It's an odd kind of recovery
South Wales Evening Post - 26 August 2014
Just lately I find myself in a bit of a quandary. It’s nothing serious. It’s just that I can’t figure out if the economy is improving or not.
I know that sounds strange with all the headline national statistics being so upbeat. After all, unemployment, economic growth and business confidence are all going in the right respective directions. So we should be feeling the benefit right around now, shouldn’t we?
A recent survey by Swansea Bay Business Club showed optimism among its members is continuing to improve. Their Business Barometer provides a valuable indicator but, as I’m sure they acknowledge, their membership is predominantly in the service sector. Recent conversations I’ve had with firms operating in manufacturing and construction paint a less encouraging picture.
Overall, the upward trend of six months ago has stalled and, in some instances, dipped below expectations.
A director of a Neath-based fabrication company blamed matters on what he described as ‘investment lag’. He was talking about how plans to launch a new product is slowed by a lack of available finance. However, this viewpoint was rubbished by a banking contact of mine who says lending to firms has increased noticeably since the beginning of the year.
So who is right? I have a feeling that it might be both. Lending is undoubtedly up but manufacturing still registers on the banking radar as high-risk and comparatively low return.
Something else which suggests that happy days are not quite with us yet are falling incomes. The Bank of England recently halved its forecast for average wage growth. They now say they expect average salaries to rise by just 1.25% this year. This is the slowest pace of growth since records began in 2001.
And then we have interest rates. Businesses and borrowers are waiting for the other shoe to drop as the artificially low level throws up anomalies. For example, we learned a few days ago that the average mortgage is now around £1400 a year cheaper than renting. Of course, it would take just a small change in interest rates to reverse that situation.
As I’ve readily admitted here before, I’m no economist. What’s more, I know that it’s easier to talk your way into a recession than talk your way out of one. Having made that admission, I’d say in my defence that I recognise the difference between business confidence and business activity.
Someone I know in the printing business shared some insights with me. A few months ago, his turnover was close to pre-recession levels. Now he is struggling to get orders. His take is that the recovery isn’t nearly as sustained as the economic institutions like to suggest.
His other fear is that governments will soon begin to believe their own statistics and start removing the life-support systems that many so-called SMEs (small to medium sized enterprises) in Wales have needed to stay afloat.
What I pick up from clients and contacts is that direct government intervention is still a necessity. Small firms in particular are anxious to hear if the Welsh government is going to continue business rate relief.
It’s not long either before someone mentions business deregulation, although the more common plea is for local officialdom to cut employers some slack.
I was recently told about a firm operating out of two adjacent but separate units on the Enterprise Park. There were small enough to qualify for business rate relief. Local officials turned up one day, declared them to be a single unit. Then they slapped on an order for full rates, backdated three years. The business closed down with the loss of some 18 jobs. This sort of thing can’t be allowed to happen again.
If we can get any clarity from what remains an unclear economic situation then it is that the mutual dependency between public and private sectors in Wales is as important as ever. As Martin Luther King once said, we may have arrived on different ships but we’re all in the same boat now.
Games deserve accolade
Like everyone else, I’d been eagerly awaiting the 2014 IPC European Athletics Championships. Contestants from thirty-seven nations meeting in Swansea to break a few records is not your average happening.
As it turned out, unforeseen circumstances meant that I had to leave almost as soon as I arrived. Nonetheless, my short visit did stop me from being blown away by the sheer enthusiasm of participants and organisers.
Everyone I’ve spoken with has agreed that the week was made all the more special by the army of volunteers. I was especially taken with the idea of taking stroke patients along to witness what can be achieved even with limited mobility
I’ve heard moans as to how the games received limited media coverage. However I’m told the city’s prestige has quadrupled in the eyes of sporting organisations, public bodies and sponsors who partnered to make this a very special event.
When you take into account a further spin-off of an estimated £1.4 million going into the local economy then everyone involved can take a well deserved bow.
Pride in the past
I’m very much looking forward to seeing “From a Jack to King” and how the Swans survived and then thrived as a club. However, it’s worth noting that another movie with local connections also opens shortly.
“Pride”, which premieres in London next week, is a comedy based on a true story of how UK gay and lesbian activists arrived to help Welsh mining community during their lengthy strike in the summer of 1984.
The impressive cast includes Imelda Staunton, Bill Nighy, Andrew Scott and Dominic West - plus Swansea’s own Menna Trussler
It is warm-hearted account of how prejudices were overcome and lasting friendship formed in a time of bitter hardship.
Among the characters depicted is Swansea MP Sian James who was a miner’s wife supporting her striking husband. As happened to so many others, it was during the dispute that she ‘caught the political bug’ and went on from activist to politician.
The film opens in local cinemas on Thursday 4th September. Having seen some of the trailers, I’m sure it will bring back memories of hard times but also the humour that sustained communities during the struggle.
