[Closed] are we heading for another shit storm?

Where's cressers when you need him?

You called? We didn't emerge from the last slump. I'm expecting a triple dip recession is on the way.

are we heading for another shit storm?

Until the Chancellor concentrates on encouraging the supply side of the economy... yes.

[quote=alpin ] big companies are scaling back (the last large conference i worked on was about 3/5th the size of the previous year's due to a massive fall in attendance; several large German banks and other firms are scaling back their Christmas bash plans) or simply not putting on a show at all.
Some would argue that's a return to normality from the excesses of the past.

Its not a case of the next shit-storm? Its a case of a permanent shit-storm from now on. Europe is in terminal decline. Look at the leadership* of the EU and every European state. Utterly and completely clueless. They haven't the slightest inkling what to do, except chuck more money at failed Southern economies, and hope for the best

We're in this mess because we spent vast amounts more than we brought in. Yet this hasn't sunk in, and these idiots seem to think we can get out of it by doing more of the same. Madness!

Meanwhile the emerging economies look on at us, bemused at this car crash, as they power on to even higher growth

At best we can look forward to economic stagnation. But even that I think is wildly optimistic! The very nature of our societies is changing completely. And we best get used to it. ie: spunking billions of pounds on new nuclear subs etc, to boost our fragile national ego, is frankly bloody ludicrous

* the term 'leadership' is used figuratively in this instance

We are having our best year ever.
Oil and Gas is booming.
Even shit offshore surveyors are in demand.

we just posted a net loss (in line with forecast and the rest of the industry) which was nine figures (although the investment arm i work for was up fortunately).

That's globally, but mainly europe, which the picture is the same...pretty grim.

Japan experienced a 'lost decade' of no/very weak growth not so long ago. It's Europe's turn now - and I'm including the UK when I say Europe. I'm worried for my daughters - the eldest has just started University and the younger one is in Year 11. I don't rate their chances of living the yuppie lifestyle when they enter the job market, in fact I'm already resigned to the fact that we'll probably have at least one of them living with us for a while after they've finished Uni.

Until the Chancellor concentrates on encouraging the supply side of the economy... yes.

There's no point boosting supply when demand ain't there.

usually this time of year should be busy, but there are a lot of lads that i know who are sat around scratching their arses

People are changing the way they do business. Do you really need to spend 10's of thousands on a trade fair?

People are not smooshing (taking clients out to lunch as much)- people are cutting to the chase (is what I'm finding).

Slightly OT: If a car manufacturer misses a car show- is it because they are struggling or are their orders so high that they need not bother what was once seen as the norm to hit every car show on the circuit?

There's no point boosting supply when demand ain't there.

There's no point boosting supply when demand ain't there.

... in Europe ...

Meanwhile the emerging economies look on at us, bemused at this car crash, as they power on to even higher growth

IT is all too easy to despair about everything that is wrong with Britain. But one ray of light is our slow-burning, yet increasingly profound shift towards becoming a more entrepreneurial society.

Britain counts 4.8m private firms, 99.9 per cent of which are small to medium-sized businesses (SMEs). Most are micro businesses. The rise of self-employment is a very good thing: it is gradually changing mindsets. The people involved are far more likely to believe and practice personal responsibility; they understand, perhaps more so than some employees in big businesses, that work and reward must be closely linked, that creating economic value is difficult, that one must always seek to please customers and that endless rounds of red tape and taxes are a nightmare.

So the rise of the small firm, of the individual as an autonomous economic agent, trading with the world rather than being employed by it, is a great cultural shift. But when it comes to job-creation and economic growth, there is one category of firm that is even more heroic, and that is the subset of entrepreneurs with the desire, ability and good luck to make it big. Nesta discovered in a seminal study a few years back that there are just 11,500 companies with more than 10 staff which had grown at over 20 per cent per annum over three consecutive years. These gazelles made up 6 per cent of SMEs with more than 10 employees and just 0.2 per cent of private firms but created half the new jobs created by existing companies in 2002-2008. Today, with giants such as UBS and RBS shrinking and laying off staff and a new generation of firms beginning to emerge from the ruins of the recession, gazelles are likely to prove even more important, as an excellent report from PwC, Duncan Cheatle’s Prelude Group and the Supper Club reminds us.

The paper merges anthropological-style research with accounting rigour, and highlights seven such gazelles as case studies of a much larger vanguard of successful high-growth start-ups. None of these seven firms – including lifestyle management firm Ten Group and occupational health consultancy Health Management – existed just a few years ago; today they employ 1,219 people in total. Most were started from home (where 60 per cent of small businesses are created), one from a cow-shed and another with little more than a phone. Founders made big financial sacrifices – one sold everything he had, another borrowed the money from credit cards, increasingly a source of start-up cash.

