A year is an eternity in economics . . . and the times are tough

Jul 9 2008 by Alex Turner, Liverpool Daily Post

IN OUR fibre-optic, broadband age of instant communication, this week’s G8 summit raises a few questions around the world.

As leaders from our major developed countries (each with a sizeable entourage of assorted bag carriers, pen pushers and other flunkies – not forgetting their very own media posse) flew to a Japanese island for their chin wag, critics questioned the purpose of their journey.

In the way the police use bad weather as an excuse to tell us all to stay at home unless our journey is absolutely necessary, some commentators have questioned the need for a fleet of jets to take the G8 gang half-way round the world for a catch-up.

When global warming, carbon emissions and climate management are all on the agenda, these doubters may have a point.

And their grumbles were aired before the menu and wine list for the G8 gala dinner were made public. Not much sign of any belt tightening there. At least not before the banquet.

The forerunner of these G8 gatherings was mere economic summits. The first was in 1975 in France (doubtless with another fine wine list) and this most exclusive of clubs has gathered regularly ever since.

In those early days, the price of oil was often close to the top of their agenda. Not much change there then – except in the price of a barrel itself. Never mind how much it was in 1975. The last time this distinguished group met, a barrel of crude oil was precisely half what it is today.

And that was just a year ago.

A far more settled time when few had heard of the sub-prime mortgage market; the credit crunch hadn’t hit and food prices were not causing the alarm they are now.

If a week is a long time in politics, a year is an eternity in economics.

One aspect of this trough in the economic cycle is the way it is being reported – partly through the sort of instant messaging that has now become so widespread.

Yesterday morning, in the course of less than 30 minutes, I counted no less than eight references to our economic fortunes coming out of my radio. Needless to say, they were all negative.

At the time of writing, I’ve not yet looked at the business pages of the daily newspapers, but I’m not holding my breath for good news.

I have looked at some breaking news pages on the web. And, surprise, surprise, the economic news is not good. Our own British Chambers of Commerce have issued the latest of their economic reviews. And no punches are being pulled.

Their less than cheerful assessment of the state of our economy speaks of a “menacing deterioration” in our economic conditions.

There is no doubt; times are tough, but the tone and volume of some of these reports does seem to be over-pessimistic, doesn’t it?

MATT JoHNSON is chairman of Mando Group