DCSIMG

How do you fix the recession?

As Britain heads towards recession we asked those weathering the storm who they think is responsible and what action can be taken to get the economy back on an even keel.

LEONARD RUSSELL

Owner, Glengoyne Distillery

Who do you blame for the economic downturn?

I partly blame the herd instinct and the onslaught of 24-hour news. When you read about the economic downturn you psychology think: 'Perhaps I shouldn't go on holiday, perhaps I should save my money.' Having said that, I do blame the Government because although the headline income tax rate hasn't changed very much we are taxed in so many other ways people are feeling the pinch.

What three things would you like the Government to do to help the economy?

Encourage businesses to grow by ensuring that interest rates do not increase in the medium term. They can also cut back on legislation, a lot of which is completely unnecessary and regulate business less. We don't need to be told how to run our lives.

Do you expect your sector to be badly hit or to escape the worst?

Despite the fact that the cost of distilling whisky and making bottles has increased dramatically, demand for Scotch has increased in the export markets. As a result I am very enthusiastic about the Scotch whisky industry at the moment.

Do you know anyone personally who has lost their job in recent weeks?

Yes.

What are you cutting back on, at work and personally?

Saving more and repaying company debt.

ANDREW FLEMING

Managing director and chief investment officer, Aegon Asset Management UK

Who do you blame for the economic downturn?

Credit-driven cycles like this one are endemic to capitalism. No one is to blame, although ultimately the issue is that too much leverage (ie borrowing) was built up, particularly in the household sector in the UK, and ultimately the creation of credit is a central bank responsibility. Commercial banks also became too leveraged, and here the asymmetrical nature of the remuneration system did not help.

What three things would you like the Government to do to help the economy?

Be truthful with the electorate. To state that all is well is dangerously complacent. Be prepared to provide a safety net to support the system but also allow the economy to reduce borrowing as it has clearly become dangerously unbalanced. Support the Bank of England in its difficult job of controlling inflation, as there would be greater long-term problems if inflation took hold.

Do you expect your sector to be badly hit or to escape the worst?

It has already hit the fund management sector as our revenues are very dependent on assets under management and market values have fallen sharply. We have, however, been doing a good job for our clients so far in this cycle and we remain very focused. Over the medium term the UK household savings rate has to rise from its current extraordinarily low level, and this should be good for the asset management and life insurance sector.

Do you know anyone personally who has lost their job in recent weeks?

No, but I expect to in the next six months.

What are you cutting back on, at work and personally?

Encourage staff to take public transport as much as possible, which I do myself. I am a strong believer in controlling costs in the good times to allow the business to cope with the difficult times. The environment will be uncertain for some time, but without being complacent we think we are in good shape to weather the storm.

ALAN MITCHELL

General manager people, Dunfermline Building Society

Who do you blame for the economic downturn?

There are two major factors: the sub-prime crisis in the US (resulting in the collapse of Northern Rock) and the oil price increase.

What three things would you like the Government to do to help the economy?

Maintain interest rates at present level or lower, cut fuel duty (even temporarily) and maintain road tax at present levels.

Do you expect your sector to be badly hit or to escape the worst?

Financial services are already hit (most recently Bradford & Bingley). However, it is worth saying that the building society industry is strongly capitalised and has a lower risk profile, as per Moody's review. While our sector will be affected, I do not see the impact being as severe as Northern Rock, for example.

Do you know anyone personally who has lost their job in recent weeks?

No.

What are you cutting back on, at work and personally?

Personal: more mindful of own fuel costs (more economical driving, walking more!) Work: reviewing income and cost base closely across all operational areas.

HUGH ANDREW

Chief executive, Polygon (publisher)

Who do you blame for the economic downturn?

The blame lies with a society which expects endless increases in consumption in a world of diminishing resources. If we live off interest, not capital, this is the consequence.

What three things would you like the Government to do to help the economy?

A taxation system which penalises consumption and waste and incentivises sustainable production. Working towards an economic system where price is only one factor in the economic mix and value has a role.

Do you expect your sector to be badly hit or to escape the worst?

Books tend not to boom or bust but, yes, we will be hurt, particularly by the disastrous tourist season.

Do you know anyone personally who has lost their job in recent weeks?

No.

What are you cutting back on, at work and personally?

We are being much more careful in the type of project we take on. I would like to think that we and I have always been relatively prudent.

DAVID FERGUSON

Chief executive, Nucleus Financial Group

Who do you blame for the economic downturn?

The hopeless lack of reality in the way we've lived our western lives for the last 20 years.

What three things would you like the Government to do to help the economy?

