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Bank of England forecasts have been consistently over-optimistic – don't count on green shoots by summer
The picture is the same across Europe. A miserable winter and spring before economies warm up in the summer and get back to business as usual by the end of the year.
The Bank of England has made this prediction for the UK economy and is unlikely to change its mind despite new figures showing that a contraction in manufacturing dragged GDP down by 0.2% in the last three months of 2011. It wasn't predicted, but hey, it was always going to be a bumpy ride, governor Mervyn King repeats at every opportunity. The message from the Treasury's independent assessor, the Office for Budget Responsibility, is not dissimilar. The chancellor, George Osborne, has parroted this view for many months as he wards off attacks from Labour.
In Germany, the government says much the same. Last week it cut the country's economic growth forecast to 0.7% in 2012 from a previous forecast of 1%. Economy minister Philipp Rösler said, seemingly without a ruffle of real concern, that the German economy would "suffer a growth dent" in the first half of 2012, but that the economy, driven by continued strong domestic demand, would pick up again in the second half of the year.
"Our economy is robust. There can be no talk of recession," Rösler told reporters.
So the UK is in good company? Well, if our economic future was tied to the coat tails of Germany it might look rosier, but there is a strong argument that a central bank with a consistently over-optimistic forecasting record and a newly minted OBR with no track record to speak of, are not the best guides.
The gloom-mongers have proved to be more accurate and unfortunately are likely to be over the next year or two as well.
Economist Nouriel Roubini, who has made a name for himself predicting disaster for western economies, is currently roving around Davos unsettling the gathered thinkers and leaders with his gloomy analysis.
Roubini was one of only a handful who warned of a credit crunch back in 2006 and 2007 as the US sub-prime mortgage collapse began to be felt across the banking system.
And it is the banks that remain the focus of attention. In Roubini's view, and those of many other senior officials around the capitals of Europe, the state interventions of 2008 to rescue banks were half-hearted. They need far more money to protect them against bad loans and low confidence than politicians are prepared to concede.
German, Spanish and French banks all stand on the edge of a precipice without bigger funds behind them. UK banks find themselves in a similarly precarious situation, despite the protestations of super-confident chief executives like Bob Diamond at Barclays.
Diamond is lobbying furiously in Davos for politicians to relent on some of their more draconian rules. That is his answer to the problem faced by businesses in need of a loan. Give Diamond a more relaxed regulatory rule book and you get the loan, you get the boost to confidence and the lift in growth at the end of the year.
It is not hard to see through this argument. The banks need support, or no economy is going to rouse itself. Foreign lenders, a key factor in the lending drought to the eurozone, want to know banks are secure before they use them to transmute their savings into loans for euro businesses.
But banks also need direction. As we know to our cost they are adept at funnelling much needed capital into the accounts of their bosses and traders.
At the moment there is no appetite for rescuing banks. Germany has told its second largest bank, Commerzbank, to rescue itself with a whole series of assets sales and creative accounting gimmicks that will, among other things, mean it is likely to cut lending again. The German economy probably has enough gas in the tank to carry on motoring. The UK, with higher household and corporate debts and worse problems in banking sector, is running on empty and will need to sit in a layby for some time to come. Even rising unemployment, ever falling confidence and a contracting economy are unlikely to stir the chancellor.
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