Editor's letter: Told you so

Looking back over the years we’ve been producing this magazine, I can see we’ve made a bit of a hash of it on several occasions. And why not. Nothing ventured, et cetera, et cetera. One of my favourites relates to the economy. Called that one wrong, big time. I know what you’re thinking, but now it’s your turn to be wrong. I’m not talking about the credit-crunch induced conflagration now scorching the economic globe. I’m talking about “the recession that never was”.

Back in November 1998, you see, it seemed a dead cert that the economy was heading for a recession. There were several sound reasons for thinking so. One, Labour was in power and had been for a year-and-a-half, ipso facto, economic crisis due any time now. Two, well, I forget two. But everyone was saying it, I remember that. So we put together some editorial on the dangers ahead, how to predict (and side-step) bankruptcy among your customers and suppliers, and off we went.

And you know what? In April 1999, five months later, it was as if the darkest of dark clouds had lifted without shedding so much as a raindrop and the sun was shining again. I remember the cover photograph we had: it showed a middle-aged, bald-headed man (nothing wrong with that) with two fried eggs on his face. We called the story, “The sunny-side up recession”.

Our conclusion? Business had had its fingers so well and truly burned by the searing recession of 1990-92 that, six years later, memories of that pain were still very fresh, balance sheets weren’t overly extended, costs were well under control and – shazam! – because the corporate economy was actually quite lean and fit, there weren’t the crippling recession-inducing disasters of excessive indebtedness that we’d seen after the 1980s Lawson boom imploded faster than a black hole in the Andromeda galaxy. (Nor were there the drastic slash-and-burn factory closures and redundancies that had occurred in the early 1980s when the job of management was taken away from the unions and given back to the managers.)

Those of you who can remember back to the halcyon days when a certain Scottish voice used to boast that he’d eliminated boom and bust will also recall that times may have been good then but, from a competitive standpoint, nothing was ever easy. All during the long upswing that followed our humiliating (but imperative) ejection from the European exchange rate mechanism, there really wasn’t much in the way of corporate flab. So when a bunch of banks admitted that their balance sheets had more holes than a colander and were about as useful in a liquidity crisis, we watched, we waited, we listened and then, exactly a year ago, we shrugged a shrug and said on this very page, “the economy is not about to collapse”. Oh, dear. Sorry.

Would you feel better if I told you that I feel sure that things are about to start picking up again?