Economists? Who really needs 'em?

According to one well-known definition, economists are experts "who will know tomorrow why the things they predicted yesterday didn't happen today". In equally cynical terms, an editor is someone who "takes a poodle and clips it to the shape of a lion". In other words, economists are fraudsters and editors can't be trusted. Heaven help you if one of either species tries to be both.

In this column six weeks ago I repeated the question that is still keeping the UK business community awake at night - is the economy in recession, or not? Understandably (given the descriptions above), I failed to provide an answer. This time I won't even pretend to conclude the debate - it's up to you to decide - but I will draw to your attention one or two facts and figures and point you in the direction of some sound advice.

Here is the news. At the end of last week, the UK Stock Market FTSE All-Share index finished 8.45 points up on the previous week (good) but was still 970 points below its 2001 high of 3,055.7(bad). Retail sales were down 0.7% last month (bad) but the number of unemployed people also fell to 949,000 (good).

A recent survey of Barclay's Bank private clients reveals that one in every eight of residents living in Kensington and Chelsea have an annual income of £60,000 or more (no surprises there) but the same proportion also applies to Hallam in Sheffield, and more than 6% of people living in areas such as Macclesfield and Altrincham near Manchester enjoy the same high level of income.

So, if wages aren't suffering - average income was up 3.8% last month, year-on-year - why aren't consumers spending more money in hotels, restaurants and pubs?

Perhaps they are. According to South West Tourism, 80% of respondents to its latest How's Business survey report that business is on the increase. The latest Deloitte & Touche UK Hotelbenchmark says that the Commonwealth Games and the Open golf championship gave "a much-needed boost to the UK's regional hotel industry", and consultancy firm PricewaterhouseCoopers is forecasting growth of 0.5% this year for the UK hotel market and nearly 2% for next year.

The problem is that, with share prices stalling and property prices rising, analysts don't really understand the economy at the moment and financial backers, with their fingers badly burnt by recent stock market falls, are adopting a "wait and see" approach. Result? A gulf is developing between operators on the front line who are saying things aren't that bad, we want to expand; and investors in the City who say not yet you don't, certainly not with our money.

But, by saying this, investors are missing a great opportunity to back businesses in an industry that is bound to flourish in the near future.

With this situation in mind, here's the advice. It comes from Neville Abraham, who has regained the reins of London-based restaurant chain Groupe Chez Gérard. Asked by an employee if the company had an expansion strategy, Abraham replied: "Yes, it's to grow the business in your restaurant". Very astute, Neville. If you can't expand by borrowing, put your house in order and grow the business organically. The customers are obviously out there, even if economists can't see them yet.

Forbes Mutch
Poodle clipping editor, Caterer & Hotelkeeper