Criticaleye's Community Updates are read each week by Members, registered users, and subscribers globally. Click on any of the topics below to see the corresponding newsletter. If you would like to comment further on any of these topics, write to us via

Reading tea leaves may prove more useful than relying on official measurements of how the economy is faring. There’s staggering national debt, real fear of inflation and overwhelming frustration at the short-termism of politicians, but this needs to be counterbalanced by the fact that, from a business perspective, confidence is picking-up in the boardroom today and it can’t all be due to a new royal baby.

Growth, and how to drive it in a sustainable fashion, is what’s on the agenda. Criticaleye spoke to a range of business leaders to get their take on the economic fix we find ourselves in, looking at it from both a local and global perspective. Here’s what they had to say…

1) Things are Getting Better

Optimism is returning and the vital signs – for the UK at least – are stronger than they have been for some time. In July, for example, the IMF upped its forecast of UK growth for 2013 to 0.9 per cent from 0.7 per cent in April. It’s positive news but with the national debt at 75 per cent of GDP (some say more) and concerns about cheap money and subsidised credit, no-one’s getting carried away.

It’s more meaningful to talk about ‘optimism’ in the context of business performance and in this sense there are certainly some reasons to be cheerful. Brendan Walsh, Senior Vice-President of American Express’s Global Corporate Payments division in Europe, says: “At a macro level there are definite signs of improvement. When I look at my business month by month, over the last nine months, I can point to, at the aggregate level, total improvement, although the pace of improvement differs country by country.”

There are signs of a recovery in recruitment too. Stephen Barter, Chairman of KPMG’s Real Estate Advisory practice, comments: “We’ve seen quite significant job growth over the last nine months. Our recent Report on Jobs has shown the highest rate of growth in vacancies in the last three years, the fastest acceleration in permanent jobs being created for the last two years and the beginning of a movement in wages… The sectors that show the strongest growth have been engineering, IT and healthcare, but in recent months we’ve also started to see executive professional posts picking up too.”

Naturally, your view on whether things are improving will depend on the space you’re in. David Harding, who sits on the boards of two smaller UK companies, says they’ve both had diametrically opposing experiences: “The consumer business has been caught between rising input prices and an inability to increase prices in the supermarket. As a consequence, growth has been limited to trying to focus on specific segments where we have a strong USP, and give them a more direct service via the web. Conversely, the B2B business has just enjoyed a record year as cash-rich corporates unlock capex spending.”

2) Danger Signs

So, to come back to the big ‘E’, what’s currently weighing on the minds of business leaders?

“I keep my eyes on what’s happening to public spending and waiting for inflation to explode – and it will do,” insists Jon Moulton, Chairman of turnaround specialist Better Capital. “There is no means out of this deficit and debt position for the government other than inflation… We have reduced the amount of government debt in real terms and I’m sure we’re going to see a lot of inflation come through in the next few years.”

According to Jon, the situation at present is divorced from reality. “We’re in a very peculiar economy where the free market really doesn’t dominate any more… To a very large extent the economy is dominated by the behaviour of central banks, and the effect of low interest rates is, of course, to have very odd effects on asset allocation because people are perfectly happy to pile them into low-yielding assets, property and the like.

“People are not looking for an economic return, they are looking to preserve the value of their money. Higher interest rates would mean that people wouldn’t pursue hopeless business strategies because they couldn’t afford to.”

David Turner, CEO of outsourced contact centre company Webhelp TSC, comments: “Confidence and the economy remain fragile. My belief is that consumer spending will lead us out of recession but my worry is that we are beginning to see some levels of inflation coming through which could cause an upward trend on interest rates. We have to keep hold of inflation but higher interest rates will take away consumer confidence to spend and business opportunities to invest in the future.”

For Dominic Swords, economist at Henley Business School and a Criticaleye Thought Leader, the main cause for concern over inflation is that it could spark a hike in import prices. “Whether that’s around energy and commodity prices or a weakening of the exchange rate, it would mean that we have to pay more for our imports, which would all spell bad news because it would increase input or raw material costs for companies,” he says.