Everybody involved gains from successful firms, including the taxman. PwC calculates that 44 per cent of the gross value added created over the last five years across the seven gazelles was distributed to employees. The amount retained or distributed to owners was just 15 per cent, while the value distributed to government in taxes borne (such as corporation tax and business rates) and collected (national insurance, income tax, Vat) amounts to 41 per cent of gross valued added. The entrepreneurs featured generated a total tax contribution of £104.2m over the last five years. One of the firms featured hands 30 per cent of its turnover to HMRC; another collects £15,400 per employee in PAYE tax. At a time when debating tax avoidance has become a national obsession, these figures remind us that by creating jobs and value added, entrepreneurial businesses always generate lots of tax receipts, directly and indirectly.

There is only one way the UK will ever get out of its debt crisis and stagnant growth: it needs more successful entrepreneurs. Go for it, dear readers, you know you want to do it.

i think you may find that large companies in recent years are really starting to question the value of exhibitions/trade fairs/conferences. I work in healthcare industry and the last two annual exhibitions/conferences have had dire turn outs. I've manned stands in the past where the company has spent £80,000 to build a stand that is up for two days.

At the end of the two days we've met very few 'new' people and most people who approach the stands are existing customers who are either on a two day piss up away from home paid for by the NHS (and those are very much the minority now, hence the decline in attendees) or they're punters who are pissed off and want to sound of at senior managers who only seem to leave their desks once a year for the two day company piss up with the reps.

I think all in all it costs £90K to host this two day flag waving exercise and whilst it may send signal to our competitors and other manufacturers that we;re doing OK, IMHO it's £90K poorly spent. I'd rather spend £90K taking consultants out for meals and we could reach far more target audience with that money.

The Eurozone may be in recession but businesses have had to evolve in recent times and the ones thriving have recognised it and the ones struggling haven't.

Head first - maybe we could give loads of cheap credit to stimulate the demand? What bad effects could that possible have?

Do you really need to spend 10's of thousands on a trade fair?

no, but it would be nice as it's my bread and butter...

re. the uni thing. would it not be better if more kids were to learn on the job rather than believing that the only way into a job is via a university degree? my cousin finished two years ago and since then has been dossing at her BF's place whilst she goes from one "work experience job" (i.e. free labour) to another.... she finished her english and editorial degree with top marks.

[i]We're in this mess because we spent vast amounts more than we brought in. [/i]

Playing devil's advocate slightly, much/most of that spending was on social welfare stuff, like the NHS, eduaction and the welfare state, that people of your left-leaning persuasion (including the Labour government in power) thought that money should be spent on. You didn't complain about it at the time and indeed even thought more money should be spent. It could be seen as a bit rich to be complaining now that it shouldn't have been spent.

Best case scenario is for sustained period of very low (flat) growth. Double-dip, triple-dip, one quarter of growth is all statistical noise and tells us nothing. Strip away the funnies and we haven't had any of them. Just sustained flat/no growth.

With everyone delevaging at the same time, there can be no fast recovery. Plus with the policy focus only on sorting out deficit countries rather than on surplus countries at the same time, people still haven't learned the lessons of the great depression.

[edit: on that topic this is not a bad article: http://www.telegraph.co.uk/finance/financialcrisis/9680554/Like-it-or-not-Beijing-and-Berlin-must-pay.html ]

More of the same for a long time I'm afraid. Unless the (inevitable - just for JY 😉 ) collapse of the € happens sooner than expected. Then the shock will be faster and recovery possible earlier but not without considerable interim pain.

re. the uni thing. would it not be better if more kids were to learn on the job rather than believing that the only way into a job is via a university degree? my cousin finished two years ago and since then has been dossing at her BF's place whilst she goes from one "work experience job" (i.e. free labour) to another.... she finished her english and editorial degree with top marks.

Move to London?

It's all pretty irrelevant. Israel will probably kick off World War 3 and we'll all be dead by the middle of next month just like the Mayan's predicted.

geordiemick00 - building trade stands for healthcare industry? So you're the one responsible for the really freaky 12 foot tall asthma inhaler sat downstairs, then???

Rachel

Its not a case of the next shit-storm? Its a case of a permanent shit-storm from now on. Europe is in terminal decline. Look at the leadership* of the EU and every European state. Utterly and completely clueless. They haven't the slightest inkling what to do, except chuck more money at failed Southern economies, and hope for the best

We're in this mess because we spent vast amounts more than we brought in. Yet this hasn't sunk in, and these idiots seem to think we can get out of it by doing more of the same. Madness!

