Big firms "hoarding" and not investing will endanger us all (Evening Standard)

Centre for Policy Studies Ketih Joseph Memorial Lecture features in an article by Anthony Hilton in the Evening Standard. He highlights on the pivotal points made by Roger Bootle, Captial Economics, on savings and investment in austerity.

“The suggestion by the Chancellor of the Exchequer that he was considering launching a government bond with the life of 100 years to lock in current interest rates brought to mind a comment made by City economist Roger Bootle last week when he was delivering the Keith Joseph Memorial Lecture at the Centre for Policy Studies.

“I often ask myself,” he said, “what the great Victorian entrepreneurs would have done if they had been confronted by interest rates and bond yields as low as we have today. I think the answer is that they would have rebuilt the world.”

The fact that companies would rather sit on their cash than spend it on improving their business poses a profound threat to the economy in the longer term. And yet, as Bootle points out, the investing institutions who are the shareholders in most of these companies allow them to get away with it.

…We have the most sophisticated financial system on Earth but still haven’t worked out how to inundate a Birmingham metal-basher with cash so that he can buy a new bit of kit, and we can all — employee and investors alike — make a bit more money.

As Bootle says: “Something has gone wrong with the intermediation between the ultimate savers and how their money is deployed for real investment.”

Click here to read the full article

The CPS Keith Jospeh Memorial Lecture 2012 by Roger Bootle  is availble to download from our website.

Date Added: Thursday 15th March 2012