Don’t frighten the horses

Commercial property rarely makes for mainstream headline news and we’re thankful lfor that as we quietly get on minding our own and our clients’ business. We occasionally stick our head above the parapets at either end of the year with the annual round of reviews and forecasts but that’s about it.

At the outset of this year, commercial property professionals and pundits were in broad agreement that yields had most definitely peaked and that the volume of transactions we’d been enjoying were unsustainable and that total returns were set to fall – my own firm pegged the fall to 8.8 per cent. So far so predictable in Q1 and Q2 2016 then.

However, before the third quarter of the year had properly got underway, commercial property came crashing in to mainstream media headlines for five days in a row and not in a good way. I say ‘commercial property’ but what actually made the news was the suspension and closure of a number of funds which were invested in commercial property.

It was the funds that were falling down, commercial property is still standing. Alongside other property interests, thankfully. Expert property commentators and analysts were - and still are - at pains to point out that a commercial property fund is an investment vehicle and one not for the faint-hearted either. In the close world of any niche investment funds, it is easy for contagion and a herd mentaility to take hold.

Investors in all sorts of funds are getting spooked and some of those whose portfolios include commercial property funds are wanting to liquidise their investments and move on to other funds and other asset classes. Commercial property investment fund managers were left with little option but to suspend the funds while they sell the asset. It can take a long time to sell an office block, business park or a retail outlet, believe me.

The thought of Brexit has, understandably, made many people twitchy – just look at the pre-poll rock solid political careers it has ended but now some new careers have begun too. While the matter of the prime ministerial succession and the timescale has been settled earlier than first assumed, the financial markets reacted to uncertainty.

In those first weeks post-24 June along with the value of sterling falling, FTSE companies most exposed to UK business interests saw their share price drop more than those with more international exposure. There was much mention of housebuilders’ shares falling as if this was proof of a mass property Brexodus.

To make a connection between the closing of commercial property investment funds and a potential housing market crash á la 2009 is crass but some reporters whose business is not, ordinarily, the reporting of business can be forgiven in not appreciating the very clear distinction between commercial property and residential property.

Investors in the housing market in the UK are, in the main, those who live in their investment. The forces driving commercial property investment funds are very different from those governing the housing market, namely a fundamental shortage and a low interest rate environment in the case of the latter.

The economic and financial expert view is that whereas the credit crunch of 2008 and 2009 was a financial crisis with political ramifications, what we are experiencing now is quite the reverse.

Setting aside on what the actress Mrs Patrick Campbell was commenting when she said it, I am minded to agree with her when it comes to the present situation: “My dear, I don't care what they do, so long as they don't do it in the street and frighten the horses.”

Will Mooney MRICS
Partner
Commercial, Cambridge

Keeping it real about AI

So much focus in the news on artificial intelligence is far from droning on, believes Will Mooney, Carter Jonas partner and head of commercial in the eastern region

It is incumbent upon any professional adviser to have an understanding of their clients’ business. Those with clients in the technology sector, acknowledge that the speed of change means they are always going to be learning something new. 

The latest technology to intrigue me is Artificial Intelligence (AI).Like many, I do get the basic concept but what’s more tricky is understanding its wordly application and how, in the not too distant future, this might affect my working, domestic and social world.

I could say that understanding AI is above my pay grade, so to speak, but perhaps, one day, an AI-primed robot my be on my pay grade instead of me. Time will tell. But surely all of us with enquiring minds, operating on any pay grade, must be wondering about the the impact that AI is having -  and will have -  on the working world within our life times.

Like most technological developments, AI and its attendent world of robotics once sat in a comfortable package with drone technology in having their roots in governments’ defence spending before coming in to civil use.  As did the first usable prototype of the Internet and look how far down business civvy street that had travelled from the mid-1960s by the mid-1990s.

With drone-eye views of large properties, sites and country estates fast becoming the ‘must-have’ tool in the property agents’ marketing armoury, I can’t help but wonder what mundane but essential jobs in my industry could be happily handed over to an office robot.

It’s been suggested that in the legal world, robots could take on the job of legal executives in checking all is in order on page after page or screen after screen of contracts and agreements.  Whither the legal exec then?

The consensus appears to be that it is jobs in the creative industries which are at least threat from being undermined by AI technology. However, do bear in mind that the people relaying this message are in the media – one of those creative industries.

Far from being a threat to jobs, there are those involved in the world of AI who see their work as freeing up people to do what humans really are good at: being creative and, well, being human. Taking this line, it’s easy to follow the argument that industrialisation has shackled us humans and made machines and drones of us. We do more than be.

In a delicious and ironic twist, perhaps the robots we make and the intelligence we equip them with will free us up to re-discover what the essence of being human is?  This latter point was made with alacrity in a recent interview by Eric Horvitz who is the Director of Microsoft Research’s Redmond laboratory in Seattle.  

The more cynical members of the human race than this esteemed scientist and scholar can’t help but wonder if discovering the essence of our species isn’t a more threatening thought than that of having our jobs done by robots...

It may be that, one day, my job can and will be done by a robot.  But no matter how advanced its intelligence develops to replicate or exceed my own, I do wonder if it will ever share a gut instinct about a deal or the visceral delight and sense of achievement when the deal is sealed.  There’s definitely nothing artificial about those feelings.

Will Mooney MRICS
Partner
Commercial, Cambridge

The business of America is our business

As the race for the White House in 2016 begins in earnest this summer with big hitting Republican and Democrat candidates lining up for their party’s nominations, Will Mooney, Carter Jonas partner and head of commercial in the eastern region, takes his cue from a past-President

In quoting the 30th President of the United State of America, it must be acknowleged that what Calvin Coolidge actually said in a 1925 speech was, “the chief business of the American people is business”. In being misquoted for the best part of a hundred years, the essence of what he said has remained true in characterising the clout with which the USA has dominated global relations, particularly those with Europe, for the past century.

Even when positions of international isolation and economic protectionism were taken by successive presidents after 1919, there were US treaties which looked to its Pacific and Central America interests and negotiations which resulted in several formal ‘payment plans’ so Europe could begin to settle its World War One debts.

Edging towards the Second World War in the late 1930s, saw Franklin Roosevelt attempting to move Congress towards an understanding of ‘collective security’. By September 1940, it authorised the spending of $10.5 billion on arming the nation and, in the first quarter of 1941, the Lend Lease Bill was enacted which enabled Britain’s continued participation in the war. On 07 December that year, Pearl Harbour was bombed and isolationism was no longer an option.

The last repayment on the Lend Lease agreement was £45 million pounds and was made under the Blair government in 2006. Tony Blair wasn’t born until 1953.

