The Government didnt cause the current problems but as they are in the driving seat they need to do something about it...

As yet more statistics hit the street proclaiming further economic gloom and doom some of us, me included, are inclined to scratch around for straws of comfort rather than to simply accept the implications of the evidence that some would say is staring us in the face. Burying our heads in the sand? Maybe, but on the other hand what’s to be gained from burying our heads in our hands? In any case, is relying upon these traditional indicators of financial health helpful?


In recent years, largely as a result of incredible technological changes, the world has moved on at a pace that few would have thought possible ten years ago. It was only 15 years or so ago that email was regarded with suspicion, that websites were rare in the extreme and that social media was not even a twinkle in some ‘techies’ eye. As the use of technology has become more widespread customer practice and demand has changed dramatically.

Was it only a few years ago that people maintained that internet sales wouldn’t take off claiming that before purchasing buyers would need to be able to touch and feel whatever it was they were buying. Nowadays we can reflect, not only upon how wrong they were, but also upon the wider impact of the online revolution. One could write volumes on the subject; demands for greater convenience, lower prices, that most white goods are now regarded as being disposable to name only a few of the outcomes.

Simultaneously attitudes have changed in other areas. Remember the heady days when our houses earned more than we did and, for those who had any, cash deposited in the bank grew in value with little or no effort. Those were the days when, if servicing debt became difficult, we just borrowed more; happy days, when water was cheaper than milk and diesel was cheaper than petrol. Weren’t those the days too when the experts decided that it would be more cost effective to send manufacturing processes to parts of the world where they could be carried out more cheaply while we would thrive on ‘high value’ processes alone.. What crazy times they were.

My point? Well we can bemoan rises in public borrowing, widening of the balance of payments, reduced standards in education, the wrong type of leaves on the line, and any other thing that takes your fancy, but the fact is that, unless somebody is prepared to do something as a result, such indicators are of little more than academic interest. In any case, given the way the world has changed in recent years, I would question whether the traditional indicators are as pertinent as they were in the past. The one thing I am sure of is that the time for simply sitting with our heads in our hands has long passed we need action, energy and direction leading to growth in the economy. This government didn’t cause the current problems but as they are in the driving seat they need to get on and do something about it.

Blame can wait... what we need are solutions that work.

If one were to listen to the Banks you would be hard pressed to understand why so many businesses are complaining about their reluctance to support them and, that if they do, are only willing to do so on the most penal terms. ‘We have money and we want to lend’ is the oft repeated dictum but the reality on the ground seems to be very different.
In today’s reality those deemed to be worthy of support either don’t need it or, as is the case with a growing number of businesses, don’t want it. On the other hand those who do require their support are disqualified simply because they do. Lewis Carroll would have been proud of the situation we have created and would, perhaps, have nominated the Queen of Hearts as the next Governor of the Bank of England.

In today’s world the first thing one seems to be required to do is to determine ‘who is to blame’. The Banks for creating the mess in the first place? Is it the government for lacking in leadership? Is it the economic incompetence of the previous government? Perhaps, it is The Bank of England and the regulatory authorities? The press and a variety of economic commentators for persistently, and consistently, undermining confidence? Possibly, even, the reluctance of businesses that can invest in the future simply stockpiling cash while they sit on their hands waiting for someone else to blink? I think I can save a great deal of time, to a lesser or greater extent it is all these although, actually, blame can wait. What we need are solutions that work.

Given the recent banking crisis few, if any, would argue for an unregulated orgy of lending but what is required is a source of lending that can be accessed by growing small and medium sized business that doesn’t attract penal rates of interest or the need to put forward their ‘first born’ by way of guarantee. We also need a process in which decision making is transparent, fair and timely. Too many businesses are being required to go through opaque drawn out processes costing them time and money before being told that they have been successful, or worse, unsuccessful.

Whilst I do not share the more extreme views of the ‘doom and gloom brigade’ I strongly believe that the economy needs an injection of growth. There are a number of measures that can be taken but one must be to deliver more financial support for small and medium sized businesses. Delivered with care encouraging sensible lending to this sector will enable it to flourish whilst simultaneously delivering the economic growth we need. The government, the regulators and the banks were quick enough to get round the table when the latter needed support it is about time they sat down and sorted things for the rest of us.

ECONOMY, ECONOMY, ECONOMY...

A great deal has been said about the current economic climate, probably too much, there seems to be an ongoing competition amongst experts and the press as to who can come up with the most dire forecast. One says things are bad another says it’s worse. This may serve to burnish certain egos but it does nothing for consumer confidence and certainly doesn’t do anything for the majority of businesses that have been well run. In Hertfordshire we are fortunate to have many companies large and small that have set the standard in terms of innovation; companies that have been developed using sound business practice; companies have been run responsibly. Whilst some will need to tread cautiously they remain viable and will continue to be source of wealth generation and employment.

In any period of challenge those that have the ability to demonstrate clear thinking will come to the fore, thrashing around for one solution after the other is not the answer. The problem is within the financial system not, by and large, within the run of the mill businesses that most of us know and understand. Of course they are affected but it is not a problem of their making left to their own devices with sensible levels of financial support they will continue to succeed.

What is needed is a period of reflection enabling the myriad of initiatives to work, the seemly endless drive to fill column inches or airtime must come to an end. In the same vein the apparent need by some to provide justification has to cease. We all have a good idea what went wrong and where the blame lies. It will be the innovative non-financial businesses that will get us out of the problems that face us we are calling on politicians, regulators and the financial press to clear their heads and ensure that an environment is created that will enable them to so.

Ross, Brand or the Economy?

It’s been an interesting week; the fall out of the credit crunch rolls on, house prices continue to fall, various wars continue to take their toll around the world and what do the BBC, Gordon Brown and David Cameron choose to lead on? The rude and boorish activities of two overpaid radio presenters.

Oh well at least the Chamber has been doing it’s bit, meeting Members of Parliament, challenging the government on the payment of rates on empty business premises; calling for cuts in interest rates; and particularly looking at support for smaller businesses during the current economic upheaval.

Smaller businesses play a key role in the county employing high numbers of people , introducing innovative new ideas and as a vital link in the supply chain for their larger brethren. To many of the people running smaller businesses the word challenging no where near reflects the current situation.

Anyone who has put their house up as security to support a business will know the stresses on themselves, their families and life in general. People running small businesses can’t just lock up at night, go home and forget all about it.

Last Sunday I read the papers as usual and found myself becoming more and more angry as I read the various accounts of why we had got into the economic pickle in which we find ourselves. Angry because many of these so-called experts were the very people who had caused the problem. I don’t suppose many of them had put their house on the line.

Now the banks who largely caused the problem, those that courted the small companies whose businesses they so avariciously sought only a few months ago, are withdrawing their support. Not surprising I suppose when they don’t even have the confidence to do business with each other.

It is clearly naïve to expect things to return to normal overnight but surely the key ingredient we require now is confidence. Isn’t it about time the experts in the City and the banking community began to do something about it?

Oh, and what about Messrs Brown and Cameron? It’s probably better that they stick to worrying about the BBC.

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