The country’s beleaguered high street will not recover for another three years and will underperform for the rest of the decade, according to leading economic commentators. Retailers will have to weather a ‘tough trading environment’ as householders’ hoarding of cash and debt repayment mean consumer spending will fail to return to pre-recession levels before at least 2015. The forecast from the Ernst & Young ITEM Club suggests the worst of the recession could be behind us but warns a recovery could be derailed by consumer habits and put under renewed pressure by rapidly increasing mortgage costs. The economists expect Bank of England interest rates, the foundation for mortage costs, to climb to 4-5 per cent by 2015, leading to a quadrupling in the percentage of household disposable income going towards debt interest payments to 3.2 per cent, The Telegraph reports.
The Government must boost the credit rating of infrastructure assets to attract the private funds it needs for its planned £250bn spend on transport, power, schools and hospital projects, the CBI will say today. Noting ‘little has happened on the ground’ since Chancellor George Osborne trumpeted the spending blitz in November’s Autumn Statement, the employers’ lobby urges the Government to make ‘smarter use’ of its balance sheet. Improving Britain’s infrastructure is a key plank of the Government’s much-criticised growth agenda but it is struggling to attract the necessary investment from the private sector, not least for riskier greenfield projects, according to The Telegraph.
One of the world’s biggest car parts suppliers has rejected overtures from Westminster to bring large-scale manufacturing into Britain. Robert Bosch, a key provider of components in engines and in car safety, has rejected the entreaties of ministers and will not set up a large operation in the UK because it is too expensive. The attraction of so-called Tier 1 automotive suppliers to Britain has been one of the single most important goals of Vince Cable, the Business Secretary, and Mark Prisk, the minister with responsibility for the car industry, says The Times.
Thomas Cook has cut the notice period of its chief executive from 12 to six months as its board tries to stamp out ‘pay for failure’ accusations at the company. Harriet Green, who was hired from electrical components maker Premier Farnell last week, has accepted a six-month notice period against the usual 12-month contract awarded to most FTSE 350 chiefs. Frank Meysman, the firm’s chairman, said: ‘We gave her a fair contract. The notice period is six months. I don’t think it’s fair, even at the top levels, that people obtain a 12-month notice period.’ Mr Meysman refused to discuss other details of the contract but suggested it had been drawn up along simple principles: ‘I’m a strong believer that you pay for strong performance and you don’t pay for non-performance. That’s what the whole debate around the Shareholder Spring is about – why the heck do you pay for non-performance?’, The Telegraph reports.
A plan for the ‘industrial re-conquest’ of France is being drawn up by President Hollande’s new Government, in a renewal of state interventionism against a backdrop of rising unemployment and restructuring at leading French companies. The plan comes as Air France, Carrefour, Peugeot-Citroën and a host of other French businesses are set for a showdown with Mr Hollande over wide-ranging job cuts. Arnaud Montebourg, the Minister for Industrial Renewal, fired the first shots in the campaign when he said that he would finalise his ‘industrial re-conquest plan’ within weeks, The Times reports.