Does the UK being out of recession impact daily life?

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Posted in:Banking and Finance, Retail|November 5, 2012 | Join the mailing list

According to the official gross domestic product figures published last month the UK economy grew by 1%. This growth means that for the period July to September the UK economy officially emerged from recession.

Whilst growth figures exceeded expectations which had estimated a growth of 0.6%, it was important to put the growth into context. Some of the growth must be attributed to the Jubilee celebrations and Olympic Games rather than assuming pure
market growth.

In reality, by the middle of 2009 the market had contracted by 6.4% and has only grown by roughly 3.2% since. Continuing growth is estimated in the region of 0.2-0.3% per quarter; however, market uncertainty means that predictions speculate
possible contraction in the final quarter of the year. With the zigzag nature of market growth and contraction the figures for 2012 as a whole may show no actual market growth.

With such uncertainty it comes as little surprise that the GFK’s October figures show that consumer confidence has fallen to a six month low. The index showed that despite the news that the UK economy has emerged from recession, consumers
have a more negative perception of their individual financial situation for the next 12 months and do not intend to make major purchases or investments.

With the run up to Christmas coming in the final quarter it seems that retailers and businesses cannot rely upon a spending boom on the back of the news of market growth. Consumers have become acclimatised to the need for more conservative
spending. With shoppers searching for more value for money there has been a structural shift in the UK economy. In order to survive, businesses have found the need to utilise alternative media outlets and multi-channel offerings rather than the traditional
investment in stores.

To discuss any of the issues raised in this article and arising from structural change in your business please contact Stephen Foster, Head of Corporate at
stephenf@berg.co.uk or by telephoning 0161 833 9211.

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