Darling to resign, more incentives for entrepreneurs and cut interest rates.

Do you expect your sector to be badly hit or to escape the worst?

Financial services will be badly hit. Our niche sector – financial 'wrap' platforms – will not be.

Do you know anyone personally who has lost their job in recent weeks?

No.

What are you cutting back on, at work and personally?

We're not cutting back on anything. We're investing.

JOHN ROWLEY

Chief executive, Tangible Group (advertising)

Who do you blame for the economic downturn?

You can't blame any one person. This recession has been forecast for the last couple of years and the most obvious culprits are greed, the free market and herd instinct. Phrases like "global problems, global solutions" are clearly coming home to roost as this is a global recession and politicians are struggling to act quickly or significantly enough with the mechanics of national economic control.

What three things would you like the Government to do to help the economy?

Scrap tax credits and use the personal allowance to support low-income groups. Allow greater independence for the large public sector bodies such as the NHS with the aim of reducing the burden on the taxpayer. Join the euro at the most convenient time.

Do you expect your sector to be badly hit or to escape the worst?

The marketing services industry is going through massive ideological (return on investment) and technological (the internet) change. The recession will accelerate both of these trends. The sector will ultimately win but there's going to be some pain on the way.

Do you know anyone personally who has lost their job in recent weeks?

No.

What are you cutting back on, at work and personally?

The company runs pretty lean anyway, but we are more focused on financial rigour than ever before.

ANDREW MURPHY

Managing director, John Lewis, Edinburgh and Aberdeen

Who do you blame for the economic downturn?

There is no one person or group of people to blame. The economy moves in cycles and the current slowdown has felt particularly harsh because there are global contributing factors at play, as well as national ones.

What three things would you like the Government to do to help the economy?

Cancel all spending on new nuclear weapons programmes and divert the billions saved into realigning income tax bands – the higher-rate threshold is set far too low. Change the Monetary Policy Committee's priorities from solely asking them to manage inflation to also directly requiring them to prioritise UK economic growth. Slash local authority organisational and labour costs and pass the benefit onto the public through reduced council tax.

Do you expect your sector to be badly hit or to escape the worst?

Retail is already being hit and I expect it to get worse before it gets better. With predicted gloomy times ahead, consumers will become more cautious about spending their hard-earned cash. Research has shown us that as people have less disposable income, they understandably become more interested in quality and value, which is why we believe John Lewis is faring better than most. Other retailers that started 2008 in good shape and who have a strong customer focus will be fine. However, some familiar high-street names may not survive the year.

Do you know anyone personally who has lost their job in recent weeks?

No.

What are you cutting back on, at work and personally?

At John Lewis we're committed to maintaining our excellent levels of customer service, so while we've slowed our recruitment it's not been necessary to make any drastic cuts. All in all, John Lewis is in good shape. We have a strong brand and a unique positioning, which has meant we haven't had to resort to any of the drastic measures being undertaken by some of the other retailers. At home I am trying to be more careful with my spending on groceries and to waste less at the end of each week.

BARBARA BLANEY

Scotland director, BioIndustry Association

Who do you blame for the economic downturn?

We are all part of the global economy and economic storms will happen for numerous unforeseen or even unavoidable reasons.

What three things would you like the Government to do to help the economy?

The main thing I would like is a reduction in capital gains tax to promote investment in SMEs.

Do you expect your sector to be badly hit or to escape the worst?

We expect the companies with the best products and the best management teams to do best in any economic situation. The products our sector produce are not luxury goods but essential products to treat diseases; they are literally needed by patients. Development may slow down and investment terms may be more demanding, but bioscience is a long-term investment.

Do you know anyone personally who has lost their job in recent weeks?

Yes, a very good friend of mine from church lost their job in construction.

What are you cutting back on, at work and personally?

As a trade association we run a very tight ship, so for us it is very much business as usual. Myself, I'd like to cut down my fuel consumption, but that just doesn't seem to be happening so I am trying to drive slower and still be on time.

MARTIN SIME

Chief executive, Scottish Council for Voluntary Organisations

Who do you blame for the economic downturn?

With hindsight, the banking meltdown was a crisis waiting to happen but it shows how interdependent our world has become. The real cause, though, is the aspirations of people in the developing world to the kind of lifestyles we take for granted, and who can blame them? Our endless pursuit of (unsustainable) economic growth is the problem.

What three things would you like the Government to do to help the economy?

The UK Government should borrow more and invest in social housing, thus also stimulating the building trade; provide tax breaks for company donations to charity (as they do in the US), helping us to address the real victims of recession; invest in community-owned renewable energy production and ensure that the benefits of all renewable energy projects are used to address fuel poverty – it's a scandal that anyone should be too poor to keep warm.