When that post-1945 period of European history could still be called ‘modern’, any ‘O’ level scholar of the subject - and of the day - would be able to reel-off successive speeches and policies of the period in which the United States’ willingness and ability to be at the centre of things was crucial.

No longer the Prime Minister when he made it, Winston Churchill’s ‘Iron Curtain’ speech of March 1946 was made in Missouri in the presence of President Truman. In September that year, albeit in Zurich, Churchill referenced the creation of a ‘United States of Europe’.

NATO – the North Atlantic Treaty Organisation – is an alliance which stands to this day with considerably more member countries than its original set of north western European nations, the USA and Canada when the Treaty was signed in 1949.

Foreign policy wise for decades post-1945, ‘the domino theory’ prevailed in those countries who did not want others or themselves to succumb to European communism and the expansion of the Soviet Union and the influence of Chinese communism across Indo-China. It was President Eisenhower who gave voice to this as the policy driver in a landmark speech in 1954.

Crucial to backing up any policy position in any stage of history is economic might and, for the USA in the 20th Century, this was built on the supremacy of its industrial and business wealth. The £13 billion dollars’ worth of aid - worth circa £120 billion in modern times – made available by the USA in form of the 1948 Marshall Plan saw many European countries avail themselves of it in re-building and modernising after the Second World War.

As to what our ‘O’ level selves might have made of where we are now? Well, in writing an essay about the nature of the USA’s influence on the European and wider world stage in the first decades of the 21st Century, we would have to consider the importance of trade and aid and could argue the supremacy of the former.

Will Mooney MRICS
Partner
Commercial, Cambridge

Regions to be cheerful

Will Mooney, Carter Jonas partner and head of commercial and professional services in the eastern region, ponders the politics of the powerhouses.

The recent Budget statement acknowledged the potential of regional powerhouses and the considerable heft that economically successful regions contribute to the national and international performance of the UK.

Not before time. On the face of it, there appeared to be positive policy initiatives which could be good for the eastern region and spending plans for the kind of things for which this region – if you consider Cambridge as the heart of the hub - is known and recognised.

There will be £11 milllion to invest in new technology incubators to be channelled through Tech City UK – the government body which funds technology clusters. A £40 million pot will assist with research in to the ‘Internet of Things’ which, in his speech, the Chancellor rightly identified as the next stage of development in ‘the information age’.

Then there was the potential of a deal whereby 100 per cent of growth in additional business rates could be brokered for and kept by local authorities in areas like Cambridge, among others. This was described in the speech and in the subsequent media coverage as a ‘roll out of the Manchester model’ and a key component in formulating a northern powerhouse which sees Manchester and Leeds at the metropolitan heart of this hub.

Naturally enough, many in business in this region gave what is couched as a ‘cautious welcome’ to this and other elements of the Budget and for understandable reasons.

It is churlish to say it, but there has been a full-on eastern powerhouse for the best part of 20 years and does the powerhouse model, in modern times, really orginate in Manchester? We’re a long way from the heyday of the wool trade in which industrial Manchester was the centre of that economic power push.

Equally, one could argue that at a county level, never mind a regional level, there are issues of disparity and identity with which we struggle here in a way that a northern powerhouse might not. Although try telling that to the Houses of York and Lancaster.

In Cambridgeshire, there is a marked distinction between the north and south of the county; try lumping Ipswich in with Norwich and you won’t be popular; locations in Hertfordshire and Essex which border London have more in common with each other than their country or coastal county compadres. And whither Lincolnshire and Northamptonshire? Arguably, the former has more in common in its southern rump with north Cambridgeshire and the latter, a compatability with the Oxford corridor.

While government and civil service assistance to provide the broad policy and economic framework and infrastructure in which any region can seek to prosper is to be welcomed, it is questionable whether direct intervention - some might say interference - in trying to impose a regional identity and common cause is the best use of their time in the modern age.

After all, the latest detailed study of the genetic sources of the UK, has identified that there are 17 dominant genetic clusters which tend to reflect the de-facto, regional identities, not bureaucratic boundaries, within our nations. The largest of these clusters covers southern, central and eastern England and dates back to the the collapse of the Roman Empire when Angles and Saxons settled here.

Will Mooney MRICS
Partner
Commercial, Cambridge

Cambridge granted 100% control of business rates

“The Cambridgeshire business community is delighted with George Osborne’s announcement that the county can now claim 100% control of its business rates. This will allow the local councils to realise their ambitions and further invest in much needed infrastructure for the county’s burgeoning population due to the influx and expansion of major global firms in the area such as AstraZeneca and ARM Holdings.

Cambridge’s GVA forecasts highlight the city will out-perform the UK national annual figure for each of the next ten years. The city’s rate of GVA growth is also predicted to steadily increase over this period, highlighting the continued out-performance of the Cambridge economy when compared to the national level.

With biotech, education and Information & Communications Technology (ICT) sectors conglomerating in and around the city, we praise the Chancellor’s decision to grant this opportunity for Cambridge to continue to reinforce its position as an economic powerhouse.”

Will Mooney MRICS
Partner
Commercial, Cambridge

Negative split times

Will Mooney, Carter Jonas partner and head of commercial and professional services in the eastern region, feels the economic recovery is now a marathon not a sprint.

No athlete myself, I am, however, familiar with runners’ focus – which can border on obsession – on their negative split times. My familiarity extends no further than knowing that, in essence, this means finishing a run faster than you started while acknowledging that there might be a sag in the middle.

Look at coverage of and comment on the Bank of England’s latest Inflation Report and it could be concluded that the UK is in that sag. We definitely started this post-recession recovery slowly and we gathered pace in the past 18 months. While we know we’ll get there in the end, the doom and gloom first glance coverage of the prospect of deflation is enough to bring the Eeyore out in any of us whose natural disposition doesn’t tend toward the Tigger at the best of times.

But the prospect of a fall in UK interest rates to the point of a negative rate was laid out in conditional terms by Governor Carney. Interest rates might fall but could rise and banking sector activity would suggest a tendency to expect the latter. Last year, we bemoaned the prospect of the rise of interest rates and many people adjusted their borrowing and spending accordingly merely in anticipation of something that has yet to happen or might not happen for a good while yet.

Financial markets don’t deal in something called futures for nothing.

The current weakness of the price of commodities such as food, oil and energy - as cited by the Bank of England – shouldn’t really be mistaken for debilitating deflation. What goes up must come down and vice versa.

Thinking of the pound in our pockets, may be deflation is not so bad for commodities in the way it is for consumer durables of which the ‘big television’ is used as shorthand. We might put off buying the new big telly but we only bought our old big telly back in the days of easy credit when consumer durables weren’t treated as durable because they were so easily replaced.

But look where that got us?

