Snow figures show a lack of home work
This recession may be the first to test the global economy – but there’s more at stake than that
It’s also the first since the corporate blame culture took hold.
It reached what will hopefully be its nadir last Monday when snow brought
much of the country to a halt. We were told the disruption on Monday alone may
have cost the economy £3.5bn, a sum based on productivity lost from the 20% of
the population unable to get to work.
That preposterous figure assumes that, in this broadband-enabled,
flexible-working, service industry-dominated economy, nobody is equipped to work
from home. Which is plainly cobblers. Yes, another day of lost custom will have
brought some retailers and restaurants closer to collapse, but the impact would
have been much narrower than the multi-billion headline figure suggests.
You can see the effects of this blame game more widely. The effects of the
credit crunch and resulting recession have been devastating, with worse to come.
But many of the higher profile businesses that have collapsed were well
acquainted with concerned bankers and turnaround specialists before last summer.
Fair value and the freezing of credit just tipped them and others over the edge.
Far too many companies had high gearing and working capital deficiencies
coming into the credit squeeze. It’s no wonder they’re struggling, now easy
credit has dried up.
Martin Williams, MD of credit rating agency Graydon, drew an analogy on the
Accountancy Age website last week. ‘A plane crashes in the jungle.
There are three survivors facing a crisis – a three year old toddler; a 30
stone, 40 cigs a day man; and a 28 year old rugby player. Have they all got the
same chances of survival?’
It’s the same with companies.