Do you expect your sector to be badly hit or to escape the worst?

The paradox here is that, with tight public expenditure and a likely drop in donated income, voluntary organisations will have the capacity to do less when demand for their services is rising because of higher unemployment, homelessness etc.

Do you know anyone personally who has lost their job in recent weeks?

Job losses happen all the time in our sector because the funding base is so fragile, but behind every story of a charity losing funds there's the personal stories of hardship for individuals who were committed to the cause.

What are you cutting back on, at work and personally?

At work we're looking at ways to generate our own renewable electricity, as well as cutting back on transport through video conferencing. Most of our income goes on staff, though, and we are slower to replace people who have moved on. At home we are already discussing how to cut back on our heating needs – simple things like wearing jumpers! Trying to make better use of the food we buy and throwing less away is also a priority.

PHIL WORMS

Director, Iomart (internet host)

Who do you blame for the economic downturn?

I don't think blame is an appropriate response. I remember the 1970s and fuel rationing – these things are cyclical and you can't pin it all on the collapse of the sub-prime market. Surely people didn't expect salaries to keep up with the spike in property prices? Good times don't last forever, but neither do bad.

What three things would you like the Government to do to help the economy?

I think taxation is a little over the top, and easing off on that would certainly boost confidence among businesses and consumers. A government can only spend what it can raise in taxes, but I believe the balance has tipped too far. I'd also like to see more investment in public transport, and more resources directed towards community projects like sports facilities and libraries to encourage greater participation from areas of society which maybe feel a bit disengaged. There's no overnight solution, but all of these things would, in the longer term, contribute to greater stability.

Do you expect your sector to be badly hit or to escape the worst?

The internet is one of these things which I believe is evergreen – no one is recession-proof, but we're in the fortunate position that IT infrastructure is more important than ever when companies are looking to things like 'webinars' and video conferencing to cut travel costs. Consumers, too, will use the internet to track down cheaper deals on everything from groceries to cars.

Do you know anyone personally who has lost their job in recent weeks?

Fortunately, no.

What are you cutting back on, at work and personally?

We have four major data centres across the UK, so obviously our biggest cost is power. Our new Nottingham data centre is just about to open and we've made sure it's kitted out with energy-efficient equipment which reduces our power consumption by around 7%. We're also looking at similar upgrades to our Leicester, Glasgow and London data centres. We're not a particularly profligate company, but elsewhere in the business we are looking at things like travel costs. Personally, I dread the fuel pumps so I'll avoid driving where possible, and I'll think twice about spending on luxury items I might have splashed out on a year ago.

MICHAEL McAULEY

Chairman, Dundas & Wilson (lawyers)

Who do you blame for the economic downturn?

No-one really. Does no one understand the economic cycle? Commentators out there are talking about 'complex' factors and uncharted waters. Oil prices rocketing, inflation on the increase, high wage demands in the public sector – does nobody remember the 70s?

What three things would you like the Government to do to help the economy?

When we're going through what's perceived to be a global economic crisis, there's very little that national governments in reality can do. But firstly, governments shouldn't believe that by fiddling with interest rates they can make a material difference. Any increase in interest rates may have a dampening effect on inflation but may also have a very damaging effect on already fragile industry. Secondly, showing strong leadership without spinning things too much would go a long way. Let's not forget that we should in some way be able to capitalise on 17 years of sustained growth to help us through these tough times ahead. Finally, political decision makers should have some respect and sensitivity for the challenges that working families now face. The MPs voting to retain their right to non-disclosure of certain expenses is hardly a good example to set.

Do you expect your sector to be badly hit or to escape the worst?

Across the UK there will no doubt be an impact within the legal profession in certain areas – we're all expecting a bit of a bumpy ride. However, we expect to see growth in the areas of corporate recovery and infrastructure investment as the Government tries to bolster a construction sector which is clearly hurting from the current crisis. There's also likely to be issues around employment law, as organisations which have experienced sustained growth over a period of time are now potentially having to look at the size of their workforce.

Do you know anyone personally who has lost their job in recent weeks?

In the legal profession, no. However, I am aware of both friends and colleagues in other sectors who unfortunately have lost their jobs.

What are you cutting back on, at work and personally?

At work, clearly travel costs are being looked at – we're much more reliant on our video conferencing than we used to be, the upside being the environmental benefits. In addition, we're more focused in our approach to corporate hospitality in response to feedback from clients who feel it's inappropriate in the current climate. I try to use the train a bit more often now – stopping at the petrol station is a bit depressing.

