The recovery is coming: can we relax yet?

Blue skies are coming.

All this month on economia we’ve been taking stock of where we are five years on from the momentous events that followed the collapse of Lehman Brothers. So much significance has been placed on the events of September 2008, that some commentators are happy now to refer to events purely in terms of them being “post-Lehman”, as if the failure of one institution marked some kind of year zero when the financial world changed forever

While the meltdown in global credit markets certainly followed the collapse of Lehman Brothers, there is plenty of dissention as to whether it was the  trigger for recession it has been portrayed as. Andrew Smithers in his latest book The Road to Recovery (reviewed in the October issue of economia) draws on a wide range of sources to argue strongly against what he calls “the myth of Lehmans”. His argument is that the global economy was in plenty of trouble (and recession had already kicked in) by September 2008. Others still don’t dispute that the collapse of Lehmans was significant but point out that it was significant insofar as the reaction to it from governments around the word led directly to a worsening of the depth of recession.

The argument here is that the painful experience since 2008 was caused by authorities and governments not allowing enough banks to collapse. While the shock would have been much worse in the short term, the recovery would have been sharper and would have taken hold sooner. The banking sector would have emerged with stronger and healthier banks (even if there were fewer of them), and would have been in a better place to help business recover.

National governments might also have been better placed to rebuild economies had they not been propping up failed banks.

But to some extent this is the old story. Five years on from these calamitous events, we are beginning to see the early signs of recovery. There have been various indicators and research reports produced to show that a lasting recovery is taking hold. The biggest question marks now remain over the fragile state of the eurozone and the likely fallout of any further problems in one or more of the troubled member economies, and the trickier issue of whether this recovery (however welcome) is the right sort of recovery.

The chancellor, George Osborne, set his stall out on delivering an export-led recovery that would help rebalance the economy and bring a longer-lasting, sustainable recovery. That the current return to health appears to be built on a new housing bubble and domestic debt remains a concern. It’s the economic equivalent of treating heroin addicts with methadone. It is far better for them (and far better for society) than heroin, and is more controlled, but it can hardly count as a full recovery from dependency. There is a place for this treatment, but let’s not pretend (as a triumphalist chancellor is likely to try and do at his party conference next week) that he has the economy back to anything like a sustainable position.

However, when that real recovery does arrive it will be fuelled by the sort of high-growth businesses that are the drivers of any economy. And on this front there are some interesting insights from a new piece of research from private equity firm ECI Partners. The top line from the report, which is based on a detailed questioning of almost 700 leaders in high-growth firms, is that they are far more confident this year than they have been for the past few years. The vast majority claim to be planning to fund expansion and growth of over 10% in the coming year and most are very confident that they will be easily able to access finance should they need to (this has been a consistent challenge to growth in recent surveys).

While there is a more upbeat tone to the responses from those based in London, and those working in the technology sector, the vast bulk of respondents regardless of sector or location feel that things are moving in the right direction.

Even if the storm clouds had been building since 2007, the storm of recession broke in 2008. Five years on we are beginning to see the first signs of blue skies above. While it is incumbent on everyone to take a hard look at the events of five years ago and make sure we learn the appropriate lessons in areas from audit to corporate governance, from our banking culture to financial regulation, for the time being it is also important to enjoy some good news for once.

This story first appeared on economia.

 

Photograph: Getty Images

Richard Cree is the Editor of Economia.

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The joy of only winning once: why England should be proud of 1966

We feel the glory of that triumphant moment, 50 years ago, all the more because of all the other occasions when we have failed to win.

There’s a phrase in football that I really hate. It used to be “Thirty years of hurt”. Each time the England team crashes out of a major tournament it gets regurgitated with extra years added. Rather predictably, when England lost to Iceland in Euro 2016, it became “Fifty years of hurt”. We’ve never won the European Championship and in 17 attempts to win the World Cup we have only won once. I’m going to tell you why that’s a record to cherish.

