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.

Interest Rates – Just go along with the ride

It was good to open my paper this morning to discover that a number of renowned economists had begun to realise what businesses had been telling us for months, a rise in interests rates at the moment would be anything but good news. Businesses who had been speaking to us had not applied any great economic academic ‘know how’ to their thinking just the highly valuable, but all too sadly rare commodity, common sense.

Who would have thought that adding to the costs of people mortgages at a time of economic uncertainty would not have an effect on already fragile growth? Who would believe that raising rates would have an impact on inflation largely caused by increased taxation, rises in the cost of oil and soaring world food prices? Well at least three members of the Bank of England Monetary Policy Committee apparently.

There are occasions when one should ‘doff one’s cap’ to the experts but when they are driven by old fashioned dogma which dictates that when prices rise too fast the only cure is adding to the cost of borrowing they deserve to be castigated. We find ourselves in a world which is very different to the one that used to respond to such a course of action. If proof of that were needed one has only to consider that on a day when Portugal is seeking to be ‘bailed out’ there are also mutterings about the credit rating of the good old USA.

I have no doubt that the world will work its way through this challenging period but it will be made more difficult if we get our strategies wrong. There will certainly be times when it will be essential to stick doggedly to old beliefs but for the time being, and as far as interest rates are concerned, now is the time to hold our nerve and be pragmatic. It might not be a comfortable experience for some members of the MPC but they should just accept that there is little they can do and that they should hold tight and go along with the ride.

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.

Please take our poll below, if you have an alternative answer to those listed, feel free to leave a comment on this blog.

Poll from Snap Surveys ...