Life & Culture

Why the UK has further to fall

Jeremy Newman is more bullish about the global economy than he is about the UK’s financial status.


It will come as a kick in the teeth to the nation's businesses but Jeremy Newman, one of the most experienced business chiefs, believes the UK will become a significantly less important economic power in ten or 20 years times than it is today.

Mr Newman, the chief executive of accountants BDO International, says he is more bullish about countries outside of the UK than he is about Britain. He explains: "Until the financial services sector picks up again in the UK, things are going to be difficult here.

"For instance, there are 60 million people in the UK and 1.2 billion in China. How can China not be a much more significant player than the UK?

"We are used to being fairly close to the top of the tree in the UK because we have always punched above our weight.

"Relatively the UK will slip and this will be a hard pill to swallow."

According to Mr Newman, the greatest challenge currently facing the UK is confidence. "There is more confidence in the global economy. The UK is in a more difficult position than a lot of other countries."

Why? "Britain in particular was very exposed to the financial services, which makes up a disproportionate amount of the UK's economy compared to other sectors, and given the difficulties facing the financial services sector, the UK is worse affected than most.

"The developing countries were always going to carry on developing and aren't saddled with the same issues of debt, and otherwise. Some of them are less democratic, less concerned about the welfare of individuals and more concerned about the economy as a whole. They do things that we would find unacceptable in the UK."

Asked how BDO was affected in the financial crisis, he says: "It has been patchy. Business in the UK and the US, Germany and some European countries were affected by it, whereas China was almost impervious to it and the business in China has continued to grow.

"In general, the pick-up in restructuring and insolvency work has not compensated for the loss of transaction work and corporate finance work."

And Mr Newman, 50, is well-placed to comment. He has spent his whole professional career at BDO, since joining what is now BDO UK in 1978.

He was made global CEO of BDO International in 2008. With more then 45,000 employees, BDO is active in 115 countries. Unsurprising then that he is abroad most weeks. But the Kinloss Synagogue member, who is shomrei Shabbat, always makes sure he is home for Shabbat.

He says taking on the global role has been the most challenging in his career. "We have been trying to grow a business globally at a time of the world's biggest ever financial crisis. It is not the time you would necessarily pick to take on that job.

"This job requires fundamentally different skills to the accounting job and running the UK firm."

He has spent a lot of time in China, developing BDO's business activities. "Doing everything through a translator, and in a very different business environment where people don't respond in the same way they do here and where the role of government - because it is a communist country - is very different to here. It requires you to develop different skills."

Mr Newman, who lives in Finchley, north London, has been championing a global set of accountancy rules. "Politicians are very good at forgetting. For the last decade they were happy to talk about 'light-touch regulation' in London and suggested that one of the reasons London boomed so much was because of the way it handled regulation. Post the financial crisis, 'light-touch regulation' is not a phrase anyone wants to hear.

"I think London would prosper if there weren't different regulatory regimes in different countries and people deciding where to go because of regulation.

"We don't want other countries to have 'light-touch regulation' and find that businesses go there because, not because it's better to do business but because the regulatory regime is an easier one to operate in.

"I think London would benefit from there being consistency to regulation because people would then judge financial centres by where the best people and infrastructure was, and I think London would come out reasonably close to the top, if not top."

Together with the other top five accountancy firms in the world, he has meetings with the International Accountancy Standards Board, the International Federation of Independent Audit regulators and others. "I can't say we all agree on everything but on regulation, the largest six accountancy firms in the world tend to have consistent view that there should be global regulations."

Will it happen? "If I'm brutally honest, no. I think there are too many political vested interests." He had hoped that one of 'benefits' of the financial crisis was governments seeing that countries couldn't deal with such crises individually.

"It was clear that you can't regulate in isolation as what happens in one country, has an affect on other countries. But it doesn't seem to have given the government sufficient impetus for them to give up some powers."

And he doesn't feel the new government will have much of an impact either. "It's not clear where they are going to end up on banks. The Lib Dems had a very strong view that banks ought to be broken up.

"The Conservatives appear to be in a different place in terms of regulation around bonuses, getting rid of the FSA and giving regulation back to the Bank of England. I am not entirely sure how they are going to reconcile all those policies.

"I guess we are going to watch and wait."

Away from accountancy, the father-of-two is chairman of trustees of Morasha, the new children's Jewish primary school in Finchley, and a former treasurer of CST. He is married to Judy.

Share via

Want more from the JC?

To continue reading, we just need a few details...

Want more from
the JC?

To continue reading, we just
need a few details...

Get the best news and views from across the Jewish world Get subscriber-only offers from our partners Subscribe to get access to our e-paper and archive