It has been striking for the last two years that the British companies I’ve dealt with fall into two categories: those that have carved out strong export routes and those whose fortunes are pegged squarely to the domestic economy. Both need to find the path to growth before we see the light at the end of the austerity tunnel.
Bosses from both camps are liable to moan. They’re proud to be British, but couldn’t George Osborne do more for us to oil the wheels of industry? Part of it is down to rhetoric, as even Tory allies such as broking tycoon Michael Spencer confessed this week, and part of it is concrete action. Across the top is the knotty issue of confidence – they need to feel good about the nation’s prospects if they are to recruit, expand or invest.
The Chancellor picked out the exporters as suffering yesterday, blaming the using overseas woes to explain away over-optimistic growth forecasts that were sharply cut. If you think it’s tough here, was the message, just look at France’s economic woes or Spain, where the dole queues snake around the block.
Yet many of the major European markets have recovered better than us after the financial crisis, mainly because no other nation was so dependent on financial services for its economic prosperity.
That skew will never be as pronounced again. Not only has the banking levy – in effect a tax on any bank that is headquartered here – increased once more, but Mr Osborne continues to exclude the banks, who are learning to live with the higher cost of regulation, from taking advantage of the falling rates of corporation tax too.
Bringing that headline tax rate down another notch is a measure meant to lure headquarters here, and it seems to have been working already. The insurer Aon made a strong statement by relocating from Chicago to the City of London. That’s great for jobs but, as recent skirmishes with multi-nationals show, the firms must turn a profit if the Chancellor is to reap the full benefit.
For the exporters, their prosperity depends on what they are selling and to whom. The last time I checked, Britain was exporting more to Denmark than Brazil. The trick is to help re-engineer trade routes, hence Mr Osborne throwing more cash at export agency UKTI, which business chiefs have been praising of late.
And for those with few routes abroad – usually small firms struggling to make their mark – helping them to take their first steps comes in the form of £1.5bn put aside for trade finance. Back at home, it is a question of getting help to the sectors that really need it. The service sector has shown it can take of itself even if the baristas in Starbucks aren’t quite so busy while their paymasters work out how much tax they are prepared to pay the Exchequer.
Companies in this sector are responsible for many of the 1.2 million private-sector jobs created since the Coalition took power – there are many part-time posts, yes, but jobs all the same.
It is the manufacturers who are struggling, according to recent data, and the construction industry remains on its back. Reviving the private finance initiatives might be the way forward. Anything that connects pension fund money with schemes for road, rail and schools, really. Here is an area where the Government should have acted far sooner. Regulators and ratings agencies that cast an eye over national finances are relaxed about debt racked up on infrastructure projects, particularly if they can create jobs and growth in the down-cycle.
An early move by the Coalition would have meant shovels would be in the ground by now but – aside from Crossrail, which is redrawing several London boroughs – there aren’t enough hard hats out there.
What else? Measures for roads, scientific research and broadband ticked a number of boxes. A strategy that can make Britain a hub for shale gas extraction in a way that Aberdeen is Europe’s oil capital could bear fruit.
Bosses gave the overall package a guarded welcome, as they always do on day one. More of the same; moving in the right direction was the boardroom feedback. And will it engender confidence? Among squeezed workers and savers, it might not. But if British firms start to invest some of the £300bn on which they are sitting, we may be getting somewhere at last.
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