THE LASSITUDE of Christmas done, one wonders how the average FD will muster the strength to confront the economic environment in 2012. That may be journalistic melodrama but it’s easy to understand. GDP forecasts for this year were downgraded in George Osborne’s Autumn Statement and the crisis in the eurozone offers little by way of reprieve from the unrelenting gloom and uncertainty. What on earth is there to look forward to?
As I write this in December, I struggle to think of anything beyond the Olympics – but even that is arguable. The economic boost from the Olympics is likely to be limited. Indeed, it could be a cause for concern. The Secret FD in this month’s issue looks beyond the revenue implications. He views it as a source of inspiration: get lean and mean for 2012 like the athletes who will compete in August. Hearty stuff – I hope it works for him.
But I can’t help feeling that businesses will need a little more, especially if, by the end of the first or second quarter, we have dipped back into recession. That could be bad news. Alongside a fragmenting eurozone, it could be more than bad. It could be awful.
Our cover story this month describes the baggage that comes with a return to national currencies. It highlights the need for contingency planning. Our current problems impose on the FD the need to become a forward-thinker who must balance the demands of doing business now with preparations for what may happen in the future. This will create some tension in the finance function but it may place a premium on being able to dig deep on the analysis.
Some FDs may be feeling government policy is not helping. The Autumn Statement offered some support – especially the infrastructure improvements, but that will not come to fruition for some time. And David Cameron’s veto in Europe may have cheered the City, but will have done little to reassure exporters who rely on a steady relationship with the EU. We’re still members of the club, but you would be forgiven for wondering where such a policy might end.
It’s a level of concern the FD could do without. But let me try to offer a glimmer of hope, though you may feel I’m overreaching.
GDP forecasts do say the economy will grow. As unimpressive and disappointing as that may be, it is still growth. Business can still be done, companies can still be grown, products sold, services provided. But it will be demanding: there will be few places to hide and, as the Secret FD suggests, a degree of athleticism will be needed. The winners will be lean, analytical and forward-thinking companies that have a vision.
Good luck in 2012.
Gavin Hinks, Editor
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