Day to day consideration of the wider UK economy can be troublesome for those whose business, professional and personal interests are rooted in this region which is so dominated by the success of Cambridge. The latest Centre for Cities report once again confirms the economic pre-eminence of Cambridge among the top ranking cities of the UK. The city scores top marks in the ranking of cities across a range of measures including the lowest number of claimants for Job Seeker’s Allowance (JSA), the highest skilled workers, the most number of patents granted per 100,000 population and the highest house price growth.

It has become normal for Cambridge to occupy these top slots in the Centre for Cities annual rankings but it’s important that this normality shouldn’t be mistaken for complacency. Those of us privileged to live, work and thrive here are acutely aware of the national and international context in which Cambridge succeeds.

There’s talk of economic normality on the horizon for the UK from some commentators but it can be a struggle to recall what that is – if we ever had it in the first place.

Before the next Bank of England inflation report, there will be a General Election and politics and democracy have a habit of interrupting economic programmes.But what do I know? It’s all Greek to me.

Will Mooney MRICS
Partner
Commercial, Cambridge

Reasons to be cheerful

This summer’s international news agenda has been tough reading and viewing. “Wars and rumours of wars” have always been the drivers of news, particularly so in our digital existence with web pages and broadcast hours to be filled round-the-clock.

While it’s been far from the silly season of summers past, weaved in to the news agenda have been more positive things. Many of these stories feature the word ‘happy’ and have lightened the mood of the summer and should give us food for thought.

Happiness can and is being measured by the Office for National Statistics (ONS). In the month in which daylight was at its longest in the northern hemisphere, the ONS analysed a raft of European data to conclude that Britain is the 11th happiest country on our continent. At 71.8 per cent, we are marginally happier than France where 71.6 per cent of adults rated their life satisfaction above or equivalent to seven out 10. This puts Brit adults just behind Germany at 72.3 per cent. Top marks went to Denmark at 91 per cent, leaving Bulgaria being the least satisfied of EU countries at just 38.3 per cent. I’m not sure what governments will do with this data but it’s interesting that they are bothering to find out.

Meanwhile in the People’s Republic of China, it’s been reported recently in the western media that quality of life has been promoted above GDP as an performance measure in a number of cities and administrative areas. Apparently, focusing solely on GDP as the key to local officials’ promotion has seen industrialisation and development rampage to the neglect of the environment, agricultural land and social welfare. So in, selected areas - although it is notable not yet in the showcase cities and areas - measures of success such as raising living standards and what President Xi Jinping calls ‘hidden achievements’ will be taken into account in judging local officials’ rise through the ranks.

Countries often look to sport when it comes to fostering a feel-good factor in their populace. Glossing over the FIFA World Cup, there was the success of the Home Nations in the Commonwealth Games in Glasgow and the European Athletics Championships. The England women’s team finally triumphed to win the Rugby World Cup after being in the runner’s up position in three previous appearances. Then, billed as a comeback, there was the Test Match Series win over the Indian cricket team by England’s men which restored a little of the pride which had been so comprehensively dented by the Ashes tour of Australia last winter.

Many of us will have come back from holiday to burgeoning email in-boxes and that’s even if we did break pledges to partners and sneaked a look at our smart phones and tablets while on holiday. But not-so employees of Daimler, whose board members wanted staff to properly relax.

The car company instituted a ‘Mail on Holiday’ system on its email server whereby the auto reply told the emailer that the emailee was on holiday and the message would be deleted but gave a non-holidaying employee contact as an alternative. Imagine how much happier – and more productive – that first morning back at work must have been for those workers and execs? This will surely contribute to Germany scoring higher on the ONS’s analysis of life satisfaction data next year.

Finally, it looks like the Bank of England is coming round to nudging up the base interest rate – well, two members of the Monetary Policy Committee are anyway. The prevailing view is that to nudge in incremental amounts, when the Bank faces up to the inevitable and raises the rate, will be easier on the economy than full percentage point rises at a time.

This is the economy which, by the way, the Governor of the Bank of England confirmed in August was half way to recovery and, presumably, he’ll and we’ll know when we arrive.

Will Mooney MRICS
Partner
Commercial, Cambridge

City-state of the nation

With Scotland’s electorate deciding if it feels better together or not in September, Will Mooney, Carter Jonas partner and head of its commercial agency and professional services in the eastern region, wants to know if smaller can be better.

Early in July, the Government announced the release of the first tranche of a big pot of £6 billion of cash for the English regions. With an eye on being better together and although the phase 1 £12 billion is very much for England, the Prime Minister heralded Growth Deals as ‘...a crucial part of our long-term plant to secure Britain’s future.’

In this first phase, £71.1 million is allocated to what’s termed the ‘Cambridge Corridor’ for projects which include transport and science and technical innovation centres. The day after the Government’s announcement, the Cambridge Ahead organisation said that the £13 billion economic powerhouse that is Cambridge needs to be on its guard as its top business talent can be enticed away to London because of, among other things, Cambridge’s poor transport infrastructure and paucity of night time entertainment.

Cambridge Ahead is looking to pitch Cambridge as the ‘pre-eminent small city in the world.’ It’s a flight of fancy on my part but perhaps Cambridge could make the case for city-state status like that of Singapore, Andorra or Macau? Or those classic city-states of Rome or Athens?

Too landlocked, perhaps, for parity with the city-state of medieval Venice, there would be there would be no shortage of candidates for The Doge of Cambridge as there are plenty of shrewd citizens and the modern equivalent of rich merchants. The great buildings of Venice see themselves reflected in the palaces of learning which are the University Colleges. So influential is the business success of Cambridge, that it could make a claim for sovereignty and overlordship over adjacent counties which is a pre-requisite characateristic of historical city-states.

Of course, this idea must be treated with the levity it deserves but Cambridge continues to reinforce its position as the most commercially influential location in the eastern region. Rather than city-state, perhaps there’s a case to be made for ‘city-region’?

It is regional causes and cases for investment and development which are the cause celebre this summer and beyond, in all probablility – and not only with the policy-makers but with policy influencers too.

The RSA City Growth Commission (thersa.org.uk) published a report in July called “Connected Cities: The Link to Growth”. The report references city-regions but prefers to use the term ‘Metros’ in arguing that individual cities , such as Leeds, Manchester and Sheffield, should have the freedom to operate as collective metros to make their own decisions when it comes to infrastructure investment.

In not relying on centralised decisions from Whitehall about what’s best and how much is best for its metro, the report makes the case that this devolved approach in England would see a counterbalance to the dominance of London and the South East. In turn, this would be in the best interests of the whole of the UK’s economic growth and chances of prosperity being spread geographically to all our benefit.

