Currency watch: Crisis of confidence

It is common knowledge that one of the many traditions of the House of Commons is that when the chancellor of the exchequer is delivering the Budget he is permitted to have a drink with him.

William Gladstone would drink Sherry and beaten egg while Benjamin Disraeli instead chose brandy and water.

You’d have to wager that George Osborne could have done with something stronger than the mineral water he had when delivering Wednesday’s Spending Review.
 
Someone once said that “compromise is never anything but an ignoble truce between the duty of a man and the terror of a coward” and the chancellor certainly didn’t compromise.

£81 billion of cuts and the axing of 500,000 public sector workers later, the future of the UK economy is based on one intangible factor that while it can be measured, is so very difficult to increase; confidence.

Both consumer and business confidences need to kick on from where they currently are before the recovery can really start in earnest.

With increased confidence comes higher retail sales, an improved housing market and decreased joblessness. It is more the lifeblood of the economy than money will be over the next four years.

Unfortunately the long-anticipated dip in the economy is definitely here and our confidence is set to be tested once again.

Jeremy Cook, chief economist at World First, 22.10.2010