BRENDAN BARBER

General secretary, TUC

Who do you blame for the economic downturn?

The banks, particularly those in the US who made risky loans, must take the lion's share of the blame for the credit crunch. Governments should have regulated the banks more tightly and should not have listened to the neo-liberals who were telling them that deregulation is the route to economic growth.

What three things would you like the Government to do to help the economy?

First of all, the UK Government should postpone the fuel duty increase. The construction sector, which is being hit hard by the current economic climate, can also be helped by building and buying more affordable homes for rent. And the Government could further boost its revenues by standing up to the super-rich and big companies and making them pay their fair share of tax. The proceeds from this could go into ordinary taxpayers' pockets and into public services.

Do you expect your sector to be badly hit or to escape the worst?

Workers need trade unions even more when there is a downturn, but if unemployment grows significantly it could hit our membership.

Do you know anyone personally who has lost their job in recent weeks?

Not personally, but construction and financial services are the main sectors suffering from redundancies.

What are you cutting back on, at work and personally?

I am cutting back on predicting economic difficulties ahead. Of course we are going through a rough patch, but the danger is we'll make it much worse than it needs to be by talking ourselves into a recession. Comparisons with the 1970s, 1980s or the 1990s are both incorrect and unhelpful.

NEIL LOVATT

Sales and marketing director, Scottish Friendly

Who do you blame for the economic downturn?

Alan Greenspan. While everyone was hailing him as a genius it was obvious he was simply pumping the US economy full of liquidity. No matter what the event – the stock market crash at the turn of the millennium, the tech stock fallout or September 11 – Greenspan just kept on printing money. The day of reckoning had to arrive eventually. Just lucky for him he retired from his job when he did.

What three things would you like the Government to do to help the economy?

For a start, stop building more houses: the property market is falling rapidly and the last thing it needs is the Government coming along and adding to supply. Dump the concept of the 'golden rule', which was always arbitrary and a farce thanks to PFI being 'off balance sheet', to allow the Government to stimulate the economy through tax cuts. Call an election: the country needs new leadership and one that is not bound to the legacy of the decisions which have been taken over the last 10 years.

Do you expect your sector to be badly hit or to escape the worst?

I suspect that the savings gap will get worse over the next few years as people pay down their debts rather than save and invest. However, the financial sector could find a longer-term lease of life as the next few months will demonstrate quite painfully that using houses to fund your retirement and long-term savings was not the surefire bet that everyone once thought it was.

Do you know anyone personally who has lost their job in recent weeks?

A friend running a landscape gardening business has just had to let some staff go.

What are you cutting back on, at work and personally?

I'm not driving around in my gas guzzler as much as I used to. I've noticed that we're spending much more time in the "value" rather than the "finest" aisle… I'm still going to buy a new iPhone though!

DOUGLAS ROBERTS

Senior international economist, Standard Life Investments

Who do you blame for the economic downturn?

You could argue it was inflation that caused it. The global economy was growing too strongly and we need a period of subdued growth.

What three things would you like the Government to do to help the economy?

There's not much it can do and we'll probably go into recession in the second half of this year in the UK. For example, there's no point in cutting interest rates, as this won't reduce mortgage rates.

Do you expect your sector to be badly hit or to escape the worst?

The outlook for markets at times like this is largely driven by momentum, as we saw with the dotcom boom. However, as I'm not on the equity side of the business I can't say what has been priced into markets.

Do you know anyone personally who has lost their job in recent weeks?

No.

What are you cutting back on, at work and personally?

I'm not cutting back in a big way. I'm just doing things like substituting certain products for less expensive ones.

MARTIN OLIVER

Managing director, Kwik-Fit Insurance

Who do you blame for the economic downturn?

We have had over 15 years of uninterrupted growth in the economy and I am a great believer in what goes up must come down. It was going to happen; it was just a question of when and how bad it would be.

What three things would you like the Government to do to help the economy?

I'm not sure that the Government can actually do much about things like the price of food and fuel, but I would say they are talking about the right things, just not in the right way. All we have had to date are penalties such as the net increase in road tax – there never seems to be any talk of incentivising the right behaviours. I don't think the Government should get involved in the housing market at all – prices are still far too high. There is a distorted market in so far as first-time buyers can't get on the ladder.

Do you expect your sector to be badly hit or to escape the worst?

Personal insurance lines such as car and home insurance are to some extent protected as the law says you must have car insurance, and the banks and building societies insist on buildings insurance before they will give a loan. Having said that, we are seeing affordability as more of an issue and customers are demanding better prices.

Do you know anyone personally who has lost their job in recent weeks?

