As it is with horticulture, so it is with the economy. The "green shoots of recovery" can be seen poking their heads up through the wintry turf of recession, but there remain signs of economic frost. Fortunately, with a May election in the UK (in all probability) the government remains deeply committed to doing very little in the hope of not making too many mistakes and upsetting the electorate even further. While the UK government budget deficit is so large that it will require a dose of fiscal austerity, it may well be prudent for the government to follow the prayer of St Augustine who cried "Lord, Make me chaste, but not yet". While the hedonistic Greeks need a large dose of fiscal austerity before their country becomes entirely bankrupt, the UK for all its ills remains in a preferable situation. It is to be hoped that by the time a new government is sworn in in May, that the recovery will be under way more robustly than now, and the need to trim the fiscal deficit will not derail economic growth.
As well as the debate over when fiscal measures ought to be applied, the issue of bankers and their bonuses remains firmly on the debating floor. There is a natural sense of injustice when public funds have been (rightly) used to bail out the banking system, yet many people find themselves unemployed, asked to reduce their pay, and feel generally insecure in employment. For those who work in the banking sector to then continue to pay themselves "bonuses" essentially out of the public purse is immoral and unjust. When banks are underperforming and, in some cases, making losses, yet charging ever higher interest rates on loans to individuals and business while borrowing at historically low rates from the Bank of England suggest that regulation of banking needs to go deeper than at present. I would argue that it was wrong to have taken regulation of banks away from the Bank of England in 1997, and would like to see it returned, despite some arguments over there being a conflict of interests between the regulation of banks and conduct of monetary policy. Plainly, the evidence of recent years is that the FSA has failed spectacularly in its banking regulation. Like so many recessions, this one was built on the shaky foundations of over-zealous banking beforehand.
Taking a wider view, it is becoming increasingly clear that it is not only the banks who have taken risks which are proving to be unsustainable. In the (more important?) world of Association Football there are an increasing number of football clubs in debt to the taxman, and finding themselves in the courts or in administration for excessive debts. Of these, the most high profile case currently is that of Portsmouth. Despite having sold some £70m of players, the club still finds itself in debt of £80m, which it is unable to pay back. In the lower divisions clubs such as Chester and Southend are in similar difficulties, yet they have not over-extended themselves by bringing in big name expensive players from overseas (like Portsmouth). The problem here is not, as some would claim, the ever-increasing need to bring in expensive imports to compete; more simply it is a failure of football to run clubs in a sustainable manner like any other business. Until football understands this simple law of economics we are likely to continue to see more clubs in financial distress. Unless football adapts, especially at the lower echelons, then we will see increasingly fewer clubs in existence.
As well as bankers and football clubs, many individuals and businesses have also been bitten in recent years by the debt bug, and overextended. While on the one hand some blame might be attached to lenders (banks!) for permitting an easy supply of credit, the old adage of "caveat emptor" should surely also apply; in borrowing individuals and businesses need to learn to take a view of debt as something useful if handled sensibly, but still risky, and highly dangerous if not handled sensibly.
And on that note, it is time to see if the sunshine has yet made it's appearance, and if the crocuses have continued to poke their heads above ground.
