At the IoD Annual Convention held on Wednesday in East London, Better Capital chairman Jon Moulton warned that we shouldn’t rely on the private sector to generate the growth needed to get the UK’s economy back on track
‘The private sector is too small to generate the growth,’ he said, speaking exclusively to MT. ‘We have a public sector that is too big. It’s only a small contributor to growth. We’re having to use debt to fund the excess spending.’
Official figures revealed yesterday that the UK has slumped back into recession, after the economy contracted for a second quarter in a row.
The Coalition has already introduced a programme of spending cuts to rein in the country’s debt. But Moulton argues the cuts aren’t deep enough, and warns the economy will get worse in the next few years: ‘Our debt will mount, the markets will panic at some point, interest rates will rise and the currency will slump. That’s when we’ll have a real crisis. We’d be forced into a savage recession which we wouldn’t be able to control.’
But the doom-monger clearly sees some potential for business growth. Two weeks ago, Better Capital bought the high-end fashion retailer Jaeger after the downturn on the high street left the British chain struggling to stay afloat. But Moulton is keen to stress that Jaeger is no charity case: ‘The company’s not in a terrible state at all. It put a lot of its cash into supporting Aquascutum which was in a much worse state. But it was operating near break-even,’ he said.
Moulton now faces the challenge of making Jaeger profitable. ‘There are some obvious things that can be improved: logistics, the central overheads,’ he says. But he doesn’t want to appeal to the mass market; instead he’s aiming to turn the business into the next Burberry. ‘There is one thing I’m not going to do with Jaeger - inflict my taste on it,’ he said.
- Look out for MT's interview with Jon Moulton in the forthcoming June edition of the magazine.