Sorry to being the 'Tap' again so soon after the last mention but with Nick Clegg returning to the UK today I couldn't help thinking of the moment in the film when Derek Smalls manages to free himself from a pod at the end of the song "Rock n Roll Creation" just as David and Nigel are returning to theirs.
George Osborne has been able to bask, comparatively at least, in the news that the coalition's deficit-slashing austerity measures have been "vindicated" by Standard & Poor's move to slash the USA's AAA credit rating."
Britain, along with France, Germany and Canada are currently seen as safe hands because attempts are being made to cut the deficit and debt as a % of GDP. This isn't fancy economics it's plain common sense. If you have £100 of debt, if only, it's better to have £75 worth of income to service it rather than £15 and constantly raising the ceiling on borrowing is just putting off the inevitable.
"Abandoning our deficit reduction plans would put Britain back in the international firing line -- and we are not in that firing line because our credit rating is secure," said Government spokesman.
I know there is a lot of scepticism about ratings agencies but I think that comes down to general ignorance more than anything else. Worth noting as well that despite all the chickens running around going "don't panic," the London FTSE is actually 40% up on where it was two years ago, what is noticeable however is that companies are now holding onto cash whilst managing to make dividend payments at a level which still keeps people interested in investing. This is sound financial behaviour, in fact it's big established companies behaving like small start-ups, accumulating cash because at the end of the day the old saying, "Turnover is vanity, profit is sanity, but cash is king," still holds true. Apple, a company that knows something about turnover and profits currently has more cash at the bank than the US Government.
Just to back-up what I was saying about confidence it's worth noting the comments of the Economist Dylan Jones-Evans who said, "Businesses in the UK are sitting on £65bn to £70bn on their balance sheets. The reason they are not investing is they don’t feel the conditions are right or the confidence is not there to do so. If that money wasn’t there I’d be worried.”
2 comments:
Not as bad as it could be but a long way from good...but seemingly on the right track. tightrope over the abyss but you have to cross the abyss.
I agree it's a long way from good - the third quarter financials will make interesting reading because the holiday industry in the UK is on its knees at the moment meaning people aren't spending.
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