Tomorrow's Business Today
A failure to predict the past
If you read the latest reporting statements from banks you could be forgiven for thinking the economy is just hunky-dory.
Virgin Money was today the latest to offer a relatively sunny outlook – staff are getting a nice pay rise! And there are hardly any bad debts.
A few possibilities here:
1) The banks are shying away from the future just to keep City analysts happy for another quarter or two.
2) The economy really is going to be fine. Honestly, we’ll ace it.
3) The banks forecasting models are a joke.
Our big lenders have a tremendous amount of economic data at their fingertips. But they seem to place way too much faith in their own statistics.
So serious economic strife may not be appearing in their numbers yet, but it is plainly just outside the window.
Banks say they have just got better at dealing with customers in trouble – they have surely had enough practice lately. To their credit, I think that’s true.
But it doesn’t entirely negate my point.
From a PR perspective, two things now follow.
Either everything is as swimmingly fine as the banks suggest. Or they start backtracking in the New Year, affecting to be shocked, just shocked, that things turned out bad.
If it is the first one, that’s a result for all of us. If it is the second, the banks deserve a sound kicking (Virgin no more than the rest).
At this point, not seeing a recession is not a failure to predict the future. It’s a failure to predict things that have already happened.
Press release of the day
Are World Cups good for your economy? Only if you win, says this from the University of Surrey.
Just hosting the event, “often seen as a glittering prize for a nation’s economy and reputation – does not deliver a boost in GDP growth, and may even lead to a negative economic impact” we are told.
Our economy growing while Qatar’s suffers would look like a good outcome to me.
