City Watch: Charles Sylvester reflects on how quickly fears of a “triple dip” have faded
At the beginning of 2013, everyone seemed to be worried about the possibility of a triple-dip recession.
It was during the same period that the UK lost its Triple-A sovereign debt rating, causing a sharp fall in gilts prices and a real worry that interest rates would have to rise to protect sterling.
How times appear to have changed, with the UK economy growing at its fastest pace for six years, well above that anticipated by both policy makers and the Office for Budget Responsibility. Unemployment is starting to fall and, with job vacancies rising, it does look as though companies are at last prepared to start investing.
Things are even looking up for British retailers, as consumer confidence is now at its highest levels since November 2007, and the most recent CBI survey found that retail sales are growing at their fastest rate for 15 months.
It has to be said that an awful lot of this is politically driven, with the new Help-to-Buy scheme in particular likely to cause a short term boost to house prices, which in turn should help retailers as well. Whether this is sustainable or not is of course a moot point, as it was a property bubble that got us into this mess in the first place.
Meanwhile living standards are still under pressure with weak wage growth and higher energy prices. Artificially capping fuel bills of course is not the answer; perhaps if the Government reduced the vast subsidies paid out to owners of wind farms and solar panels, whilst at the same time increasing its investment in shale gas exploration, we would all see the benefit in substantially lower energy bills, as they are currently discovering in the United States.
: : Charles Sylvester is an investment manager with Charles Stanley & Co in Ipswich.