Jane Fuller is one of the country’s top financial experts. She worked for 18 years on the Financial Times: posts included Financial Editor (heading the Companies and Markets section), Lex writer, leader writer and UK Companies Editor. The Linc talked to her about how the country could steer clear of the recession.
Shane Croucher: Who is the better duo to lead us through the recession? Brown and Darling or Cameron and Osborne?
Jane Fuller: I’m not a great fan of Gordon Brown because I think he micro-manages too much. However, it is a financial crisis and a recession so the government can’t do nothing. It is natural for public spending to rise and help fill the bridge when private business declines. So, some of it is classic anti-recession stuff and the kind of thing Gordon Brown thinks he’s good at. The Tories were right to say that spending £12billion on a VAT reduction was a waste of money, they were right to say that some sort of insurance scheme against losses on loans might work better than just throwing money at the banks in another way. I think whoever was in government would have ended up owning part of some big banks.
SC: Given some of the apocalyptic reporting about our economy; how bleak do you think our future really is?
JF: Well that depends. If you’re in secure employment you’re actually better off at the moment. Your mortgage costs have gone down, your fuel costs have gone down, some other things have gone down; you’re in a good position. The interesting question is what portion of the working population is worried that they might lose their jobs. Or that if they have any element of their pay that is bonus related, so if they do less work they get paid less. There’s a lot of nervousness about either losing your job or getting paid less because you’re doing less. One of the things that surprises me, because I’m old enough to remember the last two recessions, is that people seem to have forgotten what it was like. Yes shops do shut. Unemployment may well go up. Instead of being five percent or just under, it’ll go up to nearer ten percent. It’s difficult for small businesses sometimes to borrow money. What one has to be careful of, as a journalist, is that every single business or organisation that’s short of money will do what’s sometimes known as ‘shroud waving’. They’ll claim that they are in dire straits and that if they don’t get a hand out then they will go bust. So, some of it is exaggerated.
SC: Given the amount of experts in the financial media, why wasn’t this predicted?
JF: Some people did predict [the recession] and they were ignored. Everybody was happy as long as it went along. The government loves economic growth because it keeps the voters happy. The banks love it because it not only allows them to lend, but to do deals and trade in shares and bonds because it earns them all sorts of fees. So, as long as everything is growing; nobody complains. Those that do say there’s a ‘bubble’ are either ignored or laughed down. People who did see the bubble coming would have been predicting this since 2005. Every year that they are proved wrong, they effectively would have lost money because they wouldn’t have been enjoying that last leg of price rises. It’s very difficult to see when a bubble will burst, even if you predict one.
SC: What does the current climate mean for graduates who are coming out of university and looking for jobs?
JF: It’s much worse than it was in 2005, 2006 and 2007. It depends what business you’re going into. Media is being badly affected because advertising revenues are down and so they are cutting back on recruitment. However, they may also be doing some shifts, for example, fewer permanent staff and greater use of freelancers, which could be a good opportunity for new, young journalists. If you’re flexible and you can spot an opportunity to be in the right place at the right time, there could be more opportunities. Or, it could be that you start on short term contracts before you get a permanent post.