Recent date published identifies falls in unemployment of around 7000 at the end of 2009, but is this a statistical blip, or is it at trend?
One of the theories being discussed is the drop in unemployment is due to a seasonal increase in part time employment often seen around the Christmas period peak retail sales. We will know for sure when the February figures are published (post new year sales, retailers tend to slow down).
The key question for most people is what about 2010? Recent indications form the Bank of England suggest that markets are becoming concerned about action to reduce UK debts. The strategy proposed by labour is to halve the deficit in 4 years, but is seems the “markets” are indicating much faster cuts in the deficit are required. So what does this mean for the economy?
The key factor will be the balance between sufficiently aggressive cuts to ensure we do not have pressure on sterling, but equally not too aggressive such that we thrust the economy back into a recession.
The bottom line is no one can be certain, however it is a possibility that we could have a double dip recession. Lets hope that whoever gets elected gets the balance just right!
