Douglas Mellor is an Associate Consultant of GDP Global and a business leader with 35 years’ experience in technology dependent industries, including turnaround and post acquisition...It’s doom and gloom everywhere – no need to say more. But is there a silver lining for some IPAs, I wonder?
We’re used to seeing assembly jobs relentlessly moving to the latest and cheapest labour entrant to the EU. Once the years of euphoria that take farmers out of the field into the factories dies down, the quest has been for every new beneficiary of this good fortune to find a way up the value chain once they recognise that an even cheaper labour country is about to emerge to challenge their cost base.
With the slowing of global demand, large corporations will be revising their investment plans and some will be bringing jobs back home. However, some will be also re-considering countries that are likely to be good value in these prolonged straightened times. Could Britain be once such destination?
Unhappily for British residents the initial forecasts provided in the pages of the national newspapers and magazines such as The Economist indicate UK GDP could fall by as much as 2.8%. It seems from the reports last week that could be a bit on the optimistic side and a 4-6% decline is emerging as a possible scenario. As GDP falls and with the recent slide in sterling it seems possible that a reduced UK cost base could be a lot more attractive to capture the rest of the benefits of investment in a sophisticated and English speaking economy.
That sterling has fallen so deeply that ex-pats across Europe are now heading for home. However, UK relative gross government indebtedness of 47% (2007 figs) compares well to other EU countries such as France with 70%, and suggests that UK could spring back from the abyss a little quicker that we might imagine. Initially at least, UK Trade and Industry could be viewed as not a bad group of people for foreign investors to open discussions with during 2009.
Over a pleasant lunch with a property investor last week I was told that indications existed to suspect that our banks may have a lot more stock of properties on their books than we may imagine. It was suggested that figure could be several years’ worth at current rates of demand. If indeed that is the case, we can imagine a slow recovery for UK over many years thereby becoming an attractive longer term bet for investors. This in turn may be very helpful for recovery.
It would be very nice for inward investors to rediscover the warmth of the Welcome in the Valleys, glens, fens, dales etc.
