Wednesday, 21 April 2010

Four phase recession

Our current economic malaise (technically we're not in recession at the moment) will have four phases.

Phase I affected the financial sector and caused the demise of many household-name banks. There was a credit crunch which denied working capital to businesses causing...

Phase II in which the private sector of the economy suffered due to a lack of capital. We're still in this phase. However after the general election we will have...

Phase III in which the public sector is trimmed by a new government which cannot countenance continuing to spend £160bn-ish more than it receives in tax every year. Many public projects will be moth-balled and many public sector workers will lose their jobs. This will cause...

Phase IV in which the private sector firms which were supplying into public sector projects and selling their goods and services to public sector workers find their markets have shrunk or vanished.

And after that, well, we might actually come out of recession for real.

No comments: