Well, we enter the new world of retail financial services this month with some trepidation and also some excitement. Like most so called ‘seismic changes’ I suspect that that it won’t be as bad as many firms suspect but there will certainly be casualties, but there will also be huge opportunities.
However, whilst I deplore some of the unnecessarily bureaucratic aspects of the new rules (do regulators and civil servants even understand about what it takes to run a business?) there is no doubt in my mind that the main thrust of these changes is for the better; consumers will be better informed and advisery businesses better managed and that cannot be a bad outcome.
Watching the recent demise of Jessops, Comet and HMV I cannot help recall the words of one very sage corporate recovery specialist talking to BBC Radio 4 Today programme recently and spelling out his theory that an economic recovery really cannot take place until a lot of the dead wood is chopped out and that there are many businesses that are being kept alive because the banks don’t want to write off their loans and overdrafts by pushing them into liquidation or administration, with the consequent effects of house foreclosures, offered as security, (in the SME sector particularly) putting yet more unwanted and unsellable residential property on the market. House prices are still way over valued in my opinion and we need re-alignment soon or the market will remain sluggish. Residential lending figures are better so there is some sign that the sector is ‘on the move’ again, albeit slowly.
The other area of property investing which seems to be in need of attention is commercial retail. Landlords are going to have to seriously consider reducing rents at review points and not just having upward only reviews, this is commercially perverse, when business is bad prices are usually reduced to stimulate sales but in this sector there is a practice of “upward only” reviews and this isn‘t sustainable in times like the present. We are at serious risk of seeing the demise of the ‘High Street’ or it just finishing up as a line of fast food outlets and charity shops, not that there’s any wrong with fast-food outlets and charity shops per se, but no one wants to see them to the exclusion of all else; an exaggeration I admit but look around you…
This afternoon Barack Obama is publicly sworn in as the next president of the USA, he’ll need all the intelligence, vision, statecraft and all the good luck he can muster to deal with the myriad of problems in his ‘in-tray’; problems which affect not just the USA but the world as a whole and we should wish him well. Notwithstanding the rise of the BRIC countries, the USA is still a huge engine for growth in the world and we need a sustainable recovery there to assist us in our road back to fiscal recovery.
I wish everyone a happy new year, I hope it brings you all you wish for.Posted In : Alexander Beard, Paul Beard