2010 and all that

So what will 2010 mean for business? Yesterday, in the first day of trading this year, the London stock market moved strongly up with the FTSE reaching 5,500. This buoyant mood was apparently driven by new optimism about the strength of the economic recovery, which seemed to be backed up by a number of positive economic indicators. Two examples of this were manufacturing activity, which accelerated in December, and unemployment, which is now forecast by the Chartered Institute of Personnel and Development to peak at under 3 million. Even CFOs appear to be in a confident mood. Then yesterday came the news that John Lewis and Next had achieved impressive trading performances over the Christmas period.

Anything that creates a “feel good” factor and improves business confidence can only be good for business prospects. However this optimism has to be tempered by the opening salvos (for this year at any rate) in what is likely to be a very long drawn out election campaign, with all the uncertainty that brings. Whatever politicians might promise, and whoever wins, there is going to be an unsustainable gap between government income and expenditure, which means tax increases and spending cuts are inevitable. Even the star retail performers above are preaching caution in their outlook for 2010, something which the disappointing figures from Marks and Spencer seems to bear out.

We remain of the view that businesses will not be able to be rely on economic recovery to achieve better results in 2010, and will need to put in place their own plans and initiatives if they are to move forward. However, good news can only help, so let’s keep looking for it and highlighting it wherever we can.

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