The danger I’ve been seeing is that an overwhelming number of the mainstream press is trying their upmost to talk our economy down. There has been a seemingly endless flurry of negative reports and commentary on the outlook for the UK, and if you didn’t know any better, looking at some of the lexicon being used you would think we were currently living through the Great Depression.
The biggest danger of this is after a while it becomes a self-fulfilling prophecy whereby not just consumer confidence, but investor confidence is rocked by an overtly negative stance from the press. I understand that these are the headlines that will sell newspapers, rather than “everything is rosy, business as usual”, but by doing this could they end up talking us into a recession?
One of the hallmarks of most recessions is a complete lack of confidence across the board. I remember well the reports we saw during the post-Lehman credit crunch of consumer confidence being at an all-time low, and this inevitably having a knock-on effect on investor confidence.
A great example of this negativity came from the delightful Judith Evans and Emma Dunkley in a national newspaper. The article ‘Property lending turns cautious after Brexit vote’, written in early July, focused on the apparent “damped confidence” in the property market.
I have to add that we at Regentsmead have actually seen an upturn in both our enquiry and conversion rate over the last few weeks, which says a lot for what is traditionally a quieter time of year. The article correctly points out that we haven’t seen any figures on current lending levels, making it even harder to provide any genuine predictions for what might happen to the property market – so why the need for all this negativity?
The problem is that there is too much focus on the downside. Yes, it’s a good thing to remain cautious, but as lenders it’s back to the old adage of preparing for the worst and hoping for the best. The upshot over the last few weeks has been that Australia and China have already mooted significant trade deals with a post-EU UK (with plenty more to come I suspect) and major organisations such as GSK have confirmed that they will be increasing their investment in the UK over the coming years. If lending really is, as the aforementioned newspaper article reports, being reined in “like crazy”, then we would already be seeing the apparent by-products of this.
Historically banks have either over lent or not lent enough, and it’s this oversight that has partly fuelled the rise of the alternative finance sector. It would be refreshing to pick up a newspaper in the morning and see more impetus from the press and focus on talking the economy up rather than down.
If we can continue to keep sensible lending practices throughout the industry, then I see no reason to carry on writing reports trying to highlight negativity that might not actually be there. Perhaps in future Judith and Emma can speak to Regentsmead, as there is nothing being reined in with regards to our lending.