International Family Business Blog

Big End of Town warns of risks to Australia’s economy - Recession in 2015?

Over the past several weeks, key business leaders have become more vocal in their warnings that the Senate should allow the Government to govern.

Generally, a big business heuristic is to avoid entering into the political fray. The fact that high level leaders are now willing to vocalise their concerns confirms business confidence in Australia is becoming fragile.

I predicted the 1974, 1981 and 1990 recessions. Economics is a dark art. In times of uncertainty, statistics have far less relevance to predicting the future than does psychology.

Big business does big things, it uses more capital than labour and depends heavily upon the SME sector to supply much of its physical imput. SMEs tend to be the bigger users of labour, indeed they account for the large majority of employment in Australia.

With big business already sounding warnings about the future, SMEs will now be rethinking their investment and employment strategies for the next 2 -3 years.

My prediction is that if the Senate continues to block the Government’s Budget throughout the Spring sittings, Australia will sink into recession by mid-2015.

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