I was seven in 1966. Our telly was broken so I had to watch the World Cup final with a neighbour. I sat squeezed on my friend Colin’s settee as his dad cheered on England with phrases like “Sock it to them Bobby”, as old fashioned now as a football rattle. When England took the lead for the second time I remember thinking, what will it feel like, when we English are actually Champions of the World. Not long after I knew. It felt good.

Wembley Stadium, 30 July 1966, was our only ever World Cup win. But let’s imagine what it would be like if, as with our rivals, we’d won it many times? Brazil have been World Champions on five occasions, Germany four, and Italy four. Most England fans would be “over the moon” if they could boast a similarly glorious record. They’re wrong. I believe it’s wonderful that we’ve only triumphed once. We all share that one single powerful memory. Sometimes in life less is definitely more.

Something extraordinary has happened. Few of us are even old enough to remember, but somehow, we all know everything that happened that day. Even if you care little about the beautiful game, I’m going to bet that you can recall as many as five iconic moments from 50 years ago. You will have clearly in your mind the BBC commentator Kenneth Wolstenholme’s famous lines, as Geoff Hurst tore down the pitch to score his hat-trick: “Some people are on the pitch. They think it’s all over. It is now”. And it was. 4 - 2 to England against West Germany. Thirty minutes earlier the Germans had equalised in the dying moments of the second half to take the game to extra time.

More drama we all share: Geoff Hurst’s second goal. Or the goal that wasn’t, as technology has since, I think, conclusively proved. The shot that crashed off the cross bar and did or didn’t cross the line. Of course, even if you weren’t alive at the time, you will know that the linesman, one Tofiq Bakhramov, from Azerbaijan (often incorrectly referred to as “Russian”) could speak not a word of English, signalled it as a goal.

Then there’s the England Captain, the oh-so-young and handsome Bobby Moore. The very embodiment of the era. You can picture him now wiping his muddy hands on his white shorts before he shakes hands with a youthful Queen Elizabeth. Later you see him lifted aloft by his team mates holding the small golden Jules Rimet trophy.

How incredible, how simply marvellous that as a nation we share such golden memories. How sad for the Brazilians and Germans. Their more numerous triumphs are dissipated through the generations. In those countries each generation will remember each victory but not with the intensity with which we English still celebrate 1966. It’s as if sex was best the first time. The first cut is the deepest.

On Colin’s dad’s TV the pictures were black and white and so were the flags. Recently I looked at the full colour Pathe newsreel of the game. It’s the red, white and blue of the Union Jack that dominates. The red cross of Saint George didn’t really come into prominence until the Nineties. The left don’t like flags much, unless they’re “deepest red”. Certainly not the Union Flag. It smacks of imperialism perhaps. In 1966 we didn’t seem to know if we were English or British. Maybe there was, and still is, something admirable and casual about not knowing who we are or what is our proper flag. 

Twelve years later I’m in Cuba at the “World Festival of Youth” – the only occasion I’ve represented my country. It was my chance to march into a stadium under my nation’s flag. Sadly, it never happened as my fellow delegates argued for hours over what, if any, flag we British should walk behind. The delegation leaders – you will have heard of them now, but they were young and unknown then – Peter Mandelson, Trevor Phillips and Charles Clarke, had to find a way out of this impasse. In the end, each delegation walked into the stadium behind their flag, except the British. Poor Mandelson stood alone for hours holding Union Jack, sweltering in the tropical sun. No other country seemed to have a problem with their flag. I guess theirs speak of revolution; ours of colonialism.

On Saturday 30 July BBC Radio 2 will commemorate the 50th anniversary of the 1966 World Cup Final, live from Wembley Arena. Such a celebration is only possible because on 16 occasions we failed to win that trophy. Let’s banish this idea of “Fifty years of hurt” once and for all and embrace the joy of only winning once.

Phil Jones edits the Jeremy Vine Show on BBC Radio 2. On Saturday 30 July the station celebrates the 50th anniversary of the 1966 World Cup Final live from Wembley Arena, telling the story of football’s most famous match, minute by minuteTickets are available from: www.wc66.org