Business Leaders Put UK on Olympic Trial
The world’s top business leaders are using their visit to the London Olympics to raise tough questions about the coalition’s management of Britain’s stagnant economy and the country’s vulnerability to a euro break-up.
While David Cameron is trying to use the games as a showcase to boost UK trade and investment, chief executives from the US and Asia—many of them big investors in Britain—are privately voicing anxiety at the state of the economy.
“Cameron is giving us a big sales pitch, but we are not taking any notice of that,” said the head of an Asian multinational. “We want to know what’s happening to the economy and what are the prospects for us.”
One US corporate chief called bluntly for the government to change course after last week’s official figures showed the UK economy shrank 0.7 percent between April and June.
“You need a short-term fiscal policy to boost demand and a credible long-term plan to address welfare, taxes and the labor market. If you do that, the bond market will be fine,” he said.
As business leaders gathered to watch the games, in which ironically Britain’s industrial past played a major part of the opening ceremony, the chatter in corporate hospitality suites was less about sport, and more about London’s competitiveness as a financial center. One financier, referring to the forced resignation of Bob Diamond , the former Barclays chief executive, said: “What’s going on in London? You are killing your bankers.”
“Bob got shot by the regulators,” added another high-profile executive, expressing concern about pressure exerted by the Bank of England and the Financial Services Authority for Mr. Diamond to quit. “There are big implications for London from all of this. When you’re abroad you get a lot of people saying ‘who would ever want to work for a British bank?’?”
Some of the concerns surfaced publicly at last Thursday’s global investment conference at Lancaster House in London, where Mr. Cameron faced awkward questions about airport expansion and immigration in front of 200 business leaders and policy makers.
Government officials say there was a “solid, constructive” atmosphere at a series of meetings and that it is right for Britain to use the Olympics as a trade opportunity , even if the benefits are hard to define at this stage. The government hopes to win 1 billion pounds ($1.57 billion) in UK trade deals from conferences at Lancaster House, converted into a British Business Embassy for the Olympics.
So far, Jaguar Land Rover—part of India’s Tata industrial group—has announced 1,100 more car-making jobs in the Midlands.
But the executives’ worries may increase pressure on George Osborne, the chancellor, who told the conference he would resist “siren voices” calling for a change of economic course.
Many are preoccupied by the euro zone crisis and its implications for the UK. “What is Britain going to do? What is the plan?” asked one international policy maker. “Why is Britain not being more proactive?”