Leading East Midlands law firm, Smith Partnership, were delighted to recently host a prestigious presentation by Bank of England Agent for the East Midlands, Alastair Cunningham who was joined by speakers Dennis Thomas and Rachel McCahill-Brown of Smith Partnership. Alastair gave a welcome insight into the state of the economy and its prospects for recovery, based on the Bank of England’s latest Inflation Report. Despite having endured the deepest recession since World War II and Alastair cautioning that his was not a “feel good presentation” there were, thankfully, some hints of recovery. The event, which was held at the Belmont Hotel, Leicester, was exceptionally well attended by local business leaders and professionals and proved a great opportunity for networking as well as to put questions directly to Alastair as Bank of England Agent.	Event photo gallery Please click here to see images from the event
Below are some key highlights from Alastair’s presentation: The UK continued to emerge from recession. World demand picked up further although the pattern of recovery was uneven. The level of activity at home and in most other advanced economies remained well below pre-crisis levels. A pick up in UK GDP is likely, underpinned by the considerable monetary stimulus, a projected global recovery and the past depreciation of sterling but the pace of expansion is likely to be tempered by the need for fiscal consolidation and for further balance sheet repair by financial institutions The strength of the recovery and the impact of the financial crisis on the supply potential of the economy remain highly uncertain. Even with relatively robust growth, a degree of spare capacity would be likely to persist over the forecast period. CPI inflation remained well above the 2% target, raised by the restoration of the standard rate of VAT to 17.5%, higher oil prices and the past deprecation of sterling. As these temporary effects on inflation wane, downward pressure from the persistent margin of spare capacity is likely to cause inflation to fall below target. Households cut their spending substantially during the downturn as prospects for future take-home pay deteriorated and the desire to strengthen their balance sheets increased. In contrast, consumption spending grew in 2009 Q4. That may partly have been in anticipation of the VAT reversal and so may be followed by weaker spending in subsequent quarters. But it is also possible that the adjustment in households’ spending may be nearing an end, heralding stronger consumption growth in the future. Businesses continued to rein back spending in the face of weak demand, uncertain growth prospects and constraints on their access to working capital. Overseas, the global economic recovery has continued and world trade has rebounded further. Even so, activity in most advanced economies remains well below pre-crisis levels, and the pattern of recovery has been uneven. For example, output growth in the euro area, our main trading partner, has been lower recently than in the US and much of Asia. The UK’s trade deficit widened in the second half of 2009. Going forward, the substantial depreciation of sterling should encourage some switching of demand towards UK-produced goods and services, with a consequent improvement in the trade deficit. Our Speakers Dennis Thomas, Head of Commercial Property, Leicester and Rachel McCahill-Brown, Head of Business and Personal Insolvency can be contacted for details of their presentations at: dennis.thomas@smithpartnership.co.uk and rachel.mccahill-brown@smithpartnership.co.uk Alison Neate, Managing Partner - Leicester