It is an irony that one of the longest-running debates in this country is about short-termism. But short-termism has become ingrained in British business culture, as George Cox, the former Institute of Directors boss who this week published the latest report on the subject, points out.
Large companies have no qualms about selling themselves to foreign predators, or embarking on knee-jerk rounds of redundancies the minute revenues begin to quaver.
Entrepreneurs often suffer from ‘Old Rectory syndrome’, dreaming of early retirement to a country village, rather than founding a family business dynasty.
Key to recovery: George Osborne's 2011 Autumn Statement flourished a plan to harvest £20billion for infrastructure, but this has hit the buffersThis mindset means the UK fails miserably at supporting industries where we still excel, such as aerospace.
For every £1 invested by the Government in research in the sector, the French invest £8 and the Germans £12.50.
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We still have world class universities capable of producing amazing innovations, but do not exploit them. Graphene, the new wonder material, was developed at Manchester University, yet UK businesses have filed only 54 related patents, compared with more than 1,700 from the US and more than 2,200 from China.
The short-termist mentality in politics compounds the problem.One glaring example is inadequate airport capacity in the South East of England, an issue first raised in 1955, according to Cox.
Ditto energy policy.
Hopes of a nuclear renaissance are now hanging by a gossamer thread as the government cannot agree a price structure with EDF, the main player. If the charade continues, we are at risk of the lights going off.
There is a broad consensus that long term infrastructure investment is key to recovery.
George Osborne in his Autumn Statement back in 2011 flourished a plan to harvest £20billion for infrastructure from pension funds and insurers, but this has hit the buffers.
The chief executive of Legal & General this week complained he has billions currently invested in overseas bonds that he wants to invest in UK projects but cannot, due to the ‘glacial’ pace at which they proceed.
In lieu of a compelling long-term strategy for growth, the Chancellor is relying far too heavily on the stimulus of easy money from the Bank of England – a route he criticised whilst still in opposition.
In his Budget, Osborne will almost certainly pave the way for new Bank of England governor to escalate the policy into even more extreme territory, such as negative interest rates. But the solution to the UK’s economic woes is not to be found in ever more experimental monetary policy, which has the perverse effect of helping borrowers and enriching millionaires while hurting the elderly, the thrifty, and the badly off.
QE was only ever meant to be a short-term emergency measure; it is not a substitute for real long term solutions.
Bank for business
The idea for 17 big City fund managers to buy 315 branches from RBS is an excellent one – and it would be even better if they could take on the 632 Project Verde branches from Lloyds while they were at it.
The Verde business is supposed to be passing to the Co-op, but it must be said the deal is taking a very long time. A dedicated small business and retail bank of real scale would make a huge difference to the plight of credit-starved small firms, and by extension to the whole economy.
Disgracefully, the Big Four banks are still not lending nearly enough to small business. Tiny building societies such as Leek United and Newbury are doing more net lending than RBS or Lloyds, and Sir Mervyn King even advised one applicant to try a Swedish bank.
The banks claim their hands are tied as regulators require them to hold more capital as a safety buffer. In reality, RBS, Barclays and HSBC could choose to lend more to small firms here, but have extensive non-UK operations and investment banking activities.
There would be major practical difficulties in establishing the RBS and Lloyds branches as a new small business bank.
Problems with unravelling branches from the parent network and making the IT work have already stymied attempts by the two state-backed lenders to divest.
Still, it is an attractive idea, not least because it would show the City backing Britain’s long term interests. Ruth Sunderland is Associate City Editor of the Daily Mail