IT is becoming increasingly difficult to maintain my usual ‘glass half-full’ approach to life. There is just so much bad news and negativity around that any spark of optimism gets easily swamped.

It’s just as I expected. While I have to acknowledge that the economic situation is worse than anyone but a few doom-mongers expected a few months back, the truth remains that many businessmen, journalists and so-called experts have gone totally over the top and are pushing us into a worse situation than need be.

It’s impossible to say how much of the gloom is justified, but I would be very surprised if at the end of the day it was more than 75 per cent accurate. That means the 25 per cent of the current gloom and doom is unwarranted – and that represents a lot of spending and an awful lot of jobs.

Indeed, as in most things in life, it’s a question of balance, and if the doom-mongers carry on as they are doing, they will eventually prove themselves to be 100 per cent right. So it’s time for them all to get a grip and try to retain some sense of proportion during what is bound to be a difficult time (partly thanks to them). After all, it’s the doom-mongers who have made things worse by prematurely battening down the hatches and stopping spending and investing. It is they who are blaming anything that goes wrong with their business on economic conditions.

This was brought home to me by the recent news report of a UK food company that had collapsed with the loss of a number of jobs. The TV reporter solemnly reported that it was yet another example of the effects of the economic downturn. Now unless the economic bad news has put us off our food, why would a food company go bust at a time like this?

Mismanagement, natural disaster or rubbishy business plan could all be plausible reasons, but recession?
The recession has also regularly been blamed for the collapse of Woolworths. But that company had been in trouble for a long time. It had enormous debts and had largely lost its way in the retail industry. We and, unfortunately, the staff should have seen it coming.

The problem now is that a generous response from governments to the downturn could well help some companies to stay in business when in normal economic conditions they would fail. The Council of Ministers have announced that they are putting together a rescue package valued at tens of millions of pounds which every man and his dog will hope they can get their hands on. But have so far the council have failed to give any details of how they will help the economy and target those businesses that not only need it, but deserve it.

I appreciate that at the moment it is just a matter of spin. The council are trying to boost confidence in the economy. But eventually they will have to decide how the money they have available in the stabilisation fund is going to be used. Who is going to be helped and who isn’t? That’s the really tricky question.

So far all they have talked about is local companies and local jobs, but that’s not much of a help. Of course we have to do what we can to protect local jobs, but not at the expense of feather-bedding businesses that might not survive in any case. There is also the obvious impact that protectionism will have on the level of competition in the Island – and it is competition that the Council of Ministers insist is the best way to ensure an efficient economy.

The States should also certainly not discriminate against those companies who are trying to sort out their own problems during the recession and who are not looking for States aid. Just about every business has had to put in place a strategy for surviving the downturn, and many of these strategies will work and the companies will survive and even prosper (yes, there are plenty of opportunities in a recession). Why should their competitors get States help?

So the Council of Ministers are quite right in pointing out how lucky we are to have a stabilisation fund of about £140 million to help get the economy through the recession. But how it is going to be achieved is fraught with difficulties.

The interesting and frightening feature about this recession is the number of companies that are close to the brink and cannot survive a small (so far) downturn in sales. They have either not planned for the future, they are inefficient, or their owners have taken too much out of the business. Perhaps those who say that this is the end of the capitalist system as we know it will be proved to be right.

One thing is for certain: just as some banks have become too big to fail, so it must be obvious now that banking is too important to be left to the bankers. When even the US talks about nationalising some of its financial institutions, we have to accept that only governments can sort out the current mess largely caused by the banks.

Whether and how the States of Jersey should intervene in the local banking market are other very difficult questions. A locally funded bank has been mentioned, and it shouldn’t be dismissed it out of hand just because it’s a radical step.

After all, unusual times call for radical solutions. Certainly if the local banks can’t convince the States that they are ready and willing to resume normal lending policies, then an alternative has to be found. But perhaps it won’t be necessary.

• Peter Body is editor of Business Brief magazine