Evans Weir News - Trump and Brexit

Businesses have become desensitised to economic uncertainty

Last month we wrote about the lost decade – the ten years since the financial crash of 2008 – and having discussed this theory in meetings with a range of SMEs it feels like the side effect of the lost decade is a numbness to economic uncertainty. That is not to say that businesses are not impacted by it, but more that they simply seem to be accepting of it and have become used to ups and downs and are planning for the mid-long term regardless.

Analysis of the years immediately after the crash is relatively typical of a post downturn economy with unemployment rising, GDP dropping, or even contracting, and a relatively stagnant property market. But even though the economy has, and still is, taking time to recover certain measures when viewed graphically would suggest we are back in ‘normal times’ One imagines that many people would argue that these times are far from normal however. Unemployment is at a historic low and probably as close to full employment as a nation can get, but we know from productivity levels that this high level of employment does not correlate with overall growth, pointing to the fact that businesses are investing in people with a longer-term expectation of growth.

Bank of England research supports the theory of desensitisation by SMEs, with their regional agents saying that feedback from the coal face is once again back to a true British ‘Keep Calm and Carry On’ approach. Nobody feels able to sit it out and await the outcome of the negotiations over exit from the EU as again businesses seem resigned to this far from being a clean break and know that with the best will in the world, even a gold top deal will still result in continued economic uncertainty.