- Lawrence Bailey
Uncertainty is always bad for business
Let me begin by admitting that I haven’t got the first damned idea as to what actually came out of parliament on Tuesday night. Basically, you buys your tabloid and you takes your choice.
The only meaningful speculation to be made in my book is how much of a massacre can be expected when MPs revisit their limited options on Valentine’s Day.
There was some heartening news for firms fearing the worst in that the Commons voted against a no-deal outcome. Or did they?
That’s the problem. Commerce, manufacturing and the markets are just as confused as anyone else and uncertainty is always bad for business.
Sterling fell abruptly after word came through that Brexit wasn’t going on the back burner after all. This prompted wider disquiet with a consequent stock value loss equivalent to a couple of years in EU contributions.
Britain may choose to behave like Brexit is happening in a vacuum but the storm clouds are gathering globally.
Recent times have seen the iPhone become a staple economic indicator in much the way that the size of a Mars bar reflects domestic inflation. News that Apple is thinking of dropping the price of its flagship product in the light of falling sales is making investors deeply uncomfortable.
The cost of keeping retail prices at a level that matches depressed UK income levels has been 70,000 store jobs. Many in the industry admit the trend is unsustainable.
The advent of e-commerce has had other negative effects. Royal Mail expects its underlying earnings to decline to a little over £500m compared with £694m last year.
Their announcement accompanied figures showing personal insolvencies in England and Wales hit a seven-year high in 2018. This is primarily due to people using Individual Voluntary Arrangements (IVAs) as a means of avoiding full-blown bankruptcy.
This needs to be balanced with the statistic that something like 660,000 new companies are registered annually in the UK. That’s like two-and-a-half times the population of Swansea starting a new business every year.
All of the above underlines for me that the economic challenges facing us are complex, wide-ranging and ones where we need as many allies as we can get.
It shouldn’t need to be said, but leaving our biggest and best market now without safeguards isn’t just bad timing; it’s bad business.
What do we do when banks go rogue?
Banking outfit TSB is seeking to restore its glitch-ridden image by announcing greater protection for small business borrowers. They aim to be more transparent in dealing with customers and give struggling companies "reasonable time" to improve businesses prospects, including keeping loan margins unchanged if a company gets into difficulties.
This approach is in stark contrast to what happened in the Royal Bank of Scotland a decade ago as recent further evidence emerges about their so-called Global Restructuring Group (GRG).
In what MPs have described as the worst scandal since the financial crash, a leaked official report for the Financial Conduct Authority reckons the GRG mistreated thousands of business customers. Many of them were ruined and not only lost their livelihoods but suffered personal tragedy.
Inside sources claim that the government’s Asset Protection Agency – a now defunct and discredited Treasury operation – actually called the shots in stripping out business customers' cash. It’s worth noting that RBS dispute the allegation although the Treasury is staying tight-lipped.
There’s more to come though, I’m sure.