Yes. My oldest friend was laid off two weeks ago, but he has already got himself a new job starting in September.

What are you cutting back on, at work and personally?

At work we have always had a culture of watching our costs, but despite that a further review has been carried out and some costs have been curtailed and/or deferred. At home it's the wife that holds the purse strings so you would need to ask her – I do know she seems to be visiting Asda more often than M&S these days, though.

TOM KITCHIN

Owner, The Kitchin (restaurant)

Who do you blame for the economic downturn?

These things are part of a bigger picture and it is difficult to pinpoint one person or one organisation.

What three things would you like the Government to do to help the economy?

I tend to leave these sorts of issues for the experts but I would like to see it attempt to lower the fuel price.

Do you expect your sector to be badly hit or to escape the worst?

The increases in my cost base have been incredible. My food bill has gone up about 16% compared to last year, while shellfish, rice, olive and vegetable oil have all risen dramatically. The cost of wine from Europe has risen with the strength of the Euro while my utility bills have gone up 30%. Having said that, I am confident I can escape the worst because the type of restaurant that I have is a destination restaurant. But I have had to adjust.

Do you know anyone personally who has lost their job in recent weeks?

No.

What are you cutting back on, at work and personally?

There are certain things we are trying to knuckle down the hatches with but with the type of restaurant that I run it is very difficult to cut back on the produce. We have a zero tolerance policy towards wastage but we can all cut back on things, especially with regards to overbuying at the supermarket.

CLARE THOMMEN

Co-owner, Boudiche (lingerie retailer)

Who do you blame for the economic downturn?

The banks. Although I wouldn't want to blame our bank, Bank of Scotland, with whom we have just refinanced and are very happy.

What three things would you like the Government to do to help the economy?

Cut interest rates. Give a break or a reduction on stamp duty to help the housing market. Provide more support for indigenous UK businesses and young entrepreneurs as they try to establish themselves, even if it was a reduction on business rates, which are crippling.

Do you expect your sector to be badly hit or to escape the worst?

We are a niche provider in a luxury sector. Our products are defined by their quality and we are not finding people are spending any less. We have just expanded into Glasgow.

Do you know anyone personally who has lost their job in recent weeks?

No.

What are you cutting back on, at work and personally?

I had my car stolen recently and have chosen not to replace it, so I am saving on my vehicle expenditure.

SIMON WALKER

Chief executive, British Private Equity and Venture Capital Association

Who do you blame for the economic downturn?

Obviously there were a number of contributing factors that led to the situation we are in now. Our industry has lived through several downturns over the past two decades. One of the benefits of the private equity business model is it can move quickly to adjust to changing economic circumstances.

What three things would you like the Government to do to help the economy?

The first is to stop damaging the reputation of the UK as a place to do business through any more adverse tax initiatives, such as the non dom issue. This has been a major contributor to the UK slipping down the competitiveness league table. The second thing is to ask Government to place a greater emphasis on the importance of venture capital and its role in the UK economy. Venture capital has the potential to bring the right managers, scientific ideas and funding together and create businesses and jobs. The Government could allow small companies owned by venture capital firms to qualify for the same tax relief as all other SMEs. The third thing is to maintain its open approach to long term investors, such as sovereign wealth funds.

Do you expect your sector to be badly hit or to escape the worst?

The credit crunch has checked the pace of buy-out activity, but many private equity firms are in the enviable position of having well funded stores of capital available for investment. As a result they have emerged as one of the few sources of long-term capital that can be readily called on by companies in trouble.

Do you know anyone personally who has lost their job in recent weeks?

I do not.

What are you cutting back on, at work and personally?

My carbon footprint, as I cycle to work.

LAURNA O'DONNELL

Group managing director, Beattie Communications (public relations)

Who do you blame for the economic downturn?

Greedy bankers.

What three things would you like the Government to do to help the economy?

Cut interest rates. Cut tax on fuel. Cut stamp duty.

Do you expect your sector to be badly hit or to escape the worst?

So far we have not seen any downturn. Our business is brisker than usual but if lack of confidence in the economy continues we will feel the effects. During a recession, PR traditionally gets hit late and comes out of the recession later as well.

Do you know anyone personally who has lost their job in recent weeks?

Yes – a friend who worked in financial services.

What are you cutting back on, at work and personally?

We're pretty lean and mean as it is. So far no cuts have been made at work but we have plans to cut non-essential expenditure should it be necessary. Personally, I'm a shopaholic and I'm doing my bit for the high street. I've also become more conscious of the food waste incurred while travelling for work and am keeping a closer check on my weekly grocery shop.

 
 
 

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