A view from the CBI 2012: Ernst & Young's Mark Gregory says:Executives need to review their business plans, investment and growth strategies in light of the new economic reality.
Ernst & Young’s Mark Gregory, live from the CBI conference, reflects on the bias of some businesses towards risk aversion and corporate inertia. Please click here http://bit.ly/UCCymo
Mark Gregory, Ernst & Young's Chief Economist and Transaction Partner says:
The harsh reality is that low growth is the ‘new normal’
"As a firm we are concerned that in waiting for the upturn, corporates have not recognised they will be facing a very different environment.As Ronan Dunne, Chief Executive of Telefonica UK, said to CBI conference delegates this morning, business models do need to change to reflect the 'new normal'. Critically, companies must adjust their strategies and decision criteria to reflect the future economic reality, not that of the past."
A bias towards risk avoidance and inertia
"In our opinion a combination of short term economic pessimism and longer term optimism is leading UK businesses to sit and wait for things to improve, creating a bias towards risk avoidance and inertia."
Historic decision criteria could lead to inefficient use of capital
"With their vision clouded, some businesses are using historic decision criteria, developed in the pre-crisis decade, to plan for the future and this means they are at risk of inefficiently using their capital."