Any Other Business | 1 August 2009

Sir Fred’s return is one more sign that the storms are over — at least for now

Of course it’s too early to declare an end to the economic crisis — who knows what storms the Gods have in store for us in the autumn, not to mention swine flu — but I think we can be forgiven for feeling relatively upbeat as we head into the holiday season. The FTSE 100 index has just enjoyed one of its longest unbroken rallies of modern times. The price of copper, a useful predictor of manufacturing activity several months ahead, has been rising since February. The price of oil is more volatile than we’d prefer it to be, but as George Trefgarne explained here recently, there’s plenty more in the ground. The 0.8 per cent shrinkage of the UK economy in the second quarter was worse than most analysts expected, but much less frightening than the 2.4 per cent fall in the first quarter. Unemployment has been rising at a record rate and will carry on climbing into next year, but retail sales, car registrations and consumer confidence have all been showing signs of perkiness. Banks are not lending to corporate customers as enthusiastically as the Chancellor says they should, but he knows full well that the urgent need to reinforce the banks’ balance sheets makes that highly unlikely — and that they are a lot closer to doing business as usual than they were six months ago. Finally, ‘quantitative easing’, the Bank of England’s emergency cash- dispensing machine, looks set to be switched off this week. So let’s pack the buckets and spades with a sense of mild optimism — and come back in September to worry over whether it’s all about to kick off again.