Fears for economy mount as business investment falls

The sharpest fall in business investment in 44 years shocked economists yesterday who said it increased the risk that figures released today will show the economy shrank by more in the second quarter than the 0.8pc initially thought.

By Angela Monaghan
Published: 8:21PM BST 27 Aug 2009

This world wide recession is by no means over. Regardless of what is reported as this administration cooks the books to prop him up, while he seeks to do more hurt and damage to the economy, and to plunge this nation into further debt.

To those that do have some money, some financial means, the time has come in the next two months to invest in some undeveloped land, or other property that has been greatly devalued and to lock in this deal at these current low low interest rates. The stocks will fall again, commodities are being driven downward. Stocks should be dumped, take what profit you can now. Interest rates are going to go up shortly and the tide of massive inflation will hit. Commodities need to continue to fall, where the bottom is for them, the Lord Knows – We need not hit the exact moment, we need to invest in metals, in cattle futures, in grain futures and the like – and when the waves of inflation hit we will be carried up and along with the tide – rather than suffering shipwreck

At some point not too far in the future commodities will be golden as inflation drives up the values on these futures.

We by no means preach or teach the prosperity Gospel, nor do we seek to enrich ourselves in the riches of this world – However just as the Lord months and months ago expressed this coming event with dire consequences – it would seem that the Lord would have us fill our baskets – to be able to help those in need first in our own households, (In Jerusalem) then to those in need in our local church (Food Healthcare rent) and our immediate neighbors and friends (In Judea and Samaria) and them after we have fully cup runneth over have taken care of our own – what ever may yet be left from this coming year of great turmoil and hardship – Yhen and only then you can consider ministries and churches anywhere else.

Honor the Lord. Give as you would to Christ if He stood needy before you, Food Clothing Shelter and medical needs in a manner that the recipients cups runneth over. Lay it out for these – the least of My brethran.

Business investment slumped by 18.4 percent to £29.9bn in the second quarter, compared with the same period a year earlier, the Office for National Statistics (ONS) said. It was the largest annual decline since records began in 1965.

Compared with the first three months of this year, business investment tumbled by 10.4pc, which was the second worst drop on record. Economists had been expecting a much smaller fall of 3.6pc,

Economists warned that businesses' failure to invest in the wake of the recession would have severe consequences for the long-term economic future of Britain, and in the shorter term, increased the likelihood that the ONS would today revise down second-quarter gross domestic product from -0.8pc.

"I would be surprised if there is not a significant downward revision to -1pc or -1.1pc," said Ross Walker, economist at Royal Bank of Scotland.

Alan Clarke, economist at BNP Paribas, agreed: "Unless there is an upward surprise elsewhere in the breakdown that offsets the diabolical business investment component, we could be looking at a downward revision to -1pc or lower.

"Ahead of the [business investment] survey, I would have thought an upward revision was more likely, but we were expecting a 2pc to 3pc quarter-on-quarter fall, not 10.4pc."

The GDP figures at this stage are predominantly based on output measures, including manufacturing, services, and construction output, rather than on expenditure measures like business investment, which makes it difficult to predict precisely what impact yesterday's data will have on today's GDP figures.

David Page, economist at Investec, said that while business investment "raises the risk" of a downward revision, it was not certain because other output measures, including industrial production, were better than first realised.

Businesses have been hit by an unsavoury cocktail of falling profits, poor credit availability, a high cost of capital, and weak company liquidity, and investment has fallen more sharply during this recession than it did in the recessions of the early 1980s and early 1990s. In the second quarter the decline in investment was broadly-based but it fell particularly sharply within private sector services and construction, the ONS said.

"The further sharp decline in business investment signals serious threats to Britain's long-term recovery. In the face of weak demand and mounting financial pressure, businesses have little choice but to cut investment and stock," said David Kern, chief economist at the British Chambers of Commerce. "Unless this trend can be reversed, the long-term productive capacity of the economy will be damaged, and the country will lack the necessary capital stock to sustain a recovery. This must be kept in mind when the government plans a fiscal strategy to repair the public finances. It is critical not to impair the business sector's ability to invest and create wealth."

There was better news in the US, where economists were pleasantly surprised to learn that the economy there shrank at an annual pace of 1pc in the second quarter, unrevised from the initial estimate last month. Economists had predicted the number would be revised down to reflect a 1.5pc fall.