In the early autumn, the UK nation state faces the prospect of losing its most northerly part but such is the jigsaw of our country that there are rumblings in Orkney and Shetland that perhaps they have more in common with their Scandanavian counterparts than with Scotland’s central belt and its kingmakers at Holyrood.

Will Mooney MRICS
Partner
Commercial, Cambridge

Rise in interest rates is inevitable

A rise in interest rates is inevitable at some point but Will Mooney, Carter Jonas partner and head of its commercial agency and professional services in the eastern region, wonders how soon is now?

A year ago in these pages I was anticipating the end of the central banks’ monetary stimulus for their economonies. In the case of the Bank of England, it was, at that point, the £375 million worth of quantitive easing.

‘Removing the punchbowl just when the party is getting good’ is the phrase attributed to the Federal Reserve’s longest serving head who first coined it to describe the withdrawal of stimulus. Now there’s another central bank party pooper in the form of the threat of interest rate rises. Or rather, it’s the talk of the threat interest rate rises which is the spectre at the feast.

The Bank of England has held its base interest rate at 0.5 per cent for more than five years. At such a record low level, the only certain way is up. But when? And by how much? Such uncertainty could be damaging at worst but is unhelpful at best.

Since the late 17th Century, governments and, subsequently, the Bank of England have used the cost of borrowing as a means of responding to the economic pressures of the times. In the early years of Margaret Thatcher’s administration, in 1981, interest rates rose to an all-time high of 17 per cent. But that was a time before the great push towards property-ownership which has set itself in the psyche of the British public in the successive three decades to the point where it is commonly accepted as the touchstone of daily, domestic economic prosperity.

Now the 2014 property-owning democracy is incredibly twitchy about any talk of interst rate rises even if they are just going to be incremental by those ‘baby steps’ mooted by some commentators. There’s also a slice of homeowners who’ve moved in to the housing market since 2008 and whose lives are highly-geared around access to finance and low interest rates. There are plenty of other homeowners for whom a time when base rates were always in double figures is a dim and distant memory - if they remember it at all.

There is a view that interest rates are too blunt an instrument to control the complexities of a modern economy. But, in early June, when the European Central Bank slashed its deposit rate to below zero – minus 1 per cent – so it actually will cost commercial banks to keep their money centrally, it must have left many a lay person marvelling at the sophistication of economists, financiers and policy makers. Far from blunt.

In order to avoid the economic - and party political - collateral damage a big hike in interest rates could mean, we’re beginning to see policymakers hint at returning to a time when supply and demand mechanisms were deployed by governments in order to control the economy. Specifically, in 2014 , the housing market.

Measures include the new Mortgage Market Review – the pre-mortgage interview recently introduced where lenders look beyond income to consider household expenditure as a factor before making a mortgage offer. Then in his Mansion House speech, the Chancellor of the Exchequer took his own supply and demand ‘baby steps’ in trying to make councils bring forward brownfield sites for development. There are some who say this should go further and developers should be given the right to build on the green belt.

How far it is politically advisable for the coalition administration to try and control supply-side market conditions with a more hands-on approach remains to be seen.

What would be helpful is certainty. The market doesn’t like uncertainty. Endless speculation about rises in borrowing costs at a time when, in my own commercial property sphere, investors are ready to commit to more than ‘baby step’ investments is probably more harmful than the level at which any actual rise will be pegged.

Will Mooney MRICS
Partner
Commercial, Cambridge

A bitter pill for some to swallow

Some party political interests piled in to the recent Pfizer/AstraZeneca corporate tussle and this has made Will Mooney, Carter Jonas partner and head of its commercial agency and professional services in the eastern region, think about how potent a mix international business and national politics can be.

In the weeks which preceded Pfizer’s accelerated courting of AstraZeneca – which, appears, for the time being, to have peaked in mid-May with its delcined offer to AZ shareholders of £55 per share - there were almost as many reviews of the translation of a 2013 book by a radical French economist being undertaken by economic and financial journalists as those of their literary and cultural commentator peers.

The book was “Capital in the 21 Century” by Thomas Piketty and it was even reviewed in the Daily Telegraph by the immediate-past governor of the Bank of England, Mervyn King. While Lord King appeared not view the book as one of those works which changes the way we should look at the world, it pricked his interest enough for him to argue a different viewpoint to that of Monsieur Piketty.

The guiding premise of the book - not that I have read it, you understand – appears to be that, in this century, capitalism works in presumption in favour of inherited wealth over earned wealth because capital’s rate of return outstrips that of growth.

It’s a view. And not one a mere property agent is equipped to examine further.

My comment is only the coincidence of the timing of the book’s publicity and what might well play out as one of the biggest corporate capitalist battles of this decade. National politicians were struggling to keep up with a bigger battle than they could possibly control when it came to the AZ/Pfizer business. They knew it and most of us interested in the adventure knew it too. Yet the politicians couldn’t resist feeling they had to make some kind of pronouncement on it and take a position. It wasn’t edifying to see them operate their analogue arguments in this digital age.

In knowing that they couldn’t sanction whatever outcome there was going to be to Pfizer’s approach to AstraZeneca – save changing a tax regime which gives such R&D business interests a favourable home in UK PLC – the national body politic held court as the CEOs of both companies were questioned by a Westminster parliamentary committee for two days in a week which must have been one of the busiest in those two CEOs’ executive lives.

Those whose interests it suited likened the AstraZeneca situation to that of the recent sell-off of the Royal Mail and talked, wistfully, in terms of the selling off the nation’s crown jewels.

AstraZeneca and its work is one of the jewels in the corporate crown of the UK scene but it’s not a nationalised industry and it’s not ours to sell and never has been. Although in the mists of corporate time, there was a connection with the once mighty UK chemical institution ICI before ICI Zeneca was formed as part of a de-merger in the mid 1990. But it was never a state-owned operation. The Astra was put into Zeneca in 1999 as the result of a merger with Swedish company Astra AB and it then set off on a programme of acquisitions of its own which is still current.

The point is, in the 21st Century, fluffy and patriotic feelings about PLC companies are irrelevant. Whether Anglo-Swedish or American in origin, international companies are corporate citizens of the world and can, and will, choose to domicile themselves in whichever location suits them and their shareholders’ interests best at any one point in time.

To attract the best of business it seems, the best any single nation’s politicians can do is create an environment and circumstances in which as many of these companies as possible feel welcomed enough to locate and recruit and certainly not adopt a political posture which might put-off such companies in future.

Will Mooney MRICS
Partner
Commercial, Cambridge

"Events, dear boy, events."

Asked when he was Prime Minister what he most feared, Harold Macmillan responded with the now-famous quote: “Events, dear boy, events.”

