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Tesco have been having a little trouble lately, with a £250million hole in their profit forecast. That may be a significant sum in terms of their profits but it is a mere drop in the ocean as far as the government finances are concerned. If a commercial organisation can get their own figures that far out how can we be sure that the myriad of statistics that tell us how well or badly our country is doing are accurate?

The media has kept on telling us that house prices are rocketing upwards, heading for another burst bubble and the following month we are told that prices have come to a dead stop and that we should be worried about that. Vince Cable has announced that bank lending, despite an improvement in our economy, has contracted, once again. He has seen this as an indication that banks will not lend and should be blamed for our current woes. Reckless on the one hand (to lead us into the mess we are in) and now tight fisted and unwilling to make their contribution to our economic recovery. Or are businesses looking at their financing in an entirely different way, without having to resort to bank borrowing? But are the numbers right? And how have the new stricter regulations imposed on lending institutions affected how the banks identify a worthy risk? In fact we might assume that the regulators have sought to eliminate risk totally. Something along the lines of offering an umbrella when it is neither raining, nor sunny.

We have seen recently the government announce that the recession we have experienced over the past five years or so was not as deep as previously thought and has amended the statistics accordingly. Not really useful information for those who lost their jobs or homes. Tucked away in the jargon released by our government (that is the bureaucracy not the political bit) is the fact that the measurement of GDP now includes an assessment of the black economy. Do we live in a fantasy Alice in Wonderland world? How can all those cash transactions be assessed? Do statisticians include the theft of money from the government (our government and therefore our money) by seemingly endless gangs that spot an opportunity to lodge bogus claims which civil servants seemingly just cannot resist paying out?

The catalogue of dodgy numbers seems to be almost endless. From the measurement of our economy, our bank borrowing to even climate change, we see confident assertions based on numbers that are perhaps not realistically based and then just a little later we see doubts about the veracity of those numbers. Tesco are just the latest commercial phenomenon. Though there is currently no indication of wrongdoing we can all recall a list of failed companies whose numbers just did not ultimately stand the reality test.

One of the major clearing banks emails me with a report every morning with the latest financial news. Currencies, economic data and the current standing of Gold, Oil, major stock markets and the Libor and Central Bank interest rates for Europe, USA and ourselves. I must confess that my eye first goes to the 12 month Libor rate as an indicator when I might see an improvement in the interest rate returns on my savings. The incredible array of statistics released almost every day is mind blowing. Confidence indicators, from all over the world and regretfully whilst the news from the Anglo Saxon World is intermittently positive; the message from the Eurozone though would send any old fashioned, traditional bank manager into a frenzy of tutting, teeth sucking and head shaking. An apparent lack of a will to "bite the bullet" seems to be the problem. The USA and Britain threw everything (probably including the proverbial kitchen sink) at the crisis from the very outset but the Eurozone has just meandered on, putting off any decisive decision trusting almost blindly that the problem will resolve itself. I am torn between contempt for the Eurozone inaction and the certain knowledge that if they don't get their act together we are all sunk.

All our politicians (not to mention the civil servants who administer our national finances) need to face up to the reality test. As Tesco are searching to find the reason for their duff figures our politicians need to examine their plans and proposals for our future to see whether those plans are realistic. It is no use, as Mr Milliband recently did in his speech to his party's conference, to just ignore our national deficit in his address. Admittedly though he did leave out this important financial assessment from his address to the party faithful, it had been included in the original draft released to the media. I think however that many of us might consider that to be cheating. Not the ideal qualification for a prospective prime minister. Though his shadow chancellor might have a surname indicating that he might have the strength to take the difficult decisions still to be made perhaps his intent on proposing politically motivated taxation suggests that he, too, does not want to face up to the reality that we have to make money as a country to get us out of our current (though not as bad as before) mess.

On the basis that we have had a major recession (whatever the numbers say) and that the "Big Government" of the last ten to fifteen years has meant that our government has been spending more than it has collected we need to get the grips with our nation's spending. Fudging the figures or leaving a tricky issue out of a speech cannot be the future. There is no easy solution, whatever our politicians say. They, collectively have messed it up on our behalf but (and we have to admit it) we enjoyed the ride whilst it was good.

We have to keep on getting things back on track; otherwise, regretfully our number may be well and truly up.

David Ingall

Past President

UK 200Group




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