GT Summit: What would be your Plan B?

GT Summit
Global Trade Topic at Global Trader magazine
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Post date: Monday, 20th February 2012

At our regular GT Summit, business leaders discuss a hot global trade topic. The latest big question is: In the UK we seem to be increasingly at the mercy of external forces in the world economy, with the government admitting its growth forecasts – based on their 'Plan A' – are as much to do with the volatile markets as with their policies. What would be your Plan B?

Daren Cox

CEO and founder, Project Brokers

"The UK is competing in a global economy, and that isn’t going to go away. Private enterprise is the main creator of wealth and the government needs to encourage private enterprise to flourish by reducing corporate taxes and red tape and increasing access to credit where the banks are currently failing to do so. Strategies like QE don’t appear to be helping anything other than the macro-levels of the economy, which is important to maintain liquidity, but not nearly as effective if the cash doesn’t flow down to the SMEs. Having a world class, professional government that is well grounded in business principles is key to the UK’s future competitiveness – the time of the amateur ‘have a go’ government is over."

John Hawsworth

Chief Economist, Pricewaterhouse Coopers

"Unfortunately there is no simple Plan B available, given the nature of the economic problems facing the UK and other advanced economies. We have been living beyond our means for many years and a period of austerity is inevitable as we bring private and public debt levels back under control. So the Chancellor’s plans still seem broadly appropriate, although there could be room for fine tuning round the edges. In particular I would have been bolder on infrastructure investment with an additional £10bn rather than £5bn. I would target this extra spending on regions like the north east that are being hardest hit by public spending cuts."

Richard Driver

Analyst, Caxton FX

"The obvious alternative to the current plan would be a large injection of public spending. However this would only result in increased UK debt levels and the loss of the bond market’s confidence, which would raise our borrowing costs. Britain is at the mercy of external forces but this does a disservice to what the government is doing. While it is true that growth has almost come to a halt, the government’s stance of guarding against the soaring bond yields has to be our first priority. If we stick to Plan A a recession may yet be avoided and we may look back on this period and be thankful the government stuck to its path."

Derek Duffill

Group Managing Director, ENER-G plc

"With the severity of the deficit and the need for macro-economic stability, changing course isn’t an option, but a plan A+ would be welcome. This would involve the government throwing its full weight and conviction behind manufacturing and engineering to make up for decades of neglect and to provide the best chance of growth. UKTI does a great job, but more resource is required to hand-hold novices and guide expansion into the growth economies. From the perspective of ENER-G – we provide cost and carbon reduction solutions on a global scale – the government’s vacillation on the low carbon and renewable sector has hampered progress and our plan A+ requires the long-term certainty that will enable us to unlock investment."

Richard Anderson

Chairman, Institute of Risk Management

"Dealing effectively with uncertainty and volatility is at the core of risk management, and these issues confront not just the British government but organisations of all shapes and sizes across the world. The government, as the board of directors of UK plc, needs to ensure that it has a strong grasp of the risks and opportunities of all possible policy alternatives and that it has a sound decision-making process in place. Whether in business or in government, we cannot predict the future, but we can consider systematically a range of possible outcomes (including those that are low probability, high impact) and apply judgement as to the effect that they will have on our situation."

Dr Stephen Barber

Economics Advisor for Seltrade

"Policymakers have staked their credibility on the so-called Plan A – that is reducing the deficit – and the austerity package has paid some dividends in the bond markets for Britain. But the economy is at the mercy of international economics, not least the Eurozone crisis which has the capacity to be the most devastating economic failure since 1945. Plan A was conceived when it was thought that Europe’s economies would strengthen. 2012, it seems, will be a precarious year for economic growth with a real risk of a second recession. Falling output means that deficit reduction is harder. Indeed everything is much easier when there is expansion and so any successful Plan B has to extenuate the supply side. From an investor point of view, two potential winners are technology and infrastructure." 

The GT Summit was first published in Global Trader Magazine, Issue 3. To read the entire publication, click the ebook.

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