THE TELEGRAPH: Despite the hype about recovery, there is no real evidence that the recession is over, says Liam Halligan
The recession is over. The stock market is powering ahead, business confidence is rising and – joy of joys – house prices are looking up. Sit back, relax and bask in the late summer sunshine. The UK is about to enjoy a spectacular V-shaped recovery.
Worried about your debts? Fear not, we'll have ultra-low interest rates for years to come. The world's leading central bankers just said so. No need to save, then – we Brits can borrow and spend our way out of trouble. Again.
I'm not, by nature, pessimistic. I'd really like to say the economy is out of the woods. If I could see signs of genuine growth, I'd shout about them from the rooftops. But I can't honestly say I do. Instead, I see lots of stockbrokers, estate agents and other vested interests talking up "imminent recovery" with no reference to fundamental economic realities.
While desperately wanting to believe the "green shoots" brigade, ordinary households are struggling to remortgage and otherwise viable firms still can't access working capital. Amid the City's summer euphoria, the wider economy continues to haemorrhage jobs – with all the associated fiscal fall-out, to say nothing of the human misery.
Having enjoyed a six-day rally, UK shares have just hit their highest level since Lehman Brothers' collapse last September. This latest price surge is the centrepiece of claims we'll soon return to the sunlit economic uplands.
Yet this stock market upswing is based on little more than hype. Shares have risen in part due to firms imposing one-off cost savings – such as cutting their head count – but mainly because of unprecedented Government intervention.
Any beneficial impact of our wildly expansionary fiscal and monetary stance will soon be over. Once the sugar rush fades, and global investors are back from their summer break, asset prices will start reflecting the far more significant downsides of the UK's reckless policy of printing money and racking up ever more Government debt.
Whatever the "news" from the latest self-serving business surveys, output shrank by a shocking 0.8 per cent between April and June. All parts of the economy remain in recession, apart from the public sector. After five successive quarters of contraction, UK output is down almost 6 per cent since the spring of 2008 – more than double the depth of the early-1990s recession. >>> Liam Halligan | Tuesday, August 25, 2009
