I am currently basing my own thinking on two scenarios for the UK economy. The first is that the slowdown that seems to have affected IT, the media, advertising and marketing particularly badly has hit bottom and will now begin to improve. The second is that we ain’t seen nothing yet and because of systemic problems in the world economy are on our way to a major slump.
The second scenario doesn’t preclude the first. We could stave off a major crisis for some years to come. And there is yet another possibility. The notion of the world economy hitting serious difficulty is predicated on nothing much changing in current structures and values. This may be wrong. There are signs of change bubbling away under the surface and, with a bit of luck, may emerge in time to save some of us from a very uncomfortable period indeed.
Meanwhile, the Financial Times reports that sales of light commercial vehicles -“white vans”- rose in June by 28%. These are mostly purchased by small and medium sized businesses. The FT also quotes Bob Hunt, managing director of A&S Precision Machine Tools, “There has been a significant upturn since April. Customers sat on the fence waiting and waiting before deciding to spend but now they are realising they can’t put off new investment for any longer and are asking us to complete their orders in a matter of weeks.”
This supports my idea that we have reached a point where decisions to spend can’t be put off any longer. Add in the fact that the Bush administration will be desperately trying to put some oomph in the US economy before the 2004 elections and a bit of a revival looks plausible. However, any revival is likely to be quite weak and relatively short lived.
All this is taking place against in what appears to be a period of transition from one kind of economy to another. The notion of a “New Economy” may have been severely dented by the collapse of the dotcom bubble, but as Alvin Toffler and others have been proclaiming for years there do seem to be some seismic shifts taking place in the structure and organisation of economic life. As I have argued elsewhere, the digital revolution still has a long way to run and its impact is as much about how we think about the world as it is on what it enables us to do in the world.
My best guess is that it will take a couple of decades before we enter a period of relative stability again. Some changes may manifest themselves much earlier – hence my earlier remarks that we may be able to avoid a major Thirties style depression. But the ride to stability is likely to be a bumpy one.
So if we are about to about to have a bit of a revival the sensible course would seemed to be to regard it as a temporary situation, rather than the start of another Nineties type boom. So financial conservatism (pay off debt, save cash, focus on cash flow) would seem to be the order of the day. But all is not gloom, if there is a revival, however temporary, it will provide an opportunity for individuals and companies to start creating the foundations and finding the spaces to move with the flow of the transition rather than against it and have some fun while doing so.