Although the reporting cycle is a little unusual – the chancellor George Osborne only made his interim report in December – the parallels with, and potential lessons from, his private sector peers are interesting. Since he took the job (and it was a pretty senior post for a first board position) this young CFO has been struggling to explain exactly how UK Plc would achieve the more difficult half of balancing the books, i.e. growing revenues.
Somewhat predictably, the focus has therefore been on the slightly easier side of the equation, i.e. cutting costs. Thus far this approach seems to have done enough to appease watching investors and analysts. Partly due to problems being experienced by most of its major competitors, and the resulting lack of alternatives, UK Plc has been able to hang on to its investment and top credit rating. But the tough market conditions don’t appear to be easing and the outlook remains bleak. Thus Osborne, like most CFOs, will have to work extra hard to convince those watching that he has a credible plan to get UK PLC’s finances back on track.
Having already had to admit he will miss several key targets he set himself for getting the financial house in order, Osborne now needs to rethink his strategy for achieving growth. As most experienced CFOs would confirm, it is not possible to cut your way out of a slump. A sudden bout of reckless spending would be equally disastrous. But when results keep going against you (and last week’s ONS figures, showing we’re heading for a likely triple dip recession were not what Osborne projected) then it’s time to acknowledge the current strategy needs a rethink.
The rest of this article can be read on economia