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The
Outlook for 2003
By
Jeremy Priestley - Managing Partner
My message to business a year ago was "Fasten your Safety Belts" this
year, my message is "Please keep them on"!
Unless you are an estate agent, builder or
a retailer, then 2002 was probably not a good year ¶ and even the gloss seems to have rubbed
off in these sectors in the past month or so. For the individual,
living on income from investments or a pension, it probably wasn•t
so good either.
Last years predicted downswing in the economy
was averted by the housing boom; just as it was in 1988, before the
then Chancellor
removed the "double MIRAS" benefit for couples, causing
a downturn in the High Street spending which precipitated the subsequent
recession of the late 80•s.
So, can it happen again ¶ will it happen again? Nobody doubts the
housing market is overcooked ¶ rentals from ®buy to let• are hardening
as demand becomes satisfied and will reduce as we move into oversupply.
The private individual•s income will drop as he funds higher taxes
in April, mortgage rates will increase as significant Government
borrowing affect the money markets, and if you throw in a need to
repay credit card debt, then the result is a considerable downturn
in High Street spending.
The Chancellor•s "tax take" will
fall further and unless spending is curbed or put back until it can
be afforded, then taxes
have to rise unless we borrow more, on or off the National Balance
sheet.
In the meantime industry continues to suffer
the effects of a ®high• pound
and a drop in demand in our main export market ¶ Europe and the USA.
There appears to be a distinct lack of investment in industry unless
it•s for a relocation to a cheap labour market environment.
If this scenario is right, then the Governments
pump priming spending becomes necessary to address the effects of the
cycle ¶ lets hope
the expenditure is on the right things, a quick look at the Guardian
on a Wednesday could suggest otherwise.
So for 2003 I believe that the market for consumer goods and services,
especially in leisure and retail, will struggle unless the management
is responsive to the business shifts. Management generally needs
not only to tighten their safety belts, but to tune the engine, ready
for take off in another year.
Please consult your accountant if you need assistance with your annual
business planning, if your plans cause you some concern, speak to
Jeremy Priestley on 0114 2755033.
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