundamental facts. Firstly much of this information is already out of date the day it is released, usually by one to two months. Secondly, we hear little of the news that speaks of companies acquiring and rescuing those businesses which were poorly run and teetering on the brink of failure.
I have spoken with a number of partners within the big accountancy firms who specialise in dealing with the winding up and the disposal of companies. They are universal in their view that whilst things are bad, they are no where near as bad as the press and politicians portray. Equally, many of the businesses that have closed or have been sold, were already of questionable viability when the economy was buoyant. As a result, we will end up with businesses that are stronger, better managed and will provide more secure long term employment going forward.
Furthermore, I know of many business owners and individual investors, my Co-Directors and myself included, who see the current market situation as an opportunity to acquire businesses or property at a very good price, because they are looking longer term and are not put off by short term problems. These 'bargain hunters' are the very people who will create new jobs, secure existing jobs and who will create the greater profits needed to generate the taxes the country needs.
For example General Motors is in deep trouble, as a result of issues relating to management, unions, pension liabilities and building 'dinosaur' vehicles in the US. Pandering to a population that needed re educating about their excessive demands on available resources. These problems stem from long before the credit crunch. The current economic climate has simply brought the matter to a head. Yet FIAT is keen to acquire the European arm of GM, so there are very good parts to the business and FIAT clearly sees this and the 'long term' benefit of making such an investment. In return they will provide good long term employment for many workers and suppliers, whilst providing GM capital from the sale to help it's US business restructure into a sustainable business for the future.
On a smaller scale, as a business owner, I know how difficult it can be to find good quality employees. This current economic situation provides many employers with the opportunity to secure the services of candidates they would not have previously have had the opportunity to. I believe you will now see a steady increase in advertised vacancies as forward thinking businesses owners now better understand what position they are in and wish to employ these quality individuals before they are seized by their competitors.
A few interesting points to note are, UK unemployment was forecast to reach 10% by this summer/ autumn. Yet we are as at the end of March at 7.1%, with forecasts for this to level out within a few months. Home repossessions were forecast by the Council of Mortgage Lenders to reach 75,000 for 2009. They now view that as being too pessimistic. Interest from those wishing to buy properties has shown a marked month on month increase this year, which will invariably lead to lenders wishing to improve their offerings and to advance the mortgage facilities for those wishing to borrow. Furthermore, new car registrations in the UK for April were in excess of 133,000. Many retailers and manufacturers have run their inventory down to the bone and many in the market expect that position to reverse by the end of June, leading to a steady increase in sales to replenish stocks. None of these figures individually are ones to get exited about but added together, they do fly in the face of much of the 'doom mongering' one hears on a daily basis.
I believe it is important at this point to acknowledge is the hardship many individuals and their families are suffering. It is also important to accept is the best way to help them and yourselves is to take unilateral action to turn the economy around. Do not wait for someone else to come up with the solution. We are all responsible for the situation we are in. We chose our personal and career paths, made our compromises and must accept that everything comes at a price and has it's risks, (which no amount of legislation or Government intervention can take away).
If we wait for the Politicians to find the solutions, we will have a long wait. They do not and never have run the economy, (I would question whether many of them would have the skills to do so), neither do they create wealth, (except through their expenses claims). Their role in relation to our economy is simply to facilitate the productive part of the country, businesses, to be able to operate effectively, responsibly, competitively and profitably. Then to tax those businesses and all employees only as much as is needed to deliver those public services which are by necessity run through the public purse, such as infrastructure, the Police, Fire Service, Armed Forces, Local Authorities and paying for whatever level of Health Care services we deem as a country we want and can afford. It is you and I, be it as individuals or business owners, who will make the real difference, through how much we spend and where we spend it, through acquiring and/ or developing businesses even through retraining to improve our skill. Above all it is our state of mind which will determine how well we move forward. The more positive and adaptable were are, the faster our economy will recover, the more wealth we will create and the sooner we will be able to pay off the obscene public debt that has been incurred on our behalf by the incumbent Government.
To find out more about the authors background, motivation and to access other resources as well as useful, controversial and incisive articles and downloads or to contact the Author Karl Lavery, please feel free to visit the website, http://www.karl-lavery.co.uk.
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