Brave New World
Richard Lambert, the Director-General of the CBI, has seen the future and it looks "different".
That will be the thrust of the message that he will deliver today at the CBI's annual conference.
The central theme of his address will be that the recession has forced businesses to undertake a fundamental rethink of how they operate, raise finance and to cut the shackles of their past reliance on banks for providing finance.
Lambert will also say that businesses will work to create a more flexible workforce.
The lecture forms the backdrop to the publication by the CBI of "The Shape of Business — The Next Ten Years".
Lambert argues that the new "norm" will be for a more collaborative, less transactional world. Businesses will work more closely with customers, suppliers, employees and shareholders.
The sharp eyed amongst you will observe that banks and politicians have been left out of the above list.
Hardly surprising, given that the politicians and banks are largely responsible for the current financial quagmire; and have come up with precious few practical initiatives for the future economic well being of this country.
Labels: banks, CBI, government, recession, tax
Life Is Taxing
The Times reports that small businesses spent longer doing their taxes in 2008 than in 2007, despite Labour's promise to reduce red tape.
Small and medium-sized businesses in Britain spent on average an extra five hours working on their taxes, mainly because of the temporary cut in VAT in December last year. The total number of hours spent filling in tax returns rose to a record average of 110, up from 105 in September, according to a report by the World Bank and PricewaterhouseCoopers.
Britain slipped from 24th to 25th in the rankings of 183 countries for the least number of hours spent on taxes.
Will the government ease the administrative and tax burden?
No!The increase in the PSBR means that the government will in fact increase taxes. Unfortunately, given that we are in the middle of a recession, this increase will only make matters worse.
Labels: government, HMRC, public sector, recession, tax
A Mountain of Debt
Brown's Bankrupt Britain has a nasty habit these days of breaking records, not the good ones but the bad ones relating to the size of debt.
Sure enough, as is becoming the norm, another record has been broken. In October the UK Government had to borrow £11.4BN. This is the worst monthly figure since records began in 1946.
Tax receipts fell by £4.1BN, compared with October 2008, and spending increased by £4.5BN.
The total public sector net debt now stands at a staggering £829.7BN (59% of GDP).
Certainly the figures are not good, most certainly if the government does not come up with a credible plan to show how it will rein in the debt external and internal confidence in the UK will evaporate; the situation will become far worse, as Sterling will collapse and high achievers/businesses will uproot and leave the country.
However, the ability of the current government to set up a credible plan is limited by a number of factors:
1 Time, an election has to be held by May 2010.
2 Gordon Brown will need to play to the gallery of public opinion in order to try to win the election, any plan that sets out tax rises and spending cuts will not be aviable to fight an election on (in Gordon Brown's eyes).
3 Gordon Brown doesn't have a credible plan.
Labels: bankruptcy, debt, GDP, Gordon Brown, public sector, recession, sterling, tax
Three Way Split
It seems that the Bank of England's Monetary Policy Committee (MPC) has suffered something of a three way split, with regards to what is the best course of action to take re stimulating the economy.
That at least is the inference to be drawn from the minutes from the MPC meeting this month.
Despite finally deciding to increase the level of quantitative easing (QE) by £25BN, the committee was divided three ways.
Spencer Dale wanted to leave it at £175BN, while David Miles wanted to increase it by £40BN.
The other seven members opted for the £25BN.
Time will tell as to which faction is right.
Labels: bank of england, mpc, quantitative easing, recession
Up, Up and Away!
Inflation is on the rise again, the "reliable" and "up to date" Office for National Statistics (ONS) reports that the Consumer Price Index (CPI) has risen to 1.5% in October.
Analysts expect that it may rise to 3% in the coming months.
The Retail Price Index (RPI), which includes housing costs, rose to -0.8% in October, from -1.4% the previous month.
Whatever rate of inflation is followed, the modest rise should be seen as no threat to the economy. A good dose of inflation (not at the levels seen in Zimbabwe) is what the economy needs to inject some life back into it.
Labels: cpi, inflation, ons, recession, rpi
Spat Over Woolworths
One year on from the demise and collapse of Woolworths the former Chairman, Richard North and former chief executive Steve Johnson, publicly criticised Deloitte's handling of the collapse.
They noted that Deloitte's acted as both adviser and administrator to Woolworths, and cited that this was a potential conflict of interest.
North and Jones feel that Deloitte's didn't back an emergency rescue plan by Woolworths' management team, because of its interest in the higher fees it would earn as administrator.
Deloitte's have been quick to fire back, they are quoted on
City AM:
"
Woolworths failed because it was losing money and had no cash.
It was the directors themselves, not the banks, who appointed Deloitte as administrators, based on the realisation that the company had run out of money and could not continue trading on a solvent basis.
We are never driven by the fees available but simply by the pure economics of the options for the creditors."
They have a point, re who appointed them.
I would ask why the directors, if they were concerned about a conflict of interest, appointed them in the first place and are only raising this issue now?
Labels: bankruptcy, deloittes, recession, woolworths
Europe Out of Recession
Europe, or rather the 16 countries that use the Euro, have officially pulled out of recession (their economies expanded by 0.4% in Q3 of this year).
Germany and France expanded by 0.7% and 0.3%, whilst Spain shrank further.
However, Britain is still stuck in recession (even Italy has pulled out of recession) if the recent figures from the Office of National Statistics are to be believed.
Europe should hold back on celebrations though. The recovery is fragile, and consumer spending actually fell by 0.7% during Q3.
Labels: EU, ons, recession
Banks Revert To Bad Old ways
It seems that old habits die hard and, hardly a great surprise, the banks are reverting to their old ways of forcing staff (via sales targets) to sell products to people who don't need then and cannot afford them.
That, at least, is the view of the union Unite.
Unite claims that sales targets for banking staff have not changed since before the credit crunch.
Fair point, maybe. However, the banks do need to set sales targets if they are to remain in business and continue to employ members of Unite.
The question is, are the sales targets reasonable and achievable without recourse to mis-selling and "harassment" of customers via cold calls?
Labels: banks, cold calling, recession
Don't Believe The Hype - Slowing Unemployment
The Office of National Statistics (ONS) released figures today that purport to show that the ongoing rise in unemployment is slowing, climbing by a "mere" 30,000 in Q3 of this year to 2.46M ("experts" had been predicting 2.5M).
Doubtless the government and other organisations may well spin this as signs of a recovery. However, before popping the champagne corks, the following needs to be taken into account:
1 There are still 30,00 more people out of work than there were in Q2.
2 ONS figures are notoriously unreliable.
3 Q3 ended two months ago, the figures are not real time and are irrelevant for decision making.
4 The true number of "unemployed" are hidden by government schemes that hold people off the register (eg work experience schemes, creation of "non" universities etc).
The figures are meaningless.
Labels: government, ons, recession, unemployment
Lloyds Job Cuts
Lloyds Bank, the 43% taxpayer rescued wreck of a once proud bank, has announced that it will cut a further 5,000 jobs by the end of next year.
Lloyds, at the behest of Gordon Brown, rescued HBOS last year at the height of the banking crisis; it now faces having to "eliminate" a total of 12,500 jobs from a total of 129,000 staff employed in Britain.
Meanwhile HSBC and Barclays both issued positive trading statements, in which they claimed the rise in bad debts has peaked and profits are sustainable.
Labels: banks, HBOS, HSBC, Lloyds, recession, redundancy
