Recession will hit us despite Culture year

Aug 20 2008 by Alex Turner, Liverpool Daily Post

THE idea that Liverpool is insulated from a recession by the impact of the Capital of Culture has been described as “wishful thinking” by a senior Liverpool accountant.

Howard Hackney, a partner at Grant Thornton, Liverpool, expects a recession to hit the UK economy and predicts the September and December quarters will show negative growth.

Mr Hackney disagrees with Jack Stopforth, chief executive of Liverpool Chamber of Commerce, that “local factors” can help the city’s businesses avoid the worst of the economic troubles.

Mr Hackney said: “From a Liverpool perspective, it’s very buoyant and attitudes are positive but it can’t be insulated from the rest of the economy.

“Liverpool has come back to the same as the rest of the UK economy. It’s wishful thinking it would not be affected by the downturn – we have seen that in the housing and construction industry. Why should the Capital of Culture mean we are insulated?”

The results of a survey by Liverpool Chamber of Commerce of its members led Mr Stopforth to remain positive.

He said: “In our survey of members for the second quarter of this year, there was clear evidence that the trading environment was very tough with half of the companies who responded having to face rising raw material and overhead costs and a general slowdown in new orders and sales.

“Despite this, 33% of companies reported growing employment compared to only 13% reducing jobs with the majority of new posts being full time. There is also anecdotal evidence that the hospitality sector is doing well with record numbers of visitors coming to the city and our growing base of technology and innovation-based businesses are expected to be less affected by the general trend.

“We believe that there are local factors that provide at least some short-term insulation against the worst of the credit crunch.”

Liverpool Chamber’s parent body, the British Chambers of Commerce (BCC), has predicted that Britain’s economy will enter a recession within the coming year and anticipates unemployment could rise by 300,000 in the next two to three years.

However, Mr Hackney does agree with the BCC that a recession is unlikely to be on the scale of the recession seen in the early 1990s.

“We’ll come out of it, possibly in the March quarter,” he said. “The British economy is pretty efficient and competitive worldwide.”

alex.turner