The circumstances in which, about what and to whom ‘Super Mac’ was referring have never been established once and for all as the Profumo Affair (there’s one for the under 50s to google) but it’s a sentiment with which we can all sympathise.

No matter how much or to what level of detail we undertake research and prepare for or forward plan – even for an anticipated crisis scenario - events have a nasty habit of taking over.

Just ask the current Prime Minister. For all the expert advice from policy wonks and spin doctors in order to control the political messaging and the news agenda to the nth degree – it rained. And it rained. And it rained again. And it’s still raining.

Eighteen months out from David Cameron’s first General Election in-residence, the rain began. From where we are now, coming towards the end of the winter, an administration whose first term in office looked all set to be defined by austerity and, latterly, recovery, risks being overtaken and characterised – even caricatured – by a lack of both sandbags and ministers and state officials in wellington boots in the early days of the flood event.

Events are a great leveller for those in public life. Tony Blair’s premiership became characterised by wars in Afghanistan and Iraq and was defined by the terrible milestones of the 9/11 and 7/7. Not at all what New Labour had in mind on assuming power in May 1997 - no amount of political planning and message control freakery could have anticipated those terrorist events or their lasting impact.

The Bank of England policy, ‘Forward Guidance’ – whose feel-better factor I welcomed in these pages at the end of last summer – has also succumbed to events.

As the unemployment rate in January and early February looked like it was edging forward to that magic 7 per cent figure (as it turned out, it’s currently 7.2 per cent) which would mean that, under Forward Guidance, the Bank would have to take a view on increasing interest rates, Governor Carney announced that other variables were part of the interest rate policy too.

To be fair, Mark Carney was at pains to point out last August that 7 per cent was not a target at which point interest rates would definitely rise.

The direction of travel of interest rates is far easier to anticipate and prepare for a change of course than the unpredictable precipitations of Atlantic storms and the direction of the pesky Gulf Stream in winter 2013/14.

Yet not all big events are surprises. Under the Fixed-Term Parliaments Act of 2011, for the first time we’ve known exactly when the next General Election will be – 07 May 2015 – and plans will have been well underway for at least four years by the time it comes round.

This year sees another big constitutional event - some might argue the biggest since 1801 – the Scottish Independence referendum.

If, in line with a quote attributed to the US’s longest serving First Lady Eleanor Roosevelt, ‘Great minds discuss ideas; average minds discuss events; small minds discuss people’, the debate about Scotland’s independence and the accompanying political and cultural stushie has got the lot.

September 18 is bound to rain on someone’s parade.

Will Mooney MRICS
Partner
Commercial, Cambridge

Acronym-Mystic

A former non-executive director of Manchester United FC has just completed a thought-provoking series of four programmes for BBC Radio 4 and also the round of media interviews it seems is incumbent upon any ‘celebrity’ personality presenter.

The series was entitled ‘MINT: The next economic giants’. While music hipsters of the early part of this century might recall a programme on BBC 6 Music called ‘Mint’ – the credentials of the Radio 4 programme presenter could not be more different than those of DJ host Marc Riley, although both hail from Manchester.

As well as an ex-non-exec of a football club, presenter Jim O’Neill is a former chairman of Goldman Sachs Asset Management and very much the moment’s ‘go-to’ economist who says he sees his discipline as a social science.

MINT is an acronym which stands for Mexico, Indonesia, Nigeria and Turkey. These are the economies Jim O’Neill identifies as the next set of developing and emerging economies to which the global investment community is looking now to reap benefits in the future.

MINT is the new BRIC (Brazil, Russia, India, China) for long term investment bets, according to Jim O’Neil. While denying in an interview that he was the originator of the term BRIC, O’ Neill appeared happy to be credited with popularising its usage three years.

So popular in fact that anybody with even a passing interest in international business and investment can identify the BRICs. The very popularity is the spur which is moving the focus of global investors on to the MINTs.

In one of the radio interviews, O’Neill confessed that his focus might have been MIST and not MINT as South Korea was in the running too. Whether MINT or MIST, two of many reasons for identifying such countries were demographics and young governments with emerging democratic mandates. In the case of Mexico, a very young government with an administration led by President Enrique Peña Nieto who is just 47 years old.

Demography is on the side of developing and emerging economies in a way it isn’t for those more established. Investments always have to look to the future and there’s nothing more encouraging for a country’s future than a demographic bulge of young people poised to aspire, produce and consume.

A young population is advantageous for growth. Older societies, where pensioners increasingly outnumber the young and need to be supported by that dwindling number of young, prove burdensome to economic growth.

From an economist’s point of view, an active policy of immigration is something to look to when demographics are against growth. But the fly in the ointment for countries facing this demographic conundrum is, as Jim O’Neill pointed out, the fact that they live by the political cycle.

While the investment community thinks globally and acts for the long term, politicians think as far as their democratic tenure permits and, in the main, are guided by the populist policies of their times.

Jim O’Neill is nearly 57 years old but he talks with a speech inflection common among young people and which has been identified as ‘uptalk’. Apparently, uptalk is not appreciated by (older) senior managers as it indicates a reluctance to commit to what one has just said and infers a question and, thereby, uncertainty in the speaker.

Jim O’Neill sounded certain. Demographics are against the senior managers.

Will Mooney MRICS
Partner
Commercial, Cambridge

Property Investors Return With Confidence

The year has been heralded as one in which investor confidence in property will return in earnest. Rural property peers have pointed to the ‘froth’ skimming off premium agricultural land values this year as property-minded investors return with more confidence to the more obvious residential and commercial sectors for the first time post-credit crunch.

But, in the commercial sector, it’s by no means the wholesale return of investor confidence in any commercial property opportunity and the smartest money is always ahead of the game in the smartest of locations.

Last summer, Cambridge greeted the news that Tesco Pension fund is backing developer Brookgate’s 65,000 sq ft Grade A building which is at the heart of the cb1 scheme. But this five storey building was already pre-let and pre-let in Cambridge is always going to be a sure-bet.

In places like Cambridge, where there are limited opportunities in a smattering of its remaining key strategic locations, funders have been prepared to invest on very specific terms for the past three years. The terms usually involve pre-let agreements, more often than not with blue-chip companies and with certainty of long term leases.

Given the limited and ever diminishing supply of commercial sites with viable opportunities in Cambridge, those which exist are big ticket items and so it’s the cream of the funders who are attracted here.

With forecasts that the development pipeline will be reduced by more than 25 per cent by the end of this year, there’s concern about future opportunities for commercial property investments.

Investors like to look ahead and stay ahead but it’s getting more and more difficult to point to the next tranche of Cambridge sites looking for funding. Land which is supposed to see the city through to 2030 is already coming in to the calculations and commercial allocation.

