Who Has the Confidence to Mention the Green Shoots of a UK Economic Recovery?

According to the Nationwide Building Society British consumer confidence for May 2009 rose to its highest point since last year, with expectations the highest in over a year that the UK’s economic conditions will again further improve in 6 months time. But is this British optimism well founded?

News stories at the beginning of June briefly reported General Motors becoming the third biggest Bankruptcy in world history. The more important story in the UK being the future fate of Vauxhall’s 5,500 workforce as Opel, General Motors European arm, is sold off to the Canadians & Russians by the Germans.

Unemployment in the 16 nation Eurozone to April was reported by Brussels to be at its highest levels for 10 years with some 14.5 million people losing their jobs, 9.2% of the total workforce.

On the other hand the pound rose against the US dollar to $1.64, it’s highest for 7 months from a low of $1.37 in March, and to Euro €1.16. So we can start to look forward to summer holidays abroad again! The possibility of a General Election and a change of government also loom large on the horizon as Labour MP’s resign from the cabinet, or pledge to stand down at the next election in the wake of Westminster’s latest political scandal over expense claims.

Maybe this is where our new found economic optimism comes from? If you are one of the Euro zone’s current 14.579 million unemployed then tough luck! If you are currently employed by British van maker LDV or work for its supply chain, with little hope of even being given owed back pay and despite being owned by a Russian Oligarch. As the Business Secretary Lord Mandelson says, “The jobcentre has been asked to help LDV workers.”

But if you still have a job then maybe the current British mentality is to keep your head below the parapet and ignore today’s bad news, in the hope of some better news tomorrow. The trouble is that I don’t yet see where this better news is going to come from.

Prices for a barrel of oil have jumped up again to $68 from a low of $33 last December. OPEC itself expects an average price of $75 per barrel for the remainder of this year. The break even price for Russia to sell oil, the point where they start to turn a profit again, is reported at around $100 per barrel, with the Sheiks themselves expecting to break even at around the $90 per barrel mark.

Are we going to soon see again pump prices of £1.20 per litre for unleaded & £1.35 for diesel as we did last year when oil was heading past $150 per barrel?

We all want to change our car for something more fuel efficient, or dream of dreams that does not use fossil fuel at all. But with car makers trying to offload their huge inventory levels of unsold gas guzzlers whilst keeping new car prices high enough to pay off their enormous loan debts and unprecedented levels of unfunded pension liabilities, I’m still driving around in my old banger!

I remember what happened last year when Hugo Chavez, Vladimir Putin and Mahmud Ahmadinejad became louder in voice as oil prices rose past $150 per barrel. The mums complained that it cost too much to drive little Jimmy to school any more, or to keep the 4×4 going. We could no longer afford the costs of green taxes, fuel surcharges or the additional costs added to the price of fresh vegetables transported to our supermarket door from half way around the world.

Next year we will have, in addition to last year’s woes, the added problem of trying to pay back a record amount of UK national debt. This is currently expected to top 50% of GDP, with all the additional individual tax hikes and reductions in public finance spending that will bring. Add that to the news of higher costs of fuel, unprecedented levels of unemployment and Hugo Chavez & Mahmud Ahmadinejad are again plotting our demise at full volume. This whilst China then refuses to continue to act as the banker with the bottomless pockets to America’s unprecedented levels of rising US national debt, and as the US dollar and the value to China’s American Treasury bond holdings continues to diminish against the Chinese Yuan.

Consumer confidence, what improving consumer confidence?