Making sure the green shoots don’t wither away

The UK may be in recovery, writes Scott Barnes, but how can we keep it that way?

Recent third quarter GDP figures for the UK showed a growth of 1.0 per cent, however when these figures were announced, many commentators were keen to point out that discounting this summer’s Olympic Games and Diamond Jubilee spending, the economy has remained stagnant year on year. Although this is a continuation of the current pessimism around the UK economy, the question is whether when you take a closer look at the situation, this is justified. 

Some recent research undertaken by us in conjunction with the Centre for Economics and Business Research (CEBR) found that mid-sized businesses have actually, for the most part, been growing well during the past few years of economic stagnation. After taking a closer look at this growth, it found that mid-sized businesses have been able to boost their productivity, with turnover per employee 18 per cent higher than the UK average, and as a result increase their turnover by £25.7bn over the past year. 

In addition, the third quarter of 2012 company liquidations were down 2.8 per cent from the previous quarter, and 6.6 per cent less than the same quarter in 2011. One of the major factors behind this is that the current low interest rates mean that struggling businesses are better able to service their loans and pay off the interest. As a result, banks are less concerned about calling the loan in. Those businesses that can’t afford to tackle the debt itself are given a bit more breathing space, allowing them to concentrate on growing revenue, rather than struggling to meet loan payments. 

The latest quarterly Business Confidence Monitor from the Institute of Chartered Accountants of England and Wales and Grant Thornton shows that business confidence is actually higher in regions outside of London and the South East. There have been some encouraging initiatives recently from the Government and it will be interesting to see how this glimmer of regional confidence is affected by the recent review by Lord Heseltine and the Coalition Government’s "City Deals" plan. Together, these schemes have called for more government funds to be diverted to regional governments and greater powers for mayors to support this entrepreneurialism and dynamism across the UK.

The pervading economic climate continues to be a proving ground for companies, with those that are still in business emerging lean, organised and efficient. Businesses are taking a fundamental look at how their business is run in order to weather the worst of the economic storm. Clear effective governance, robust planning and attention to financial levers mean they are now equipped to deal with this kind of environment. 

Before businesses start to invest again, economic confidence needs to come from somewhere, and the government must shout about how well we’re doing, and keep providing support for British businesses. If just a fraction of the estimated £720bn of cash reserves in British businesses was invested back into the economy, business investment would return to pre-crisis levels. While the "new normal" means we have to adjust our growth expectations, confidence is needed to ensure the recent economic growth doesn't just prove to be an anomaly and continues.

Green shoots. Photograph: Getty Images

Scott Barnes is the CEO of Grant Thornton UK.

Photo: Getty Images
Show Hide image

The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.