Meanwhile the emerging economies look on at us, bemused at this car crash, as they power on to even higher growth

At best we can look forward to economic stagnation. But even that I think is wildly optimistic! The very nature of our societies is changing completely. And we best get used to it. ie: spunking billions of pounds on new nuclear subs etc, to boost our fragile national ego, is frankly bloody ludicrous

Frank, concise, insightful and just about spot on.

Binners; are you feeling ok?

Anyone who thinks this 'recession' is merely a 'blip' that Europe and especially the UK will recover from is either in denial of has their head in the sand.

WorldClassAccident - Member
Head first - maybe we could give loads of cheap credit to stimulate the demand? What bad effects could that possible have?

What a stupid answer. Yes, that is of course what I was suggesting.

EDIT: 🙄

Israel will probably kick off World War 3

Pop me down for Israel's side.

IHN - The problem is that during the labour years we were told that all these things were being funded by strong economic growth, so that therefore it was affordable.

But it wasn't, was it? It was all smoke and mirrors. There was no actual growth at all. It was all just a bubble of property prices and credit! And an illusionary boom in the city (which benefited how many?)

The rest of the real economy was just bumping along the bottom. Or in the case of manufacturing, slowly declining. And this behavior was magnified all over Europe. The more severe the further south you went. So now we've got to bite the bullet and re-balance our economies if we're ever to get out of this. And be honest - can you see that happening any time soon? The politicians are all sat around with their thumbs up their arses.

The result - terminal decline

EDIT: Mike - I am actually feeling a bit odd 😉

FORGET Grexit, Spexit or any other possible departures from the euro. Despite yesterday’s news that the Eurozone is now back in recession, the markets should focus on another potential exit. The Brixit – a British departure from the European Union.

For the first time in a generation it’s realistic. But would it hurt the UK economy? This question is usually framed in terms of exports and market access. But the relative decline of the EU as a percentage of the global economy makes those two issues less relevant.

In fact, if the UK did pull out of the EU, it would be better off. There would be costs, but sterling would benefit from becoming a quasi reserve currency. And UK businesses would get a one-off competitiveness boost.

For the UK, the European question is changing very rapidly. First, if the euro is to survive, there will need to be full fiscal union. Tax and spending decisions will be made by a treasury minister in Brussels. Members will have to relinquish control over their national economies, and Britain won’t want to be part of that. So the UK may soon have left anyway, in that it is no longer involved in the EU’s most important decisions.

Second, the world has moved on. The global economy is now dominated by rising emerging economies. In contrast, the slow-growth EU doesn’t look like a partner anyone would want to stay married to anymore.

And it’s highly likely Britain will have a referendum on EU membership in the next five years. Labour is committed to one, and the Conservatives won’t want to be trumped by Ed Miliband. When the referendum happens, Britain might vote to leave. By this stage, the core Eurozone may well be stuck in a deep recession. That can only tip the popular mood further towards leaving the EU.

If a British exit becomes possible, the markets will take fright. Sterling will tank. The FTSE would dive. Most mainstream business opinion for 30 years has held that Britain needs to be in the EU. It needs access to that market. Lose it, and trade would collapse. But on a medium-term view, it will boost the UK economy. Here’s why.

True, there would be losers. The City would suffer. It has been the key financial market for the EU, but it is unlikely France and Germany would tolerate this situation if the UK was outside the club. Some global banks could move their operations to Frankfurt or Paris, and the wealth they generate would flow elsewhere. As the mass redundancies at the London office of the Swiss bank UBS demonstrate, however, this is now less of a worry than it would have been a decade ago.

Also, while the UK could negotiate the same kind of free access to EU markets enjoyed by the Swiss, hidden barriers to our exports may be put in place. And while the importance of exports to the EU is often exaggerated – only about 13 per cent of the economy relies on selling to EU markets – some businesses would suffer.

But there would also be two big advantages. First, sterling would emerge as an island of stability. The pound is already emerging as a partial reserve currency – a status it hasn’t held for fifty years. The Swiss National Bank, for example, revealed this month that it had doubled its holdings of sterling, while cutting back on euros. The Russian central bank recently said that 9 per cent of its reserves are held in sterling. Despite the UK’s problems, it is still a stable nation, and is not caught up in the Eurozone mess. If Britain was further detached from the euro crisis, its attractiveness would increase.

