I started the £1k FTSE 100 Confidence Project in January as a personal show of confidence in the UK equity market. I was fed up with the doom and gloom and was convinced that the equity market had priced in bad news. I invested £1,000 in a FTSE 100 ISA tracker from the Halifax and commited to reporting its performance on my blog.

The market fell further to a low of 3,800 but has since climbed to 4,400 (FTSE 100 close 4,462 – 8 May). My £1,000 investment has grown to almost £1,105. Ten per cent growth is a cracking return in less than four months. I’m going to pull out the profit and save it for a rainy day. It could be a false dawn after all.

We’re seeing all the signs of a long, snakey and W-shaped recession. Bad news continues to arrive daily. UK manufacturing was hit further yesterday with news that Corus is likely to close its Teesside steelmaking plant with the loss of 2,000 jobs.

The recession was driven by a collapse in the credit markets. But there can be no doubt that the economy is recalibrating. A key report from the US Treasury this week showed that the US banking sector was slowly getting back on its feet and the Bank of England’s quantitative easing strategy appears to be having the desired impact in the UK.

Chancellor Alistair Darling’s strategy of increasing public spending to bolster the economy is a blunt instrument but its working. He’s unlikely to get any thanks of course because at some point spending will have to be cut back dramatically or taxes increased.

Increased public spending has to be funded through debt because we didn’t build up reserves during the years of growth. Prime Minister Gordon Brown wasn’t as prudent as he likes to claim. We didn’t put anything away for a rainy day.