With so much current building activity in Cambridge, it’s difficult to convince a lay audience that there’s a paucity of sites in supply on the near horizon but it’s one we will have to face – and soon.

The year 2014 is going to be a big one for those with development and property interests here.

This year sees Cambridge City Council and South Cambridgeshire District Council’s Local Plans firming up with the identification of residential and commercial site allocations to take the area through the next couple of decades.

At the end of this month and in the early days of February, we welcome in the Chinese Year of the Horse. People born in years of the horse are believed to be active and energetic and, work wise, they refuse to give in to failure but, add the astrologers, ‘their endeavour cannot last indefinitely’.

In a twelve year zodiac cycle, the next year of the horse in 2026 - property investment funds are already backing Cambridge sites that are four years in front of that horse.

Will Mooney MRICS
Partner
Commercial, Cambridge

New father time

At the year’s end Will Mooney, Carter Jonas partner and head of its commercial agency and professional services in the eastern region, is looking forward, very far forward.

Whether your view of Old Father Time is that he hands his watch over to New Baby Time on Hogmanay or you’re of the feeling that, much like the Grim Reaper, the old fellow is a fixed feature who watches over us year-in year-out as the sands of our lives slip through the hourglass, is a matter of cultural education or superstitious belief.

What the Oxford Martin Commission for Future Generations wants us to do is exorcise our habit of short termism and think about the consequences of our actions. When I say us, what I mean are policy makers who are urged in the Commission’s report “Now for the Long Term” which calls for radical thinking in policy and business.

The Oxford Martin School (http://www.oxfordmartin.ox.ac.uk) is an “interdisciplinary research community of over 300 scholars working to address the most pressing global challenges and opportunities of the 21st Century”.

The Commission’s latest report has ideas about transforming the way governments and corporates go about their business. But the ideas are not founded on wishy-washy sentimentalism. How could it be? The international brains of the commission are chaired by the former director general of the World Trade Organisation, Pascal Lamy who only left that post in September.

The report identifies megatrends - demographics, social mobility and technology to name but three - that are shaping the 21st Century. A century which, the founder of the School Dr James Martin, says could be our best or our worst ever.

These megatrends are, by default, drivers of change and our institutions need to update themselves or become obsolete.

Business and financial systems come in for criticism for short termism. The sector is urged in the report to re-wire itself for long term investment as opposed to slavishly following quarterly reporting cycles.

Interestingly, on the day Pascal Lamy was fulfilling his media commitments about the launch of the Commission’s report, news broke of the departure from Invesco Perpetual of one of the biggest stars of fund management. Neil Woodford said his decision to leave his role managing a £24.6 billion fund and co-managing another of £6.4 billion was based on where he sees long term opportunities in his industry.

Monsieur Lamy pointed out to one interviewer that the news media seemed to be frightened by the long term too. In a time of rolling 24-hour news schedules to fill, it’s no wonder many journalists and producers look to the brevity and immediacy of Twitter and other social media platforms for news and views to source or reinforce a story or even report social media activity as news in itself. There’s a lot of air time to fill and our attention span appears to be ever-shortening.

Pascal Lamy pointed to a couple of examples where business and policy makers had come together to think about the long term with staggering success achieved in a relatively short space of time. Namely, anticipation of Y2K technology meltdown in the year 2000 and also in setting minds to tackling HIV-AIDS in the late 1980s and 1990s.

It seems fitting to quote Marx here: Groucho Marx. “Why should I care about future generations – what have they ever done for me?” But it seems that the Oxford Martin Commission’s view is that in thinking about future generations, we could actually do ourselves a favour right now.

Will Mooney MRICS
Partner
Commercial, Cambridge

The Generation Game

Unable to find his name on the latest rich list rankings again this year, Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, seeks solace in the wise words of one who knows.

Those of us who are parents acknowledge that we’re blessed with, in equal measure, life’s greatest treasures and the biggest drain on finances. For parents fortunate to have wealth – however meagre and diminishing - to pass on to the next generation, we fret about how to do it responsibly. We don’t want to indulge but we’d quite like to ensure we’ll be remembered fondly by successive generations.

A report published by insurer LV= earlier this year, entitled Cost of a Child:From cradle to college 2012, pegged it at around £218,000 but that is just to the child’s 21st birthday.
While my children are younger than that presently, those parents I know with post-university age children would love to have stopped subsidising their children at 21 or at the £218,000 threshold, whichever came first.

So when consoling myself that Clan Mooney had failed to make it to the Sunday Times’s rich list again this year, I came across some words of wisdom from one of the world’s richest men: Warren Buffett is quoted as saying, on the matter of inheritance, “Leave your children enough to do what they want but not enough to do nothing.”

But what’s enough? And what’s considered doing nothing? Socialite, fashion designer and heiress Petra Ecclestone - one of Formula 1 supremo Bernie Ecclestone’s daughters - has complained in a published article that she feels she isn’t recognised enough for her hard work starting with the feat of getting up in the morning.

She’s been ridiculed but she does have a point. As the owner of a 14-bedroom mansion in Los Angeles and six storey mansion in Chelsea with attendant entourage to see to her every need, why should Petra bother doing anything at all?

None of Ecclestone’s children appear in the frame to take-up the family business of running the Formula 1 circus. This is entirely in keeping with the archetype of first generation entrepreneurship.

First generation entrepreneurs who create substantial business wealth for the first time in their family’s history, tend not to pass on their business unless there is a child who shows not just ability but exceptional ability. They are very protective of the business that has created the family wealth. The same kind of protective instinct means they want to cushion offspring from having to put in the hours of hard graft that were needed to make the business the success it has become.

Apparently by the time you get to the third generation and beyond of any inherited wealth which originated from entrepreneurship, capability has been succeeded by the need for equality when it comes to divvying up the spoils among the family and also the business itself – if it’s still going.

While living among entrepreneurs in Cambridge and being in a business which benefits directly from their wealth creation locally, I make no claim to be one. Also, having never been the heir to a substantial family fortune, I don’t seek recognition for getting up in the morning to earn a living.

Apologies to my children on these two counts.

Still, I’ll never have problem of selecting which one of them, if any, is capable enough of taking over the entrepreneurial reigns from me. They, in turn, will thank me that, unlike Petra Ecclestone, they won’t have to decommission a gift-wrapping room in one of their mansions because they were useless with ribbons.

Will Mooney MRICS
Partner
Commercial Cambridge
T: 01223 558032
E: will.mooney@carterjonas.co.uk

Recession – what recession?

So we are back in recession and can confirm the ‘double-dip’ – well technically we can anyway. But should we really give this apparently depressing news anything more than a passing grimace as we get on with our job. If you look back over the last few months, GDP has been up a bit and down a bit. There is no doubt that we face some major challenges, not least where some of the property debt might come from to replace that which has to be renegotiated over the next 2-3 years, but the majority of business are getting a bit fed up with being in recession. They are keeping their heads down and just getting on with life.

