Enterprise - Spring 2015

FOREWORD - THE SEVEN-YEAR ITCH

Guy Rigby looks at how the world has changed in the past seven years, reflecting on the path to recovery from the economic crisis and the rise of an entrepreneurial revolution.

I was recently reminded that I joined Smith & Williamson seven years ago, in the spring of 2008, when the world was very different to today. We were then in an economic bubble with investors seeking to invest, banks eager to lend, and strong merger and acquisition activity, fuelled by liquidity and a very favourable tax environment for exiting entrepreneurs.

And then it went wrong

We all know what happened next. A flood of unsustainable debt washed away every semblance of normality, creating huge uncertainty and stopping the global economy in its tracks.

Here in the UK, we were particularly adversely affected. London's position as the world's leading financial centre and our dependence on financial institutions and markets meant that our fall was harder than that of many other developed countries. Demand for products and services fell off a cliff. Stock markets collapsed.

Rekindling the feel-good factor

Since that time, governments around the world have been wrestling to secure a recovery, creating an unprecedented low interest rate environment and printing money (so-called 'quantitative easing') to create liquidity and support asset prices. In the UK, these and other measures, for example the Help to Buy mortgage scheme, were designed not only to save our economy but to try to rekindle a feel-good factor which would create a virtuous circle of economic activity, instigated by growing demand.

Business-friendly policies

Has this worked? Surprisingly, it has - or, rather, it seems to be working. The UK economy, under the direction of a business-friendly Coalition Government and with the support of the Bank of England, appears to be recovering nicely. Far more nicely than our troubled eurozone neighbours and just as nicely as any other developed economy. While significant issues remain - the much-discussed deficit and ongoing trade imbalances being key challenges - we find ourselves on a path that is beginning to deal with these problems.

An entrepreneurial revolution

But something else has been happening during the recessionary years and it would simply be wrong to give all the credit for our success to policy, as fundamental as that may be. There has been an additional and, in the longer term, far more important ingredient, and one which has now become well-established - an entrepreneurial revolution.

A combination of necessity, opportunity and technology have come together to enable this phenomenon, which has seen an increasing number of business start-ups - more than half a million new businesses were registered in the last year alone. People want more control over their futures. Individual capitalism...