The Great Debate UK

Mood of cautious optimism in owner-managed business sector

-David Rankin is managing director of business advisory, tax and assurance at Vantis. The opinions expressed are his own.-

There is no doubt that the economy is one of the most contentious issues in the run up to the election. While politicians argue over who would be able to handle the economy in the best manner going forward, we thought it would be far more telling to ask smaller businesses, those at the hardest end of the coal-face, just what they thought would happen to the economy.

We were pleasantly surprised.

More than half of the leading owner-managed businesses in the UK surveyed believe that the economy will improve over the next 12 months, according to the latest Vantis Market inSight survey.

Latest findings have shown that 58 percent of respondents are confident in the UK’s economic prospects, despite the uncertainty caused by a general election. Just one in five believe the economy will decline.

from Breakingviews:

Greek agony must galvanize the euro periphery

The emergency numbers are ringing. Greek 10-year debt yields are ballooning to well over 8 percent. The country cannot sustainably finance itself. The debt of other troubled euro zone countries -- Portugal, Spain, Ireland and Italy -- is vulnerable to contagion. Help for Greece from the International Monetary Fund and European Union can't come too soon. But the probable rescue must be a spur not a salve, in Greece and outside it.

Germany is reluctant but the EU's hand is being forced by the markets. The much-discussed help must surely come. The IMF will begin supervising Greek economic policy. But the task of making the country solvent looks immense.

Three big myths about public sector cost-cutting

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Wileman- Andrew Wileman is a independent business consultant and writer, most recently writing about cost management in the private and public sectors in “Driving Down Cost” (Brealey Publishing). The opinions expressed are his own. –

“We only need to cut cost because of the credit-crunch crisis.”

No, there is a deep structural problem that was there before the crunch. The public sector has been driving up its share of GDP for decades, in the UK, the U.S. and almost all advanced western economies. Its momentum will be painful to slow down, let alone reverse. This underlying trend was concealed in the nineties and noughties (when the talk was of “the end of big government”) by a debt-bubble-fuelled growth in the private sector. In the UK, we are already over a 50 percent state share of GDP.

from Global News Journal:

If Greece’s debt dam breaks, who gets wet?

The 16 countries that share the euro single currency have agreed they will help Greece out if it needs. So far so good. But only now is the nitty-gritty of how member states will go about paying for their contributions being hammered out. And suddenly things are getting a little complicated.

Italy announced on Tuesday it would have to issue government bonds -- known as BTPs --  to raise funds for its part in any Greek assistance. 

from Breakingviews:

How to tell you’re not Greece — yet

By Rob Cox and Agnes T. Crane

Greece may be enviable as the ancient cradle of democracy -- but no country wants to emulate its contemporary fiscal troubles.

Markets are exacting a heavy price for the Hellenic Republic's budget woes. Yet the Mediterranean archipelago is hardly the only country that would fall into crisis if creditors lost faith. Indeed, the government of the United States is running a deficit of Greek proportions, although its total debt load is much less frightening.

from MacroScope:

Brit Euro Shock Horror: Part II

A week ago we ran a post on MacroScope noting, in part, that Britons have a strange relationship with the euro, sometimes bordering on disbelief that it exists at all. Some new numbers from the monthly Bank of America Merrill Lynch fund managers poll underline the extent of UK scepticism compared with that of others.

For two months, BofA Merrill has asked fund managers around the world what they think will eventually happen as a result of the Greek debt crisis. Four choices are on offer:

from Global News Journal:

Does Greece really deserve such a market pummelling?

So there's no question Greece has work to do to improve its bookkeeping.

Not only must it get spending in check,  but it needs to be a bit more honest about where its finances stand in the first place. After all, it's not often an EU country says one month that its budget deficit is a little over three percent of GDP and admits a few weeks later that, oh dear, it's actually nearer 13 percent.

Yet it's hard not to have a little sympathy for Greece at the same time.

Its government bonds have been hammered and the price it has to pay to finance its debt has soared as financial markets have relentlessly taken it to task over the past six weeks for its profligacy.

Re-entry dilemma for G20 ministers

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copeland1- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -

As the G20 ministers gather for their meeting this week, there should be no doubt about the item at the top of the agenda: the re-entry problem. At what point should the expansionary monetary and fiscal policy of the past year be reversed? And, if the answer is “not yet”, how soon does the re-entry plan need to be announced?

from Commentaries:

Take the L out of LBO

In a perfect world, we would simply ban leveraged buyouts. The vast majority of these debt-laden corporate takeovers are no less predatory and value-destroying to a company than a loan shark who charges usurious rates of interest.

Realistically, a prohibition on private equity deals will never happen, given the big dollars involved in these transactions and the sizeable campaign contributions that private equity chieftains shower on politicians from both parties.

from Commentaries:

Anglo American clears more clutter

CHILE-CODELCO/ANGLOAMERICANJohn Parker's appointment as chairman of Anglo American seems to be having the desired catalytic effect – even though the British businessman is barely through the door.

Last month, the mining group disposed of its stake in Africa’s largest aluminium processor, Hulamin for a total of $150 million.

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