RSM Tenon Breakfast Forum

Breakfast ForumThursday 25th November, 2010

Speaker: Philip MarsdenTopic: Prospects for UK growth and M&A in 2011

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Philip Marsden gave an eloquent address to this morning’s Leadership Forum which provided a concise and insightful look at the challenges that lie ahead for all companies, in 2011.Some of the facts were surprising and thought provoking.The key points;The UK

• The UK has just experienced the fastest 6 months of growth in the last 10 years. Q3 showed annualized growth of 3.2% growth.
• In this same 6 months, the private sector created 340,000 new jobs.
• Public Sector job losses will equate to 490,000 over 5 years.
• However, the economy is slowing and Q4 could slow to 1.5%. Growth forecast for 2011 is 1.8%
• Corporation Tax income only covers the interest on the existing National debt.
• It will take 3 years before we see full recovery.

The Global Picture

• Business confidence in Germany is at record high levels.
• China has had 9.9% growth in 2010 and it is estimated that it will be slow to 8.6% in 2011.
• Hotels in Shanghai have seen RevPar increase by 63% in 2010 and occupancy by 40%. Hong Kong Revpar has also increased by 40%.
• The USA has had 2.6% growth in 2010 and this is estimated to slow to 2.4% in 2011. The USA needs higher growth than UK and there is great concern that it could be lower than the forecast of 2.4%
• Fastest growing economies are Brazil, Russia, India and China (BRIC) and Indonesia and yet the UK’s exports to these countries is less than to Ireland which has well publicised problems. The UK needs to adapt.

M&A Activity in 2011?

• There is more and more activity in the M&A sector and this has risen since September.
• Investment over the last two years has been almost a record low. However, this has to change. The Private Equity Market does have money to invest and it will need to invest.
• There will be more opportunities for those that are able to attract finance or have the courage to grasp good opportunities.

Forum DiscussionThere was good discussion from all and the overall thoughts were that;

• London is a global city that operates in a global market and will continue to prosper
• Outside of London, it will be tough.
• This could lead to scenes of social unrest that we have not witnessed since the 70s and 80s.
• The economy is following the normal cycle and there will be secondary failures as we come out of recession.
• 2011 will be a cautious market but companies can no longer afford to not invest in their businesses if they wish to be competitive.
• It will all be about “consumer value” in 2011.
• Margins will be competitive and companies will need to outperform their competitors.

“Don’t worry about the economy or about things outside of your control. Just focus on the economy of your business and deal with what is in front of you.”