UK's chink of light

By Elissa Bayer, May 6, 2010
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Hopefully, the Greek situation will resolve itself soon as the Greeks need to understand that they are going to have to take their medicine and the Germans will have to accept that their pre-eminent position in Europe means that they have to come to the aid of their much weaker partners.

In the UK, one would hope that we get a more definite result than the polls were indicating. What we need here is clear direction and a robust approach to cost-cutting and bringing down the huge deficit that has built up over the past few years.

The deficit in the UK did not emerge as a result of the credit crisis, although the situation was exacerbated by the exuberance of the banks and the rush of both consumers and the government to spend money as if it was going out of fashion.

However, the Labour government under Gordon Brown's chancellorship managed to turn a surplus into a £40bn deficit, and that was before the credit crisis started. The necessity of taking the medicine is not going to be pleasant, but people are going to have to think about - depending on their situation - how good the last 10-15 years have been and how a different approach is now needed.

The Greeks are paid an extra month's salary at Easter and Christmas and have tended to retire in their mid-50s. This happy situation is about to be stopped and the retirement age will move dramatically to the mid-60s, which is what we in the UK are going to have to get used to. Human nature being what it is, no one in Greece seems to be saying that they have been very lucky to get 14 months' salary in a year and a very low retirement age, but neither of those scenarios are likely to be seen again.

The past 18 months has been a matter of survival, and the corporate sector has in many cases adopted really interesting and innovative measures that have meant company figures continue to rise.

Unilever, AstraZeneca and Tesco have all recently produced figures way above expectations. They all have a similar theme in that they are quoted in the UK but a higher percentage of their earnings are from overseas and they have diversified their activities.

As we settle down after the election, the overseas theme will continue and we will be continuing to look at the emerging markets for countries to buy and sell our products. The incoming government is going to have to grapple with much that is depressing. However, from a corporate view, I believe that there are slightly more optimistic signs and if the government can provide stability while at the same time not over-inflating or taking too much out of the economy too quickly, then there will be real achievement. However, that statement is a very tall order, so 'they' will need a big dose of mazel - not a word in any manifesto.

Elissa Bayer is a Director of private clients at Charles Stanley

    Last updated: 11:32am, May 6 2010