As for Europe, there continues to be lots of uncertainty. Mark Spelman, Global Head of Strategy at Accenture, comments: “In the UK and most European countries, with the exception of Germany, there’s going to be a debt drag that will last most of this decade, so you’ve either got to find the underlining fast-growth segments or find new geographic markets…

“Politically, too, the next two years are going to be quite turbulent because we’ve got the European Parliamentary elections, the Scottish referendum and the UK General Election. British business is going to have to navigate some quite choppy political waters.”

3) Supply and Demand

Deep concerns over food and energy prices persist, creating intense pressure for businesses and consumers. There has, however, been excitement over the implications of the shale gas boom, particularly in the US (albeit mixed with some genuine environmental concerns).

Lady Barbara Judge, Chairman of UCL Energy Institute and former Chair of the UK Atomic Energy Authority, comments: “I keep a close eye on the price and availability of energy. The greater availability of energy across the world is driving optimism with respect to manufacturing, so it’s having a clear economic impact. In the US, the discovery of shale gas and the economic revitalisation of shale technology have made America feel more optimistic, because the price of energy has gone down which is bringing manufacturing back to the US.

“But there is a dichotomy between price and availability. In the US, energy prices are going down and economic activity is going up, while in the UK and Europe, energy prices are going up because renewables are expensive and unreliable. So, in Europe, the economic vibrancy attributed to energy is less obvious and is not happening as fast.”

4) The Race for Growth

Plenty of CEOs actively dismiss pessimism over the economy. They prefer to concentrate on the positives of winning contracts, doing deals and seizing opportunities. In 2013, blaming the economy for poor performance can sound like a well-worn excuse.

Dominic says: “I see a lot of evidence from a number of businesses in a range of sectors that well positioned products can pick up on some quite high growth trends. For example, if you think of the healthcare and nutrition markets and the concerns that we as consumers have around obesity, well-being and healthy living standards, then you’re hitting a hot spot for a high growth market…

“For a well-positioned product in a company that understands its consumer markets, there are plenty of growth opportunities both in established Western markets and those in the BRIC economies.”

David says: “We’ve now got to the stage where everyone is looking for growth… [and] the same conversations are happening at the macroeconomic level, saying: 'Yes, we have to control our debt and pay off our loans, but the more pressing need is what we are going to do to invest in the future?'

“It’s taken quite a long time for people to understand what being in a recession means and what you need to do to manage your way through it. What I’m now starting to see is senior managers coming back to the table feeling much more confident about taking a decision… which means the leadership can push on and assess what needs to be done.”

Any good strategy that's decided on will contain a healthy respect for risk. Jon says: “We’ve been adopting such sophisticated planning scenarios as flat lines, assuming that we won’t have following tides of economic prosperity and therefore we run the companies in our portfolio along that basis. It’s very different to a fast-growing economy, where you would be doing new product developments at pace, so it’s made us adopt a safer strategy than we would do in more buoyant times.”

5) Relationships Matter

Following on from David Turner’s point about what it means to do business through a recession, it’s become increasingly important to communicate with stakeholders, manage uncertainty and build strong relationships with existing and prospective clients to understand exactly what they’re looking for.

Duane Lawrence, CEO of InferMed, which provides software solutions and technical services to the healthcare industry, says: “A good portion of our business is related to public spending on health and, with the NHS cutbacks, we’ve had to look not just at selling the clinical advantages of our software, but also at proving how it can take costs out of the system… the manner in which we go about talking to individuals about what we’ve got has changed pretty significantly.

“[Previously] we could just go in and talk about how we could make a difference in people’s lives by helping doctors treat patients better. That’s just not enough anymore because there has to be an economic benefit associated with it.”


Questions around how to solve the GDP/debt burden remain largely unresolved, with governments refusing to tackle austerity head-on or have a meaningful plan for recovery. Be that as it may, many businesses have identified where the growth spots lie for them and, as a result, they are a whole lot more optimistic than they have been for some time.

Given the systemic economic problems we face, it may be premature to say the 'feel-good factor' has come back to the boardroom, but there is a sense of direction and focus that’s been absent for way too long. 

I hope to see you soon.