Jun. 5--An Indian businessman who travels the world asked a pointed question at a meeting this week. He wanted to know why the people in Britain were so much more depressed than the people in all the other countries he visited. Why is it that business confidence here is shot through, although Britain's economy is nowhere near as badly hit in this recession as many of the other countries?

The fact is that the British economy thus far is weathering the storm much better than most. We are faring much better for example than Germany, where output fell by almost 4 percent in the first quarter of this year, or Japan, which is declining similarly fast or Eastern Europe, where some smaller countries such as Latvia are looking at declines of 18 percent. Yet nowhere did he sense as much gloom as in the UK.

His question is clearly important because depression becomes self-fulfilling and self-feeding. If indeed we are more gloomy here than elsewhere, it could well feed back into a negative loop which will make the economy much worse than it need otherwise have been.

Part of the problem has to be political rather than economic. As is made clear by the local election results today, and no doubt the European results when they come out at the weekend, Government has lost the support of the people while unfortunately what the abysmal turnout, or more accurately the number of abstainers suggests, is that people thus far have little faith that the opposition would be much better.

What this means is that people know we are in a mess, and they are looking to politicians to bring us out of it. First, people want a leader they can believe in. Then they want that leader to come up with a strategy that is credible. But it does not work the other way round. A strategy, however coherent, won't lift the spirits if we do not have the leadership that persuades people it will be implemented coherently.

So that is part of our problem. America has Obama, Germany has Merkel, France has Sarkozy. Each is unpopular with large segments of their electorate -- but none is held in such low esteem by their electorate as our Prime Minister. We are depressed, not because we are in a hole but because we don't trust Government to get us out of it.

The second reason is a shock to our amour propre. From some time in the mid-Eighties, and certainly in the Nineties and massively after 2000, the perception of the UK economy was transformed.