Enda Mullen speaks to a Midlands banking boss who admits that a distinct lack of confidence is currently the business community’s biggest problem
With unemployment rising faster than inflation and a seemingly intractable European debt crisis, it is difficult to generate much optimism about the coming months ahead.
And even if we can solve the problems on our own doorstep, the challenges facing the global economy are enough to give anybody in business the jitters.
But according to Ray O’Donoghue, Barclays Corporate’s managing director for the Midlands, Wales and South West regions, there is no way out of the hole the economy finds itself unless we can all find a little bit of confidence.
“We are in a situation now where we desperately need some certainty and definitely need some confidence,” said Mr O’Donoghue
“It’s all about growth – where are we going to get growth?
“If we look at the spending side the cost to the consumer is continuing to rise and wages are below the inflation rate.
“Consumer spending power is constrained and that will remain so for a while and government spending is constrained too.
“Where is your growth going to come from – from businesses and the private sector.
“Businesses are looking at investment, sales and exports in overseas markets. They need to have confidence they are going to continue to grow.”
But more than ever Mr O’Donoghue believes the economic problems we face are linked to a much bigger picture.
“More and more the whole thing is becoming interlinked – international, global, national and local,” he said.
“Look overseas and go to Europe and you can see the problems they have there.
“When you talk about things like this it is hard to split it from ‘what does the Midlands do’.
“It is all interlinked and difficult to break down but we need some confidence and we need some certainty and when we start to get that we will start to see things improve.”
Despite rumblings from the business community that banks are reluctant to lend Mr O’Donoghue believes the reverse to be the case, particularly as far as Barclays Corporate is concerned which looks at businesses with a turnover in excess of £5 million.
“There is a lot of talk about bank funding and investment corporations are very cautious with investments,” he said.
“Deposits are up and borrowings are increasing, albeit very slowly.
“As far as the ability to obtain money is concerned, a lot is said about the cost of money and the availability of money.
“What I am seeing is that firstly our debit balances are growing, but very slowly, and secondly we are open to lend.
“From Barclays’ perspective our borrowings were up £20 billion to the corporate sector in the first half.”
But any talk of rapid recovery though is premature and Mr O’Donoghue makes no bones about the fact he believes it is likely to be slow and at times painful.
“It’s almost as if where we are today we are going to have to live with it for a while,” he added.
“It’s a set of circumstances management teams have come to live with and see as the norm. I don’t think it is going to get better quickly we’re going to have to live with it and see how we can manage through it.
“As far as timescales go it’s an interesting question and a difficult one to answer. Firstly you want some certainty and stability and from that you can start to go forward. We haven’t got that at the moment.
“A survey of businesses recently asked what they think it will be like in ten years time as opposed to the short term. They were reasonably optimistic but that is an awfully long time frame. But I think we are years away, not months away.”