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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?

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