Whats the economic reality?

The UK's economy suffered a slight contraction of 0.5% in the last three months of 2010, figures have shown.

This was reported by the BBC Website as a “shock contraction” and the BBC's economics editor Stephanie Flanders said “people were right to worry about where the UK's growth would come from in 2011, especially as higher-than-expected inflation had dealt a further blow to household budgets.”


Is this true?

I coach and advise a diverse number of organisations and have found that generally confidence has been returning and most people in those organisations were feeling that 2011 would be a steady growth year. So maybe the contraction would be more of a mild surprise to these organisations.

Reality is created by perception as confidence leads to organisations spending on services and also projects to customers who also spend, leading to growth in confidence and GDP.

Figures such as today’s are likely to dent some people’s confidence and as such may in fact lead to a drop in confidence, this is largely dependent on how they are reported and focused on.

Whilst we are recovering economically it is important to remain optimistic and realistic. The recovery is likely to take a while and is unlikely to be a straight upwards but may have peaks and troughs. A balanced view doesn’t make headlines though and neither does good news so we are likely to register more of the bad news than the good. This is an important factor to bear in mind when assessing are we going to have a good year.

My advice is to keep a realistic eye on costs, work ‘smart’ as well as hard in order to spot opportunities for growth and invest in your people. If you do these things you are more likely to have a successful 2011, no matter what the headlines say.