The effects of the recession

In the World Tonight broadcast by BBC Radio 4 on the evening of June 30th ( minutes 13 to 18) a couple of small business owners were interviewed to test the claim of the ConDem govt that the reduction of the jobs in the public sector would be more than compensated by the creation of new jobs in the private sector. As far as the intentions of the programme were concerned, the test was inconclusive. However, the programme was revealing in another, unremarked upon, way. The first business was a small fashion designer. SeeMe London. Their customers had not bought anything for most of 2009. To the credit of the owners they had kept their staff on while weathering the storm and restructuring their business. Business was now expanding again but they had ditched their previous customers and markets and how re-branded themselves at the high end of the market selling high value services. The future is now looking quite rosy. The second small business was a company that specialised in tuning high performance cars, Paramount Performance. Again, over 2009 business declined dramatically. One attempted solution was to diversify and offer economy tuning rather than performance tuning thinking that their customers, in straightened circumstances, would be more willing to spend money on saving fuel. To their disappointment this did not appeal and the attracted very few customers. However, this year business is growing again and it is the high end sector that is placing the orders and spending the money.

This is only anecdotal evidence of course but may prove to be symptomatic of how this recession will play out – the already poor and the middle classes getting poorer and the rich getting richer, as is evidenced by previous recessions.