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Cash flow is key to crisis; city view.


So how much worse can it get? The answer, it seems for many, is considerably.

A random survey of news stories this weekend sees another emergency bailout looming for the banks, a warning of the largest contraction in UK GDP since 1946, and close to home, 1,800 more jobs at risk at Jaguar Land Rover.

It's now impossible to turn on the BBC news without witnessing the slightly unnerving spectacle of Business Editor Robert Peston discussing in his inimitable staccato style the latest economic woes. (A by-product of this recession, potential depression, call it what you will, is Pesto and his Dalek-style approach to presenting. He's clearly a brilliant journalist with his Northern Rock and HBOS scoops, so why the need for peculiar up and down jingle-jangle delivery?)

But Pesto's not the only new element to this terrifying downturn. I recall the dotcom crashes of a few years ago, the early 90s slump and the ERM crisis, the year-long miners dispute of 1984-85, even as far back as the Winter of Discontent exactly 30 years ago. But none of those events were necessarily comparable to today. There's a sense that this is a real shifting of the sands, a genuine turning point in the global economic cycle.

Take the Winter of Discontent. That was primarily a power struggle between over mighty trade unions with closed shops and crazy Spanish customs who couldn't stomach the fact that their dubious privileges wouldn't last forever.

Remember Red Robboand that basket case British Leyland? Remember the Thomson organisation closing Times Newspapers down for a year because of print union stoppages? Remember the bodies lying unburied as council workers went on strike? It's all a long time ago, and the world has moved on, in many ways for the better. B L could never exist today, Red Robbo would not be tolerated, the NGA and its wildcat walkouts are consigned to history.

So much of that stuff was industrial parochialism, a last manning of the union battlements before Thatcherism swept aside much of heavy, inefficient industry, with a brutal impact on whole communities. Thirty years on, this isn't so much a Winter of Discontent as a Winter of seeing the chickens come home to roost.

In 1978-79 credit was not a hugely discussed issue. Families and companies - even the inefficient ones - tried to stumble along by living within their means, with obvious exceptions like British Leyland.

John Towers, of MG Rover fame/notoriety, once told me a very interesting fact of business life. He said: "Profits are a matter of opinion. It's cash flow that is important." Mr Towers may have dropped a few howlers whilst at the helm at Longbridge. But that analysis was spot on - just ask a few bankers and company directors this morning, not to mention the thousands of families feeling the pinch.
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Jan 19, 2009
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