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Come on, Boris, cheer us all up and rebuild our confidence for 2009
Jo Valentine22 Dec 2008
A recession is upon us. For many consumers, business leaders and politicians, it's the first they can remember. Gordon Brown has portrayed himself as saviour of the universe; Boris has his recovery plan. But are our leaders making the right decisions for the economy - above all in London?
There has been much noise about speeding up investment in infrastructure, but not much has actually changed. Tube investment is stuck in arcane arguments around the Public Private Partnership, while contractor Tube Lines must lay off staff who could be upgrading more stations. And while Boris has a vacancy for a 2012 legacy champion, no acceleration on East End infrastructure spending seems likely as part of the "once in a generation" regeneration programme around the Olympics.
Despite all that, there are some more positive developments. Having stepped in to recapitalise the banks and inject liquidity in the autumn, the Government has pressed ahead with its stimulus package.
The Prime Minister last week committed to maintaining London's status as a premier world city, and, thankfully, there's no hint of the Treasury trying to slow down cash flow to the vital Crossrail project. Its governance - board, senior management - is falling into place and contractors are being appointed. Meanwhile, politicians are showing off about how helpful they are being to small and medium-size enterprises.
But big companies are adjusting to the recession by laying off thousands of staff. Small businesses are their supply chain. If big companies fail, the smaller ones should watch out. What's more, while London is the location of choice for many of the world's biggest companies, it also has more small businesses than any other UK region. And if London suffers, the rest of the country hurts.
The most effective way to help small businesses isn't to let big business go hang. The best way to help big business isn't to hang banks out to dry, either. Banks would, collectively, like to lend to businesses of all sizes, to oil economic activity and avoid further debt default. But shareholders are nervous. They would like the banks to shore up their balance sheets, reducing lending. So it's understandable that each bank is resisting lending to even slightly marginal businesses.
The Government calls in the banks regularly to bash them about the head about passing on interest rate cuts and lending to small businesses. Having seen fellow institutions go to the wall, it's hardly surprising that our banks are feeling more vulnerable. Far from being the dragons of the business world, banks have joined the ranks of damsels in distress. A rare knight in shining armour is the European Investment Bank. As a development bank it is mandated to lend where others fear to tread. But there are too many damsels for it to rescue alone.
Beyond the banks, there is a broader concern over the division of responsibilities between Government departments. It is leading to confused messages. Cabinet ministers seem to disagree about the nature and length of the recession, let alone what should be done. We need robust evidence (Bank of England), real time sensitivity to business needs (Department for Business, Enterprise and Regulatory Reform - BERR), informing macro-economic policy (Treasury) and regulation (FSA), all bound into a coherent policy framework (Downing Street).
So here's a priority for the Government after Christmas: a coherent set of policies which aligns the collective interests of the banks with shoring up the economy. Unless we slay the credit crunch, the distress will be shared by us all.
It's time to armour new knights: a state-run development bank or a beefing up of the puny Small Firms Loan Guarantee Scheme, to support lending to all businesses. There are signs that the Government is ready to offer new guarantees to underwrite banks' lending. Pressure remains on for those Treasury, BERR, Bank of England and FSA officials to design and carefully implement such a scheme, so it incentivises helpful behaviour.
As for London's government, Boris has published his Economic Recovery Plan and kept his nerve on some vital infrastructure projects. But his extra £750,000 for tourism marketing, even with helpful exchange rates, may not be enough to keep the credit card machines busy in London's hotels, restaurants and shops.
New Year's resolutions for Boris? He needs to keep Tube Lines engineers working to improve stations and signalling. And he needs a heavyweight business leader as his Olympic legacy champion, who can win support for a regeneration vision and bring investors into east London.
But Boris can make another, much broader contribution to leading London out of recession: he can be the giver of confidence.
After Christmas and January sales, what is going to happen to consumer confidence? We can certainly reap advantages from the low exchange rates, but tourists and Londoners may be hunkering down for a gloomy spring.
A less gloomy tone, humour even, could help cut through the gravity of the situation. Londoners need Boris to reassert the delights of living in the capital - the world in one city. He should ditch his diet and lead Londoners back into our famed theatres, bars and restaurants, galleries, department stores and attractions.
Instinctively, we will be more careful with our money, but while some of us might cancel the weekend in expensive Prague or New York, instead we can have a better time in glamorous London. The West End restaurant or fabulous dress have become a little bit more affordable. Where better to invest the monthly savings from the mortgage?
In the next few weeks there's Elton John at the O2 and the opening of Oliver! in the West End. There's the Debutantes exhibition at Kensington Palace. There's the iconic Harrods and Harvey Nichols for a little bit of luxury and, in Oxford Street, London still has the world's most famous shopping destination. There is tremendous value to be had - just as good as before but more affordable now.
I know that some of his minders would like to see a more serious Boris. But if Government needs to find one or two valiant knights to help shore up the economy, Boris can be London's own court jester. I can think of no better person to cheer us all when the going gets tough.
Baroness Valentine is chief executive of London First.
Reader views (3)
There's the debutantes exihibition at kensington palace?
Really! well thats all our problems solved then.
We all know Boris will do nothing until it has been sanctioned PC Plum,otherwise known as David Cameron.
- James Hennessy, london england, 22/12/2008 20:13
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It's extraordinary! Here's one politician that everybody wants to listen to. Boris. Which is a lot more than can be said for the incompetents in Westminster - what a relief they've gone off for their 24 day Christmas holiday. If only they'd stay away and we could be like Belgium - without a government. That would brighten many people's Christmas but, alas, things wouldn't be half so amusing, for if there's one thing you can say about our politicians - they do make you laugh. Now we've given up groaning and recognised that it's pantomime time again.
- John Problem, Hackney Wick, London, UK, 22/12/2008 18:05
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I totally agree, this is a time for forging ahead with the big projects that were already costed and agreed, including the Thames Gateway Bridge, DLR extension to Dagenham Dock and Greenwich Waterfront transit.
We need some consistancy also, not this flip flop of policy announcements every other week from the the part-time, job hopping Mayor!
- Damien Vaugh, London, 22/12/2008 15:30
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