New indicators this week prove that the economy is still getting worse.To be sure, the Retail Sales Index for August edged up in nominal terms year over year for the first time in three years and any sign of improvement is welcome.But it fell in real terms after accounting for inflation for the 40th month in a row and what increase there was was mainly driven by fuel sales where price increases forced sales up.To be sure, some other sectors also saw rises, but there is little from which to draw real encouragement.In the meantime, another wave of job cuts suggests that the economy will contract further.The impact of these job losses is now being firmly felt. The latest sign of that came yesterday when HSBC Bermuda’s rating outlook was cut by ratings agency Standard & Poor’s to negative from stable.Although Bermuda’s biggest bank retained its very strong rating, the change in outlook is worrying because it was taken due to deterioration in the bank’s loan and mortgage book.Chief executive officer Phil Butterfield acknowledged as much when he said: “Over the past year we have witnessed a softening in the Bermuda real estate markets with inventory build up. This has been combined with widespread reduction in business activity in the local economy, leading to loss of income through unemployment or loss of rental income for some customers.”Much more detail on the state of the economy is shown in the lengthy opinion piece on this page that has been contributed by former Premier Sir John Swan.What cannot be in doubt is that Bermuda has now been in recession for two years, and the Island’s problems seem likely to worsen and not get better unless the Island embarks on major structural changes and quickly.It is not hyperbole to say that the economy is no longer on the brink, but in a spiral.Sir John has made many good proposals here, but it is worrying how little leadership and thought is being shown by others. Has the Island become so complacent about its place in the world that it has forgotten the hard work that was needed to get to that place?That is true of the Government, that has consistently underestimated the weakness of the economy and whose measures have been consistently too little and too late. So the ten-year work permits now being offered are welcome, and would have been more welcome a year ago. Now something more is needed.But it is also true of the private sector. Why are the leaders of Bermuda’s international companies, service providers such as law firms and accounting firms, and local businesses not out beating the drum for Bermuda? Where are the new ideas about diversifying the economy?What has to be recognised is that Bermuda is in a competition for qualified human capital who can help Bermuda offer the services the world wants. That’s how Bermuda built a world class insurance centre.Companies that have left, or transferred operations elsewhere give two reasons. One is the high cost of doing business and the other is the lack of flexibility of Government agencies, most notably Immigration.This in no way suggests that Bermudians should be displaced in the workplace. But it must be recognised that when wealth creators come into the community, they create jobs, and good jobs at that.Bermuda can recover its place in the international business world, and it can develop new streams of business, including a greater role for investment and fund management. But it will take flexibility and a willingness to demolish long-held certainties. This will not be easy. But the alternative long term and consistent decline is much worse.