Second, Britain could expect a one-off competitiveness boost. While it may have started as a free trade zone, the EU has turned into a spending and regulating machine. Its agricultural policies keep food prices high. Its employment regulations make it hard to fire people – and companies reluctant to hire. Health and safety laws put barriers in the way of innovation. Discard them, and businesses would be freed of a massive burden of red-tape. There are few better ways of stimulating growth than tearing up regulations. Though it would only happen once, it would help the UK grow again – and that would help the equity markets.

There are few reasons to be optimistic about the UK economy. State spending is too high, taxes keep going up, and growth has been flat-lining for four years. But an exit from the EU might be the “growth shock” the UK needs – and could be the one thing to get the economy moving again.

We'll get over it..

Just need to spend more of your savings.

The UK holds 1/3* of the worlds savings assets..

We're saving more for that "rainy day" when realyy if you eased up you'd ease the economy..

Fear and threats have hampered this country, Govt's constant fear and threat mantra is now in our physicie..

Mines a pint, beers on you.

* last time I counted it

Move to London?

she is in london 🙁

I work in healthcare industry and the last two annual exhibitions/conferences have had dire turn outs.

hmm strange that, as the one sector that does seem to like spendning is the pharma industry. there was an event in Berlin this year where all the attendees recieved a 500€ cash gift to cover their inconveniences/costs of attending the two-day event. god knows what the whole gig must have cost the firm, but then for them it's a nice friendly way of reducing their taxable profits...

i like to think that i'm not a pessimistic person, more a realist, but in these circumstances the two are not that far apart... i have tended to agree with binners' astute analysis of the situation in the past, but have never been able to word it quite so eloquently.

so how do we go about future-proofing ourselves against the low-credit, low growth shitty outlook future?

[i]And be honest - can you see that happening any time soon.[/i]

Well, no, but it's not going to happen quickly anyway. And rebalance to what?

[i]So now we've got to bite the bullet [/i]

Agreed, but much of that bullet-biting is a required reduction in Govt spending, resulting in the cutbacks that, again, many/most of the left-leaning types are so vehemently against.

It sounds a little like you want to have your cake and eat it.

[i]The politicians are all sat around with their thumbs up their arses[/i]

Honestly (and I'm talking the UK here, the Euroshambles is another matter), I don't think they are. I think they're working incredibly hard trying to sort it out. Whether you agree with how they're doing it is an other matter but, much as I'm no fan of Gideon, I wouldn't want his job at the moment.

Honest question: if you were Chancellor, what would you do?

This is how capitalism works, its happened before and will happen again if its allowed to continue.

The difference in the shifting economies means that uk plc is increasingly becoming less 'relevant' globally, always difficult to accept that you know longer call the shots !

For some people this is an exciting time politically, the old order has run its course, is unable to affect the course of events, and there is not a new one ready to replace it Yet.
History shows that things can change very quickly, so its not all doom n gloom, just remember who's been shitting in your shoes all your life , and you shouldn't go far wrong !

Heres something- why don't all those companies that avoid tax in the UK START PAYING TAX OR LEAVE?

It'd start to make things abit more comfortable. **** you apple and amazon et al. Tossers. As with anyone, in these straightened-times, if I find out somewhere that I shop is avoiding social/moral responsibility I'll go elsewhere in future.

The Apple fanboi's would still buy their products though even if A Jimmy Saville keyring came with each one.

😆

To summarise: Get out of our obligations to failed Europe and back into the world. Export to the BRIC nations, where the money is.

bikebouy - Member
We'll get over it..

Just need to spend more of your savings.

The UK holds 1/3* of the worlds savings assets..

We're saving more for that "rainy day" when realyy if you eased up you'd ease the economy..

I would be interested to see where you get these figures from bikebouy. My understanding is that UK savings rate remains extremely low with latest stats (ECB) showing that we are saving less than half as much of our disposable income than our European peers (albeit a little bit more than we used to!)

The UK holds 1/3* of the worlds savings assets..

What does this actually mean ion the real world though? businesses are going to the wall. unemployment is increasing. The cost of living is becoming increasingly unsustainable for increasing numbers of people. The property market is grossly overinflated. Increasing numbers of people will default on their mortgage loans.

And worst of all, the East Europeans are moving back home, so even if the building trades were healthy, the quality of workmanship will drop dramatically and entire buildings will collapse.

€3.2bn Operating Profit for the first 9 months over here.

I can't believe the Euro has so far avoided imploding. Seems to have been teetering on the edge pissing money away for a while with no real improvement.

Interesting article in the Economist today:

http://www.economist.com/news/leaders/21566640-why-france-could-become-biggest-danger-europes-single-currency-time-bomb-heart

mikeconner - I thought at the last count unemployment went down, not up?

