High time for some positivity

MT editor Matthew Gwyther reflects on the slow economic progress since the fall of Lehmans.

by Matthew Gwyther
Last Updated: 06 Nov 2012
The global economy looks, if anything, more feeble than when I went off on hols a fortnight ago. We’re now four years in since the demise of Lehman Brothers and five if you count the beginning of the rot as the fall of Northern Rock. How time has flown as the economy glides downwards. One thing that doesn’t change are the delays into Heathrow due to congestion: nearly two hours for me last night on a trip back from Rome. Something needs to be done about our national airport and fast.  

One of the more alarming things I read while I was away was the statement from a senior bod at Unilever that his company was considering selling shampoo and even washing powders to his European customers in cheap, single sachets, in similar fashion to the way it’s done in thrifty India. "Poverty is returning to Europe," Jan Zijderveld, the boss of the company’s European business told FT Deutschland. "If a consumer in Spain only spends €17 when they go shopping, then I'm not going to be able to sell them washing powder for half of their budget."  That kind of behaviour from a huge conglomerate looks like a sensible, measured response to a prolonged depression.  

At the top end, as we all know, the mega rich are still making out like bandits. Today we read that the influx of the most wealthy into London has created a £38 billion property development boom in the capital. But when average people feel insecure about their jobs, and their futures, and are watching their wages stagnate then it’s very hard to kick-start an economy with a virtuous circle of earning and spending.

Writing in The Telegraph this morning Roger Bootle says that "we are at one of those once-in-a-generation moments when the state needs to take a leading role in bringing  us out of the mire." But where exactly can this government take us? The nature of the coalition is that something dramatic is very unlikely to occur because consensus on genuinely radical moves is almost impossible to achieve. Bootle’s suggestion, for example, that stringent cuts to government spending including a freeze on all state benefits for five years with those savings used to fund reductions in NI and income tax will never get out of the starting blocks after howls of protest from the Lib Dems.

However, Bootle is right that there needs to be more energy and ideas from the top. In life generally confidence is necessary to get out of bed in the morning and there must be something government can do to boost confidence. Even if it isn’t the biggest of  Big Ideas, it’s high time they tried to create some positivity. To use the words of Allen Sheppard, formerly boss of Grand Met ,"a CEO should add value or get out of the way."

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