ANALYSIS: Printers should watch out for changing economic climate.(Brief Article)

Policy makers have rarely had to face such difficult decisions, as David Ross explains

It's been a topsy-turvy year. One moment we're enthusiastic and confident about short-term economic prospects and the next we're deep in gloom and despondency. The worries about war with Iraq have led to increased pessimism. Of course, printers do not feel the same way as they look forward to what are traditionally the busiest months of the year.

Yet, even when printers are busy, they should keep a weather eye on the changing economic conditions around them.

A few weeks ago, The Times published a cartoon of a hawk and a dove poised over a graph of UK interest rates. The hawk was making its case for a rise in interest rates based on house prices rising at more than 20% a year; the ratio of household debt to income being at a record level; the possibility that the Chancellor's spending spree might stoke price pressures; and the possible inflationary impact of next year's national insurance rise. The dove made a persuasive case for a cut based on inflation being forecast to remain below target for at least the next year; the fact that the US and eurozone economies may be stalling; that UK manufacturing remains weak; and tentative signs of a slowing in consumer demand.

Since the graph was published, new evidence to support both sides has been about equal. The hawks can trumpet the fact that employment is at an all-time high and unemployment is at a new 27-year low. They can also point to official data showing that the manufacturing sector has started to expand output again and to survey evidence from the Chartered Institute of Purchasing and Supply pointing in the same direction. In addition, lending to individuals reached an all-time high in cash terms in July.