The government would have us believe the recession is ending, but we don’t see much evidence of it. At this time of year, when many businesses should be shipping more goods than usual, trade and industrial packaging suppliers expect to enjoy their busiest quarter. As a result, the packaging industry is a good barometer of a large cross section of businesses in general. Our direct contacts within the packaging industry inform us that they, their suppliers and competitors are in decline, with many going out of business altogether.

Banks are still paying big bonuses but either not lending, or lending at inflated rates; 6.5% is common, when the base rate is 0.5% currently. SMEs (Small and Medium-sized Enterprises), including what’s left of Britain’s manufacturing and engineering industries are going to the wall due to poor cash flow and an inability to borrow.

So why won’t the present government bring pressure to bear on the banks currently in public ownership? If they were to give business a much needed helping hand, but fail to win next year’s general election, the incoming government might well take the credit. How much does this sort of reasoning feature in the actions of a weak, outgoing government? If it does happen, or ever has happened, it could lead to a highly undesirable form of ’scorched earth policy’. The problem is, how do we prevent such a thing?

Also see “Let the RBS directors resign“.