Rachel

Some would argue that's a return to normality from the excesses of the past.

druidh has a point here. I have seen truly obscene amounts of money spunked on corporate dos. There just isn't the cash slushing round in a lot of businesses to allow for this any more. I used to work for companies where Christmas parties were all paid for. This has been getting rarer and rarer over the years.

Also with trade fairs, conferences etc. I think that as more companies run on a leaner staff there simply aren't the bodies to free up for these events.

re. the uni thing. would it not be better if more kids were to learn on the job rather than believing that the only way into a job is via a university degree? my cousin finished two years ago and since then has been dossing at her BF's place whilst she goes from one "work experience job" (i.e. free labour) to another.... she finished her english and editorial degree with top marks.

To counter that, everyone I know who graduated with an engineering degree is either employed and earning very good money or made a decison after being made redundant to go traveling instead and hasn't come back! One guy in my class got lucky and is is practicaly semi-retired at 27 living in Cornwall and doing consulting work and surfing in aproximately equal measure!

But then 'editorial' sounds like media studies to me.

With £9k/pa tuition fees I can see a lot of non vocational degree courses (English, Geography, History, even Mathematics) struggling and a lot more people going onto Engineering and similar which have a much more definate job/career at the end. In some ways that's a good thing (those jobs pay well and generate growth) ont e other hand I suspect a lot of engineers have gotten used to being in demand and quite well paid despite our protestations that the plumber who fixes your boiler can call himself an engineer 😛

Yet this hasn't sunk in, and these idiots seem to think we can get out of it by doing more of the same. Madness!

It is possible to borrow your way out of a deficit.

That Economist article has caused a bit of a S-storm in Paris today!!!

Re: what the chancellor can/should do - its really about a very fine balancing act. To date, his error has been to over-emphasise the importance of fiscal consolidation (in the short term) and the ability of the private sector to compensate for cuts in the public sector. But to give him some credit, his hand was largely forced and he has avoided unnecessary pressure and focus on the fiscal mess that he inherited.

But its basic economics than not everyone can be in surplus, but that is exactly what is happening (or at least what people are attempting) at the moment. One party has to give and that is normally government - ie, you relax fiscal consolidation while other sectors of the economy are moving into surplus. But again this is very difficult to achieve.

But that is frankly a finger in the dyke when put against the external pressures - the lack of aggregate demand in the UK is domestically and externally driven. Its silly to criticise GO for complaining about the lack of growth in Europe because that has very real effects on activity and confidence levels. Until Europe sorts its mess out, it will be very difficult for the Uk to address its own problems unilaterally.

Germany ultimately has to bite the bullet and accept that creditor nations have to share the hit from the € catastrophe. Keynes understood this years ago, but Merkel doesn't. She needs to re-read the history of the Great Depression again and refresh herself with the outcome.

molgrips - Member

Yet this hasn't sunk in, and these idiots seem to think we can get out of it by doing more of the same. Madness!

It is possible to borrow your way out of a deficit.

It depends on how much debt you have in the first place though.

It is possible to borrow your way out of a deficit.

It's the only proven method of getting out of one. Historically, no one has achieved it through cutting expenditure....

Some UK companies (for example in the textile industry) are now finding that, with increasing wage and transport costs, the cost of manufacturing in China is now reaching a tipping point, where it is comparable to manufacturing in the UK. And the quality of UK manufactured goods has always been far higher due to a skilled workforce.

Trouble is we [i]were[/i] a skilled workforce. Past tense. Those skills are disappearing as nobody has trained anyone, or gone completely. We are reaping the whirlwind of terminally short-sighted decision making by companies looking exclusively at short term dividends to greedy shareholders

Also... we have a banking system that is totally dysfunctional, and unfit for purpose, infected as it is with the same chronic short-termism that has hobbled British industry.

British manufacturers simply cannot get credit to grow, even when they've got orders to fulfil. But the bankers still get their bonuses.

We effectively own the *ing banks! Why the * are we tolerating this behavior. The entire industry is acting against our national interest. And we're showering them with our money to do so!!! Its insanity! Utter madness!!

In short - Gideon has no policies. None at all. Nothing. He's cutting the public sector, which we all know needs to be done, but as for private sector... well... lets just hope for the best eh?

It is possible to borrow your way out of a deficit.

Yip - the economic powers-that-be in Europe have a fantastic track record of effectively and efficiently investing for the future, don't they? Lets borrow even more money, and hand it over to them to 'invest'. Its gone really well so far. I wouldn't give 'em their bus fare home!