Balancing act
We're in the middle of a spate of economic data and the general tone of analysis in the UK is whether they indicate a continuation of the insipid economic recovery or whether they herald a slip back into recession - the dreaded double-dip.
On one hand, there was some positive export news. The Telegraph reported a note by Citi's chief UK economist - Michael Saunders: "In Q2 as a whole, export volumes (ex oil and erratics) rose 6.4 percent quarter on quarter and 15.5 percent year on year," he noted.
"The 6.4% quarter on quarter rise in export volumes matches that in Q3-99, and has not been exceeded in the last 30 years. Export volume growth in Q2 was far ahead of imports (up 1.6% QoQ). Exports are benefiting from the low pound as well as the euro area pick up."
Not only is a reduction in the trade deficit highly desirable for a country as heavily indebted as ours, but with domestic demand likely to be low due to public sector cuts, healthy exports are seen as key to the economic recovery.
And the signs of weakening domestic demand are coming in thick and fast. For the first time in a year, more surveyors are reporting a fall in house prices than a rise, according to RICS. In other words, house prices fell, but this has coincided with a glut of new properties on the market. Retail sales growth also slowed last month.
Meanwhile, research from the CIPD confirms that the public sector cuts will lead to extensive redundancies. "...while the number of employers planning to make redundancies is similar to that in the Spring report, this trend masks the true extent of forthcoming job losses in the third quarter of the year; as the proportion of the workforce that will be affected by these redundancy programmes has jumped by fifty per cent," said CIPD public policy advisor Gerwyn Davies.
"As is being widely reported, this is being driven chiefly by public sector organisations, where redundancies will affect almost eight per cent of the workforce on average."
The business secretary Vince Cable has himself conceded a reasonable possibility of a double-dip, telling the Guardian: "The government's own forecasting risk puts it at something like one in four, one in five," but when asked for his own assessment said: "Well, you know, certainly well below 50-50."
The macroeconomic view will be revised once more later today, when the conclusions of the latest US Federal Reserve meeting will be made public. With similar double-dip fears in the US, what the Fed decides to do about it could have a profound effect on business and investor confidence.
