Anthony Hilton: Public Sector - Milton Keynes offers a 'romantic' touch

Escape the self-fulfilling gloom

British business is doing quite well considering we are emerging from what is supposed to be the worst recession since the 1930s.

The drop in company profits has been far less severe than in the recessions of the early 1990s or the early 1980s. Manufacturing is having a good year, with the biggest increases in output seen for many a year. The level of insolvencies is also much lower than anticipated, and this has caused embarrassment to some of the corporate undertakers who have predicted disaster on several occasions.

Unemployment is much higher than a couple of years ago, but even here the increase has been far short of what was forecast. Partly this is because much of the pain in construction was borne by immigrants who returned home. Partly it is because of the high level of co-operation in terms of job sharing. And partly it is because things have not been as bad as predicted.

It's the same in the housing market. House prices have fallen but they have not crashed. Repossessions are much lower that they were in the last recession.

The net result is that things are not so bad. And yet poll after poll paints a bleak picture of the public mood. Polls of individuals say they are the most pessimistic about their personal finances out of almost any country in Europe; polls of businessmen say that they have the lowest level of confidence; one poll even said that our economic outlook was among the worst of 120 nations surveyed.

The bleak picture painted by politicians to soften people up for the cuts plays a part, but the bigger one is the remorseless negativity of the press. Economic indicators that are better than expected get dismissed as freaks; those that are poor are taken as confirmation that we are plunging towards a double-dip recession.

So much of this is press and PR driven. The press increasingly has only one tone - just a shade below hysterical - in its desire to grab readers' attention. Confidence matters a lot. Government needs to start delivering positive messages about the economy before the depression becomes self-fulfilling.

Anthony Hilton is City commentator on London's Evening Standard

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