Magazine article Financial Management (UK)

Editor's Letter. (Comment)

Magazine article Financial Management (UK)

Editor's Letter. (Comment)

Article excerpt

There was supposed to be only a slight dip in the economy and then everything would return to normal by next summer. The word "recession" was banned and we were talking "slow down", nothing more. So why are we so much less confident today?

The word "recession" is still rarely mentioned, but the optimistic view that things will soon take a turn for the better is definitely losing ground. Sir Edward George, governor of the Bank of England, is predicting a "bumpy ride" that will last for about three years and he told business people in Wales last month that "there is little reason to suppose that global growth will not recover to at least its earlier trend rate over the next two to three years once the immediate shock has been absorbed". Meanwhile, there are few sectors that have not been affected by the tragic events of 11 September. In most cases, the financial forecasts weren't particularly good anyway--it's important to remember that the words "economic slow down" were being bandied about back in the spring--but the current atmosphere of uncertainty does not help matters. Computer chip maker Intel saw net earnings fall by 96 per cent in the quarter ending 30 September; home reservations are falling, causing considerable concern to property builders; and Pearson, owner of the FT, is likely to abandon plans for its proposed multi-million-pound FT campus office complex on the Thames, following a sharp drop in its advertising revenues. …

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