It may be a little premature to hope for ‘green shoots’ of economic recovery, particularly in the first half of 2010. In recent weeks, UK unemployment reached new highs and the first quarter of 2009 saw GDP slump to 2.4% - far lower than economists had forecast. The Bank of England have taken unprecedented steps to pump extra money into the economy to boost lending to individuals and businesses but as yet, the quantative easing programme has had little visible effect.
There are hopes that the worst of the recession are behind us - that we saw the economy ‘bottom out’ in March of this year - but it’s dangerous to assume that 2010 will see a return to normality. House prices are dropping at a slower rate and data released this month showed a pick up in retail sales which suggests a recovery is on the way and confidence is returning, but fears persist that we’re simply seeing a ‘bear rally’ (a small, unsustainable spike higher in a downward moving market), suggesting a false dawn.
As far as currencies are concerned, of 39 major banks surveyed by Bloomberg, most are predicting sterling to recover further against both the US dollar and euro in 2010, albeit modestly. These predictions suggest that the bank’s analysts are, on the whole, reasonably bullish that the slowdown in the UK will start to turn a corner. It would also mean that your imports become cheaper.
In conclusion, 2010 should see a little more confidence return in the UK economy and, therefore, an increase in high street spending but, in my mind, it is too soon for you to increase your budgets and hope for return to the boom enjoyed in the early 2000’s.