Jerry Blackett: This anniversary’s not quite the downbeat affair of popular belief

Aug 11 2008 By Jerry Blackett

On Tuesday last week, I participated in the BBC’s Radio Four money and consumer lunchtime programme You and Yours.

The topic was the first anniversary of the credit crunch.

As an aside, I wasn’t sure if I should have baked a cake and brought a present. It seems an increasing trend for the media to home in on anniversaries.

We had to pick over the carcass of the MG Rover closure earlier in the year, as we are now three years on from this. What else might be coming? I wonder if I could encourage national recognition of my birthday?

I had been asked to speak on the theme of winners and losers from the credit crunch.

By the time I was brought into the discussion, it had been under way for 20 minutes.

Much to the barely-disguised disappointment of the presenters, most of the callers to the programme had been explaining how in their businesses, things were not as bad as painted by the media.

In fact it was very heartening to hear ordinary people describing the effects of the slowing economy in a sensible and balanced fashion.

The great mistake we can make is to extrapolate problems in some parts of the economy into a conclusion that everything is bad and getting worse.

It is not like that.

There are some general comments that it is possible to make; confidence levels generally are reducing and inflationary pressures are rising. Not least driven by energy and food costs.

The residential housing sector is hardest hit and there are knock-on effects to businesses that feed off housing spend. Businesses that are high-consumers of energy (for example metal finishing and forging businesses) are particularly squeezed by rising costs and competition from China and India.

Anecdotal evidence suggests banks are tightening up on the cost of finance and associated lending covenants. We have also heard of larger companies taking longer to pay bills due to smaller businesses.

Once we move beyond generalities, then the picture becomes much more fragmented.

There are companies in every sector (including those I have mentioned above) that are still competitive and prosperous.

I was speaking to the chairman of one of our great industrial success stories recently (a Footsie-quoted business) whose businesses are still delivering growth, underpinned by a relentless commitment to innovation and efficiencies.

Interestingly, he believes that the costs and competition challenges we are seeing will result in more companies facing up to inefficiencies in their businesses and ultimately, this can only be a good thing.

Whilst public spending will now slow given the pressures on the public purse, this will take time to filter through.

In the meantime, spending on new hospitals, colleges and associated infrastructure is providing double-digit growth for many of our locally based businesses.

In the medium-term, the London Olympic spend is and will remain substantial.

Another example of not falling into the trap of generalisation would be retail sales.

The media reports paint a gloomy picture. In Birmingham, sales growth at the tills in the Bullring is six per cent higher this year than last. Selfridges reported double-digit growth recently.

If shopping is not your thing, then you will need to be quick to get a good seat in Birmingham’s Repertory theatre to see the show Cabaret, where ticket sales are very strong.

If you are cash-rich, then the problems of the housing sector present a buying opportunity.

Deep discounts are available to investors willing to pick up some apartment blocks, for example.

Given the chronic shortage of housing in the country and the arguments we are beginning to see over green belt land, the fundamentals would seem to suggest there should be bargains to be had.

The fundamentals in the region’s economy do stand up to scrutiny.

Corporate earnings are holding up; the economy is diversified; we are improving the skills levels in our people faster than any other English region and we are attracting investment.

Maybe this time next year we will celebrate the first anniversary of this story all being rather complicated?