by Trevor Sturgess

From slender threads, big things often hang.
Given the huge media attention to the GDP figures released on January 26, you would have thought the country was heading back to the economic good times.

But the apparent escape from recession was down to a mere 10th of one per cent. Hardly a ringing endorsement of a renewed economic surge. And the figures may be revised downwards over time. But, given a less negative slant, they could also be in more positive territory.

As with all things economic, there are as many opinions as there are experts. Alyson Howard, a Kent-based business consultant and former chairman of the Kent Institute of Directors, was surprised by the miniscule rise in output, given the positive news from various fronts.

All reports suggested that retailers had enjoyed a Christmas and New Year sales boost. And car dealers have said that the scrappage scheme has acclerated sales of new vehicles. And the Bank of England had pumped around £150bn into the economy .

That the GDP growth was so small suggested that the rest of the economy was under-performing. The weakness of sterling against the euro and dollar apparently had not done enough to stimulate manufacturing output. That was probably because the sector was not as well-represented in the economy as it once was. The sale of Cadbury to Kraft would weaken the sector still further, she warns.

Mrs Howard does not expect to see any noticeable increase in real growth until "the back end of 2010, more likely quarter two in 2011."

People are likely to remain cautious about spending in the coming months, and unemployment, which has been lower than feared, could start to rise again. That will apply especially to the public sector as local authorities are forced to pare back their spending.
The private sector has borne the brunt of the recession, with more lost jobs and pay cuts.

Mrs Howard said the "money tree" had died. "The private sector has been working its butt off to keep things ticking over so that when the banks are lending again, and the world starts to feel better, it can make a profit once more."

Roger House, chairman of the Federation of Small Businesses in Kent and Medway, hailed the GDP figures but warned recovery remained frail.

It will need another quarter to see whether the latest figures are part of a trend, or a prelude to a double-dip recession.
Add to all this the uncertainty of a General Election, and you have such a volatile mix of circumstances that few know how it will turn out.
If the thread breaks, we could be in for a chilly economic summer.