Financial Director - November 2013

Building Britain: How improving infrastructure could help lift the country out of recession

As an FD, you can look after the pennies, squeeze margins or take more grandiose strategies, such as refinancing to acquire market share. But it seems that we are all looking upwards – and hoping the sky doesn’t fall on us. That isn’t a reference to our cloud accounting feature on page 42 – but spare me the cheeky plug.

It’s more to do with how the Greek debt crisis, Middle Eastern conflicts and, most recently, the US Senate sign-off debacle all ripple across the various oceans and channels to affect the UK. The fact that many of the recent negative events are themselves ‘ripples’ from the financial crisis should not be lost on anyone.

But we have our own ‘big’ problems. The ticking-up of house prices and the fear of an inflationary bubble, expanded by the government’s Help to Buy mortgage scheme. Stretched homebuyers will feel the pinch if interest rates rise. In fairness, though, EY’s ITEM Club says households are in a better position with their debt-to-income ratios than in the recent past, while BoE governor Mark Carney has attempted to assuage fears by setting out a ‘hold’ on an interest rate rise.

Yet we have the more insidious, potentially more important, issue of infrastructure in the UK. How can you, as an FD, appreciate how a lack of airport investment will affect your business – never mind how the EU’s travails will be felt?

Not wishing to go down the route of ‘known knowns’ and ‘known unknowns’, I guess it reiterates how important the role of the FD is. How do you know something is a risk unless you spend the time getting to grips with it?

As former Schroders FD Kevin Parry said about gauging risk at the investment giant last year: “I don’t have to conclude which of those [risk scenarios] is right – you just plan for each.”

So get your Bond villain-esque map of the world to rise from the floor of your office – and get planning.

Kevin Reed
Editor, Financial Director