Recession is far from inevitable

It seems only a few months ago that we finally hauled ourselves out of the gloomy vale of the last recession and into the sunlit uplands of economic prosperity. Yet here we are once again contemplating the abyss.

Or are we? The facts simply stated are that the economy has enjoyed five years of vigorous growth roughly dating from the moment the UK was catapulted out of the ERM. So, cycles being what they are, it’s no surprise to find the economy experiencing a slowdown of sorts. But the prospect of a full-blown recession of the kind we have just left behind – as some pundits would have us believe – seems frankly unconvincing.

Why? For one thing there is an uncomfortable feeling that we are being had. We are cannon fodder for certain sectors of the business community as they fire off their alarms against the entrenched positions of the Treasury and the Monetary Policy Committee in a relentless propagandist war to lower interest rates.

For another, the economy simply isn’t mimicking the ominous symptoms of oncoming recession that characterised 1987-91. No stock market crash – so far; no comparable housing or credit boom; no ballooning inflation; no serious deterioration in the balance of payments (again, so far).

So, despite the encircling gloom, marketers ought not to panic. Naturally, it will be difficult to sustain the same rosy optimism which probably coloured budgetary projections at the beginning of the year. But the fact that targets will be missed is not tantamount to no growth at all. And it is certainly no reason to surrender to the bean counters the minute they begin shrieking for cuts.

One of the great lessons of the 1981 recession, rapidly forgotten in the trough of the longer one a decade later, is that marketing brinkmanship can work. In the early Eighties variant, advertisers continued to spend on their products, and in so doing buoyed up sagging consumer morale in the high street. In fact, confidence in riding out the recession more than likely helped to shorten its duration.

Marketers have every reason to be confident this time round. Brand management and marketing services are a lot more resilient than they were, after the hard lessons of the last recession. Gone is the flamboyance of Porsches in the car-park and no-holds-barred expense accounts. Agencies are now more tightly run. Just as important, clients have modified the remuneration structure, making it more results oriented and less subject to sudden, savage fluctuations. Which should prove a confidence-building measure if times get harder.

Cover story, page 28

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