Stand by your economic predictions - 20/05/2009 12:23
Alistair Darling today reaffirmed the Treasury's prediction that the recession will be over by the end of the year.
In a sense he may well be right, but that does mean everyone will be sitting around their Christmas dinner toasting a prosperous new year without any doubts.
The strains on the economy are many, but if the chancellor is lucky by next May - the expected date of a general election - growth may be showing on GDP figures.
However, what GDP figures say and how the real economy is performing may differ substantially.
Unemployment may stop rising in 2010, but employment levels are not expected to bounce back.
In the short-term the economy is facing some fair winds: low interest rates, the government stimulus, the low pound and the refilling of company stock rooms that are now empty.
However, a great bounce is not expected. There is talk of v-shaped recoveries, w-shaped recoveries, L-shaped recoveries or even a square root-shaped recovery.
Blowing against the recovery are the prospects of tax hikes coming for the government to balance the books, a global slump in demand, higher interest rates if inflation bounces back, the effect of households cutting back on spending and saving more, and banks' weak lending.
Really there is a hatful of unknowns - known and unknown - that make gauging the future direction of the UK economy hard.
Indeed the economy could well pick up and see firm growth, as the chancellor predicts, but other scenarios seem more likely.
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