The Ernst & Young Item club – which uses the Treasury's economic model to make its predictions - suggests that the private sector will struggle to absorb the hundreds of thousands of jobs shed by the public sector over the coming four years. However Peter Spencer, chief economist for the Item club, said that it was unlikely that the loss of momentum in the economy over the next six months would lead to a full-blown double-dip recession.
But at the same time the ICAEW Business Confidence Monitor says that "Business confidence has weakened significantly as businesses acknowledge the path to recovery contains further challenges, with a fast return to strong growth by no means guaranteed". In fact the Monitor showed its first dip this quarter since Q1 2009.
At PEM Corporate Finance we saw an upswing in M&A activity last year closely correlated with the upturn in the Monitor. Let's hope the relatively modest decline in Q3 2010 doesn't pressage an erosion of confidence in the M&A Market. After all, liquidity concerns have eased, and the mismatch between vendor and buyer price expectations has lessened significantly.