|The pride before the fall|
|Friday, 09 October 2009 16:37|
Two speeches to the CBI, two entirely different tones: An analysis of speeches to the CBI either side of the economic downturn shows two wildly divergent uses of language, says Matt Gower
Chancellor of the Exchequer Gordon Brown’s upbeat and self-congratulatory speech at the CBI Annual Conference in 2005 was a sign of the times. In a backdrop of economic buoyancy, rapid globalisation, the threat of inflation and rising oil prices, Brown praised Britain’s “entrenched” and “hard won” economic stability.
It was a boom with no bust in sight. Though not without its challenges, Britain’s “stop-go” economy was no more. We would no longer be “first in, last out, and worst hit” in the world downturns. The word ‘stability’ featured 13 times.
‘Regulation’ was another big theme. It was used in the context of “a modern risk-based approach to regulation.” One that is at the heart of the “modern enterprise challenge” which requires “minimising regulatory concerns,” where, “not just a light touch, but a limited touch” was in order.
This new approach to regulation, he explained, followed more than a century of successive governments that had mistakenly inspected everyone and everything, demanded information from all of us on a blanket basis, and required forms to be filled in for all issues subject to regulation and inspection.
‘Risk’ also features heavily – and we knew where the risk was at that time – because the concept of risk not only applied “to the enforcement of regulation, but also to the design and indeed to the decision as to whether to regulate at all.” Though probably not in the same league as Chamberlain’s “peace for our time” in the lead up to WWII, Brown’s speech will nevertheless be best remembered for conveying the shortsightedness that was widespread at the time about the economic and financial sustainability of the world we were living in.
Fast forward to early September 2009, as the major economies climbing wearily out of recession, with Britain notably trailing the pack, and much had changed. The prevalent themes of the time are echoed in this speech by the Chancellor of the Exchequer, Alistair Darling, at the CBI Scotland Annual Dinner.
It was delivered hot on the heels of remarks by Lord Turner, the new chairman of the Financial Services Authority that rendered much of banking as “a socially useless activity,” and who argued that its unreasonable size should be curtailed through new taxation if necessary. In his speech Darling seeks to strike a more neutral tone, saying that those who talk about the financial sector being too big were adopting “the wrong approach.”
“We are not going to throw away that expertise and advantage,” is Darling’s response, not only to the City watchdog’s posturing, but to the financiallyhostile political temperature that was brewing in the lead up the G20 in Pittsburgh last week. The speech argues for a regulatory environment that doesn’t cripple Britain’s competitiveness in the sector while making connections between the strength of this sector of the economy and millions whose livelihood depends on it. Recovery, he warns, “won’t happen with a laissez-faire, hands-off, do-what-you-like approach any more than it would if governments try to micromanage the financial sector.”
As the cloud shows; ‘people’, ‘jobs’, ‘taxes’ and ‘recovery’ are central themes in his speech, but are placed in the context of tough but sensible rules that protect the interests of customers, share-holders and the wider economy – while allowing us to make the most of the expertise in our financial sector and the opportunities recovery will bring.
By the time of writing, Darling had been forced to shift his stance and harden his rhetoric against the banks, declaring: “the party has got to be over”. The G20 has agreed on a number of proposals, including deferral of bonuses, clawbacks in the event of losses, the avoidance of guaranteed multi-year bonuses, capital requirements and stricter financial disclosure, many of which were not contained in a draft proposal put forward by the FSA.
In what’s been described by one right-leaning newspaper as an “embarrassing u-turn”, Darling has aligned himself with the G20 declaration, thereby keeping Britain at the forefront of the global clampdown.
Matt Gower is managing director of CitySavvy. www. citysavvy.com