Good morning! There's a fair bit for me to get through this morning, although I have to finish earlier than usual today, as I'm booked in for an analyst/broker lunch with a small recruitment software company called Dillistone (LON:DSG), so will have to dash for a train up to London mid-morning. Generally I find it useful meeting management, to get a flavour for the type of people running a company, and also these type of meetings deepen my understanding of the business & whatever sector they are operating within.

What I've noticed recently also, is that the economic recovery is much more patchy than perhaps the Stock Market is pricing-in. Some companies are upbeat, whilst others are saying that nothing much has changed, and that things are still very tough. My own view is that as far as the UK economy is concerned, then we're not likely to get much of a sustained economic recovery whilst pay rises remain at or below inflation, and key components of the cost of living rising significantly (such that in many cases, individual households personal rate of inflation could be a good bit higher than the published national rates).

The trouble is that the bottom end of the UK labour market is so distorted, with effectively an unlimited supply of cheap labour available via the EU, that market forces will not do what they are supposed to do, and pull up wages. Although we could see pay rises start to occur in more skilled areas - e.g. a recruitment company called Matchtech (LON:MTEC) that we met recently said that pay rises were running at 5% p.a. in a couple of buoyant sectors (one was automotive, I forget the other).

In terms of policies, I would like to see above-inflation increases to the Minimum Wage for the next five years, and a massive programme of new house building undertaken by Councils, using surplus land & fast-tracking planning permission. Those two measures alone would stimulate the economy enough to get things properly moving, and hopefully reverse some of the lunacy of the house price bubble in the South.




As regulars will know, Johnston Press (LON:JPR) is a share I am very bearish on - for the simple reason…

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