The British Chamber of Commerce summed up the position succinctly in its press release which I quote below.

“The latest ONS data shows a fall in GDP of 0.2% in the first quarter of 2012, pushing the economy into technical recession. The figure is disappointing, and paints an unduly pessimistic picture of the state of the economy. Many commentators will question the accuracy of the data, particularly as it is based on only 40% of the information used for these estimates. As well as large falls in the construction sector, the estimate by the ONS that service sector output rose by only 0.1% on the quarter will be seen as too low by most analysts.

“Business surveys, including the BCC’s Quarterly Economic Survey, have shown a more positive picture, and we believe these give a more accurate indication of the underlying trends in the economy. We think it is likely that the preliminary estimate will be revised upwards when more information is available. For the time being, the main priority is to minimise any possible damage to business confidence. These figures are at odds with the experiences of many UK businesses, which continue to operate with guarded optimism.

“But it is clear that economic growth in the UK remains much too low. We need to see a reallocation of priorities within Plan A that will bolster business growth. That means reducing regulation, encouraging exports and improving infrastructure. While the government must persevere with plans to reduce the deficit despite these figures, it must introduce more measures to empower businesses to drive recovery.”

It would be a tragedy if we allowed the recent news to dent the vital confidence which allows business to invest in the future, because it is that investment which will drive the economy into more sustained growth.

Chris Haworth
Head of Commercial Division
Commercial, Cambridge

T: 0207 016 0729
E: chris.haworth@carterjonas.co.uk

Brazil: a tough nut we need to crack

Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, is not the only Britain who’s nuts about the Latin American country’s economic ascendancy.

Brazil puts the ‘B’ in the mnemonic BRIC as one of the darlings of the developing economies alongside Russia, India and China.

It’s a country top of mind of this country’s elite. Not only did the third in line to the British royal throne visit Brazil with a delegation in March but it also got a mention at the dispatch box in the House of Commons when the Chancellor of the Exchequer delivered his Budget statement.

It’s no wonder. March saw this Latin American nation overtake us in becoming the sixth-biggest economy in the world - growing by 2.7 per cent last year whereas UK growth was 0.8 per cent.

In such a vast country of topographical contrast, Brazil’s economic boom is down to high food and oil prices. It’s now the world’s ninth largest oil producer and its government aims for a top five ranking.

The UK is Brazil’s fourth largest foreign investor and the George Osborne was clear in his Budget speech in saying we’re looking to create a climate for export finance which will support our smaller firms in such new markets as Brazil. He also - in contrast to previous default positions of western states of old - was pointed about not wanting ‘protectionist rhetoric’ which, in the past, would have seen a regime of tariffs and heavy protection of currencies in challenging economic times.

Much has been said of the growing gap between rich and poor in our country, with predictions that austerity measures will see this gap increase. With a growing economy, Brazil has seen a decline in absolute and relative poverty in the past ten years, during which time the poorest half of a total population of circa 190 million saw incomes grow by up to 60 per cent.

The source of that statistic tells its own story. It’s Brazil’s Getulio Vargas Foundation which some in the foreign policy field regard as one of the world’s top five policymaking think-tanks. It has links with partner educational institutions such as Harvard Law School, St Petersburg State University, London Business School and, closer to home in our region, Cranfield University.

HRH Prince Harry was in Brazil for the Rio de Janeiro launch of the GREAT campaign which is part of the Government’s drive to capitalise on the international spotlight we’re in this year in not only hosting the Olympic and Paralympic Games but it’s a year which sees the Queen’s Diamond Jubilee.

The GREAT initiative’s Rio launch was anchored around a £25 million campaign to encourage Brazilians to visit the UK. GREAT will see campaign launches in Mumbai and Shanghai too.

British brands on display at the launch included Bentley, Aston Martin, Burberry and Stella McCartney, who is both a brand and the fashion designer responsible for the Olympic wardrobes of Team GB.

Indeed, we pass on the Olympic baton from London in 2012 to Rio de Janeiro in 2016 and, in between, Brazil hosts the 2014 FIFA World Cup.

Even though Horse Guards Parade on Whitehall is the scene for the beach volleyball Olympic event, it’s a world away from Ipanema or Copacabana. But wouldn’t it be inspiring to think that, alongside some of the 2,000 plus tons of sand scattered across the London landmark for the event, some of that Brazilian economic fairydust might be mixed in so we can maximise the chance to shine that this summer will bring Team UK plc? .

Will Mooney MRICS
Partner
Commercial, Cambridge

MIPIM - glamorous surroundings, serious intent

If you are a reader of a certain popular Sunday paper, you will have learned that MIPIM, the international property conference which takes place in Cannes each March, is a place where local authority councillors go to swill champagne at the ratepayers expense and most men spend the rest of the time, when they are not swilling champagne, in the arms of the many prostitutes that allegedly flock to Cannes for the MIPIM week. I must admit that the article made me feel a bit inadequate. I certainly have had the occasional glass of champagne at MIPIM and, even more occasionally, have had a glass or two with local authority councillors, although it is normally beer, but, in all the 13 times that I have attended MIPIM, I have never once knowingly talked to a prostitute. I think I saw one once – well two actually – when two statuesque and very attractive blondes with a heavily muscled minder appeared to be working the foyer at the Carlton Hotel, but even now I am not sure.

It is true that MIPIM takes place in wonderful surroundings – glamorous villas, luxury yachts and 5 star hotels – with delicious food and drink, but the vast majority of attendees go there to work very hard. The rather pathetic article in the Sunday Express is an easy one for a lazy journalist to write but I remember a few years ago, sitting beside a journalist from the Yorkshire Post at a dinner hosted by Bradford Council. I asked him what he made of MIPIM. “I came here to write an article about local councillors spending the ratepayers money on a champagne junket in the South of France” he said. “But, having seen how hard they have worked, the real contacts they have made, and what they have achieved for their area, that is not the article I am going to write at all”. It is a brave decision for a local authority to attend MIPIM, particularly when times are hard and Government cuts are affecting every authority in the land but it is a hugely worthwhile investment in the future of their area and an unrivalled chance to engage directly with investors, and those who direct investment, to ensure that opportunities for growth – and jobs, and housing – are given the best possible chance of success.

