Brendan Keenan: Spending incentives unlikely to work while incomes are falling
Published 07/07/2011 | 05:00
IS the recession about to begin? It may seem like a silly question, but it is a very troubling one. Recent figures are certainly moving in the wrong direction. Excluding car sales, where the car scrappage scheme has been a remarkable success, consumer spending is down 5pc on last year. That has to be alarming in the third year of a downturn.
Confidence has taken a dive. Not surprisingly, unemployment as measured by the live register -- a very up-to-date statistic -- has risen. If these figures showed up during a period of normal growth, we would indeed ponder if a recession was on the way.
Instead, it looks like a warning of another dip in a contracting economy. After a fall of almost 3pc in real terms in 2008, national income (GNP) plunged by 10pc in 2009 and was stagnant last year. This 13pc contraction is pretty well unprecedented in a developed economy.