First Person: The good news first

Here is a little game you can play at your next dinner party. Ask your guests what they think happened to retail sales during the first couple of month of the year.

Their considered verdict will undoubtedly be that they slumped, probably by around 5 per cent. You can then stun your friends with the good news: according to figures published this week by the British Retail Consortium, total sales actually rose in February.

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First Person: Rate cuts not the best remedy

The latest interest rate reductions will not stimulate the economy — they may make things worse.

First, such dramatic cuts undermine confidence. When policymakers panic, people reduce spending and retrench, fearing worse to come.

Secondly, monetary policy operates with a lag. A weakening economy does not necessarily demand further rate cuts. If patients fail to recover quickly, the sensible doctor either gives the medicine time to work or changes the treatment, rather than desperately doubling the dose. An overdose could be worse than no action — it could even prove fatal.

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First Person: The deficit danger

It is difficult to know what is most depressing about the economy. Jobs are being slashed and homes being repossessed. So it is understandable that the catastrophic black hole at the heart of our public finances is not receiving the attention it deserves.

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First Person: Where to save now?

Here is a fact that will keep you awake at night. If you don’t have a traditional, final salary pension, how much do you think you need to save to make sure you maintain your lifestyle in your old age? Most people assume it’s around 10 per cent of their annual income. The answer, however, is nearer to 20 per cent. Truly frightening.

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