So what was the mood of those of us who were concentrating on the UK property market for 2012 and beyond? The overriding impression is that there is a huge amount of equity available to invest in opportunities, but very few opportunities which match the risk criteria of those investors. It is rare for an agent to be so popular but with the many developers desperately seeking opportunities to invest, anyone who might be able to source those opportunities was feted. The real challenge , and possibly therefore the opportunity, comes on the debt side. In the heady days of 2005 – 2007, a huge amount of debt was written on property transactions normally on a 5 – 7 year term. In the next 2-3 years, some £135bn of this debt is coming up to be refinanced, and many of the traditional debt lenders are out of the market. That, coupled with the more stringent requirements to be imposed on the banks by Basel III, means that banks can no longer ‘pretend and extend’ so we are beginning to see the first signs of new debt providers – the insurance companies, equity funds and the like – coming to the market. So the second most popular people at MIPIM seemed to be those who have access to that debt. The by product of all this of course is that there is a greater likelihood that much of the property which has been locked away under the control of the banks, because low interest rates and outstanding debt exceeding value have made bringing property to the market very unattractive, might actually now start coming to the market – and whilst this potential flood of properties might have a significant downward effect on property values in the short term, it is a real time of opportunity for the well funded developer that has the skill and innovation to bring some of these neglected assets back to life. It is going to be a painful time for some of those banks though, because they are going to have to take some fairly serious further writedowns before they come out the other side.


Chris Haworth
Head of Commercial Division
Commercial, Cambridge

T: 0207 016 0729
E: chris.haworth@carterjonas.co.uk

Keep Focused on What You’re Good at and That Should Keep you and Your Business Interests Smiling

In the musical Annie, the wee orphan girl sang ‘You’re never full dressed without a smile”. I can’t recall whether this was before being taken under the wing of Daddy Warbucks but, with or without finding my own millionaire patron, I’m determined to be more positive this year.

It doesn’t come easy to those of us on the genetically dour side of the Celtic tracks. But, one month in and my disposition is still sunny. Apparently, being - or at least appearing outwardly happy - is in-vogue now too.

While the Duchess of Cambridge has a lot to be genuinely happy about, she positively beamed forth with teeth-showing and dimpled cheeks on the front cover of January’s Tatler magazine. I’m also advised that models in adverts for luxury brands Mulberry and Chanel have dropped the moody pouts in spring campaigns, whereas Bally’s models are giddy with giggling and goats in the shoe brand’s latest shoot.

While it’s not exactly mirth, my sustained positive outlook is kind-of puzzling given the relentless churn of bad economic news that just keeps on coming.

I still went to bed in a good frame of mind at the end of a day last month which saw £5 billion wiped off the share value of a company which has been the 6th largest property seller since 2007 and which is also a significant tenant and contributor of rent to some of the country’s biggest commercial property companies.

I’m talking Tesco.

It wasn’t that I was positive just because I had sealed a deal with Sainsbury’s on a unit in Cambridge at the end of last year – I’m not naïve. The ‘model’ supermarket not performing indicates it’s not rosy for the others who’ll surely follow in Tesco’s wake come the reporting season.

Yet one person’s bad news gives somebody else a lift.

On that very same January day, when the Royal Bank of Scotland announced the shedding of 3,500 jobs, it saw its stock rise by 5.5 per cent. Mixed blessings for those employees facing redundancy yet who are also UK taxpayers and thus RBS shareholders of 82 per cent’s worth of rising shares.

Boil down the analyses and commentary on the bad fortunes of Tesco and RBS and it seems that, at the core, each company had moved away from the essence of good business and that is knowing and doing what you’re good at.

Tesco CEO Philip Clarke admitted that the supermarket’s focus on expansion beyond UK shores had been a distraction. This and a seasonal price drop in-store which it had adopted as an alternative to its usual, more targeted ‘couponing’ of its loyal customers had contributed significantly to its falling fortunes.

Equally, the expert view of RBS is that its desire to divest itself of its high stakes investment banking activities will bring nothing but good. Its pre-bail out activities had diverted RBS from what it was really good at - being a very fine high street retail bank whom its Scots customers always use to refer to with affection as ‘The Royal’ as opposed to its auld enemy on the high street, the plain old ‘Bank of Scotland’.

So what’s the lesson? Keep focused on what you’re good at and that should keep you and your business interests smiling.

Will Mooney MRICS
Partner
Commercial, Cambridge

Not playing the blame game

Imagine a media interview in which a politician, in under eight minutes, managed to not only answer two interviewers’ questions but appeared to be without the yolk of partisanship in clearly setting out how a country could, step-by-step, find its way out of recession through central government policy.

The politician being interviewed came from a Euro-currency country but he bore no bitterness towards his more powerful northern European neighbours, nor grudges toward his southern Euro-counterparts. He was very much not in the blame game.

How refreshing but it’s probably no surprise to anyone who has done business in the politician’s country. It was Mark Rutte, the Minister-President of the Netherlands– equivalent to the UK’s Prime Minister.

He spoke clearly and openly about his country’s growth strategy which seemed remarkably similar to what many people in this region and other UK hotspots targeted for growth have been urging as the way forward.

Rutte’s strategy for the Netherlands is to focus on the innovation, creative and technology industries, aligning the universities with business and vice versa at the earliest possible opportunity.

The Dutch Minister-President was being interviewed in Manchester - another great university city with a science focus through UMIST, its university’s institute of science and technology – where his delegation had been visiting a number of SMEs in the creative and innovation industries, as well as sharing thoughts on transport.

Not by coincidence as these things play out, the previous week, forty business leaders from the Netherlands had been on a fact-finding mission to Cambridge and had met several of our academic, business and civic luminaries including Prof Alan Barrell, Dr Hermann Hauser and the Mayor of Cambridge.

You would think that at such a time of crisis for his country’s currency, that as a political leader, Meneer Rutte would be grandstanding about the need for financial institutional reform, taking a view about the role of the European Central Bank and, as a politician, he surely wasn’t going to resist having a pop at some of his counterparts?

Not a bit of it. In fact he admitted he wasn’t a fan of huge institutional debates.

Instead he coolly and calmly outlined his roadmap for growth which he summarised as getting public finances in order, taking away hurdles for new business, making government smaller and getting the universities involved as quickly as possible in business life to get development from innovation.

The Dutch leader felt that it was important for him to get in to the thick of what was going on and he couldn’t do that from The Hague. He appeared really pleased to be in the thick of it over here and complimented us by saying the UK’s innovative and creative capability were needed - with 50 per cent of our exports going directly in to the Eurozone, he’s got a point.

According to Meneer Rutte, we have much in common with other non-Euro currency countries such as Sweden, Poland and the Baltic states who are all growth oriented as much as his own country – which, after all, is this region’s closest continental neighbour across the North Sea.

This 44-year old politician is just over a year in to a role which has no limit to its term in office and based on the interview, he sounds like a person with whom we’d all like to do business.


Will Mooney MRICS
Partner
Commercial, Cambridge