When's the recovery? Thursday, 4th June 2009

There were genuine fears that we could be about to see a collapse of the financial system. But the government predicts there will be growth next year
There is a fresh optimism in the air and some economists suggest it could be time to start talking about having reached the bottom of the recession.

What sort of recovery should we expect?
It has been consumer spending that has led the recovery inthe past, but personal debt was a part of what started this downturn.

Even if there is not a big rise in spending, retailers could still boost growth by boosting their stock in the near future.
Retailers will have to restock their shelves at some point soon, which will make the recovery look better than the growth in demand would suggest.

Nonetheless, consumer spending is unlikely to be the leading factor in the recovery. Some have suggested it could be an export-led recovery.
Exporters are already benefiting from the weak pound against the euro and the dollar, which makes their products cheaper to their overseas customers.

The problem with an export-led recovery is that it means we would have to wait for other countries to have their recoveries before we can.

However, is the UK manufacturing sector in any state to lead the UK economy's recovery?
Some companies will have been forced by the recession to lose a significant chunk of their workforce and some of those will be highly skilled people who they've reluctantly had to let go because of the pressure they're under.

In the past, what was keeping the pound strong was the earnings from financial institutions.

A possible source of growth in the recovery could be green technology.
It is not just the manufacturing sector that could see an upturn in exports - the service sector could also benefit.

The UK tourist industry is expected to benefit from the weak pound encouraging visitors from overseas.

There may even be some growth from the financial services sector.
And, there has also been some talk of an inflation-led recovery. The thinking is that if debt is the big problem for both the government and individuals, some controlled inflation would reduce the value of that debt.

Well,it looks as if we may be relying on exports and investment when the recovery comes, but perhaps we should not raise our hopes too high.