Last week was all about growth, or rather the lack of it, with unexpected figures released that showed the UK economy had actually shrunk by 0.5% in the last quarter of 2010. With most people expecting a small growth this came as a surprise and was blamed mostly on the good old British weather!
To be fair this probably was pretty close to the truth as Britain pretty much came to a standstill during the mini “ice-age” we all experienced last year.
What this means is that it relieves a little bit of pressure on the Bank of England where increasing rates are concerned, although it was interesting to note that there are now two members of the Monetary Policy Committee, (MPC) who voted for an immediate rate increase, although granted this was before the last set of data.
If these figures were fundamentally down to the weather, then by rights the next set of figures should see the UK returning to a growth position and the pressure to increase rates re-applied. This means that a spring increase is now off the table and any change now is looking like coming from the summer onwards.
The key to all of this however, is consumer confidence, and the more the doom mongers keep talking everything down the more people believe it and it is in danger of becoming a self-fulfilling prophecy.
I still believe that there are reasons to be optimistic and it is important to keep the positive message out there as an antidote to the gloom. This is not a case of being naive or positive just for the sake of it. Growth will return, job vacancies in the private sector are growing according to the latest Reed Job Index , lenders are making the right noises about lending more and mortgage products are still very competitive.
I have said this before, we can either all worry about things we cannot control and join the ranks of the depressed or just concentrate on what we can control. If we all remain positive, we could be in for a good year no matter what happens elsewhere.