The Only Way Is Up?

Testing times, unprecedented times, uncertain times.

That was the general message of the 5th Hart Brown Annual Economic Forum entitled “Navigating The Recession” which I recently attended at the University of Surrey in Guildford.Now that is clearly not an unusual message in today’s economic climate, but maybe what was less usual was the quality of the speakers that Hart Brown, the Surrey based firm of solicitors had brought together to provide that message. Mark Curtis, managing director of key Surrey manufacturers Vision Engineering, Giles Keating, Global Head of Research at Credit Suisse, and everybody’s favourite politician Vince Cable offered a range of insights that left the 300 plus attendees in no doubt that they would need to be bold and brave if they were to take advantage of the post recession world.

Looking at some of the previous blog entries, there is a danger that we are becoming cheerleaders for the Lib Dem Shadow Chancellor, but when he continues to offer the clear, concise and reasoned arguments that he did at the forum, then it is hard not to keep cheering and waving. Pointing out that the current problems stem from a collapse in asset prices, a reduction in credit and a global recession he took the view that rather than suffering from a dose of flu, the economy had suffered a very big heart attack, which would necessitate a radical change in lifestyle once recovery was underway.He saw three obstacles to recovery: the need for high interest rates to combat potential inflationary pressures, the size of the deficit being run up by the current government and the fact that the banks were still not functioning properly. Nevertheless, positive signs included the fact that governments globally were doing all that they could to combat recession, that many UK companies were still doing well, including many world class ones, and that there was a high level of flexibility in the labour market and a willingness to accept short time working and pay cuts to preserve cash and jobs.

Giles Keating had flown over from Zürich especially for this forum and began by saying categorically that the recession would be over this year. He focused on four questions during his presentation, namely how robust the recovery was, whether the emerging markets would replace the US consumer as the driver of growth, will inflation surge and are we seeing the start of a new equity bull market? He was armed with an impressive array of charts and statistics which he used to indicate that there was some substance to the recovery, that he believed that the world that emerged would be vastly different and that the emerging markets would be the dominant forces in the new economy, that inflation could be contained and that there was every chance of a return to a bull market in equities.

Having heard from a politician and an economist, it was nice to get a view from a real business. Vision Engineering is a manufacturer of optical instrumentation, much of which is exported, and its managing director, Mark Curtis, professed to be baffled by macro economics, preferring to focus on achievement based on an honest day’s work. He outlined some of the actions, both precautionary and emergency, that his company had found necessary to take to cope with the significant fall in orders that his company had faced. He emphasised the need for developing strategies based on clearly defined problems in each of his key markets, and then using leadership to instil the confidence required to move the business forward. His conclusions centred upon what should now be considered as realistic growth and the importance of not being beholden to the banks or uninformed shareholders, along with some pithy comments about the lack of joined up thinking at government level.

All in all a very interesting and enjoyable evening, and one which left plenty to think about as we drifted off into the night after our drinks and canapés.