UK Economy “may” have turned – from someone who should know…

Maths and Economics show that “……..if you lay 10,000 economists end to end  ……..they still cannot reach an accurate conclusion” (Sorry!).    However even an old cynic like me listens when the Bank of England’s own chief economist speaks because he should know facts that others can only speculate about.

In a presentation to business leaders in the East of England this week Spencer Dale – who also sits on the MPC (the Bank of England’s interest rate setting committee) – actually said “THE ECONOMY APPEARS TO HAVE TURNED”.

Ok, we may be the last of the G20 to emerge from recession, if this is the case, but coming from a guy who should know, this is welcome news.

CAUTION

Of course you would expect some caveats and Mr Dale cautioned “The recovery in the level of economic activity is likely to be relatively slow” . He also anticipated that inflation could rise above 3pc early next year, , but the spike should be temporary. Excess capacity should take care of that he felt.

GAINING A COMPETITIVE ADVANTAGE THROUGH COST CONTROL

For us in Expense Reduction Analysts, inflationary cost rises are one of the key aspects we try to mitigate against for our clients. Systemic rises through increases in a supplier’s raw material cost base are possibly justified if we have squeezed margin. But our market knowledge can not only verify those, but also allow us to challenge and roll back any other increases.

Its about putting in practice the reality of what is behind Mr Dales’ assertion that spare capacity will tackle the anticipated inflationary pressures. At its crudest it could be about pointing out to suppliers that if they will not maintain a pricing level, there are plenty of others we can give a chance to. However its more than that; its about truly knowing the cost side of the particular market and ensuring that – whilst a margin needs to be made to sustain service levels and  security of supply – the balance is on our client’s side.

After all, our clients will face those pressures themselves in the markets in which they operate. If we can help our clients contain and reduce overheads then that helps them maintain or gain a competitive advantage.