Oxfordshire Economic Debate
PUBLISHED: 15:37 15 July 2013 | UPDATED: 15:37 15 July 2013
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Shaw Gibbs, Withy King, HSBC and Cotswold Life put their heads together for Oxfordshire’s Business Community
Is the British economy finally turning a corner? It’s almost six years since the current crisis hit, four and a half since Lehman Brothers failed and a couple of years since the recovery ran out of puff. Our economy has grown, but by a paltry 0.8% and it’s still 3% smaller than before the recession.
At an economic question time at the Saïd Business School in Oxford hosted by accountants Shaw Gibbs and solicitors Withy King, over 100 guests heard the Head of Economics at HSBC Mark Berrisford-Smith give a clear-sighted analysis of the country’s current economic situation. The audience was also able to put questions to a panel of business professionals from Withy King, Shaw Gibbs, HSBC and Cotswold Life, moderated by Nicola Blackwood, MP for Oxford West.
Outlining the current economic situation, Berrisford-Smith said: “Asset prices are rising and the stock market has been going through the roof, but it’s not really feeding through to the real economy. The Eurozone continues to wallow in recession and global economies seem to have hit a speed bump on the road to recovery.”
One of the risks the county is facing is that no one seems to know how quantitative easing will play out. “At the moment it appears to be blowing up asset markets and isn’t doing much for the real economy,” said Berrisford-Smith. “In a few years time we might end up with another blow-up of asset markets without having enjoyed the economic boom to go with it, that is the risk.”
Globally, growth is like to be around 3% cent this year with 40% coming from China and its ‘eco system’ of surrounding countries such as Malaysia, Thailand, Philippines and countries such as Saudi Arabia and Kazakhstan. Berrisford-Smith added: “China and its support countries will deliver more than 50% of global growth. The advanced economies, all 35 of us, will manage 15% and the vast bulk of that will come from the US.”
In the UK, while the service sector seems to be in recovery, exports are more of a concern. Last year our export performance was a ‘true shocker’, according to Berrisford-Smith and things won’t get better while the Eurozone remains beleaguered. So Britain’s recovery is down to British consumers who are having to cope with a continuing squeeze on incomes. He added: “To support growth the country needs inflation down, earnings up or a bit of both because a sustainable recovery isn’t going to happen until real wages are rising again.”
The most hotly debated issues at the Said Business School debate was why banks are not lending and the difficulties of doing business. Nicola Blackwood said that the Government’s Funding for Lending has underwritten £1.33 billion in loans to SMEs and its Enterprise Finance Guarantee Scheme is an alternative form of lending. She added that the Government is also setting up a new business bank.
But with Osbourne’s bank against the wall, the Government is seeking to raise revenue too. According to Richard Baxter of Withy King, VAT is probably the least harmful way to raise revenue. A one per cent cent increase in VAT raises £12 billion a year.
Cotswold Life’s Nicky Godding added that a more efficient HMRC help line could reduce the stress of business owners seeking help.
Another issue of concern to the Oxford audience was infrastructure, airport investment and carbon emissions. Having read the Government’s Aviation Plans, Lorna Watson of Shaw Gibbs said there does seem to be a commitment to recognising the balance between the need to reduce emissions and the requirement to develop airport capacity, not least to accommodate the increasingly huge amounts of high value freight exported. She was also supportive of the Government’s controversial HS2 train line, for which protestors say the business case has not been proven and which will cut a swathe through the Oxfordshire countryside. However, she added: “I just hope they join it up with the airport.”