Since this is my leader for the December 2014/January 2015 issue of The Treasurer, you might reasonably expect it to be a letter full of Christmas cheer. I’m afraid I’m going to disappoint you.
It’s actually a letter of Christmas caution. Given that I am writing for an audience of corporate treasurers, I take comfort from the fact that treasurers often describe themselves as ‘natural pessimists’ and you will probably have some sympathy with my views.
So what is there to be cautious about? At the time of writing, the financial markets have recovered from their October jitters, US and UK economic growth remains on track, and bank funding is cheap and plentiful (at least for larger corporates). Now comes the ‘but’. But it seems too good to be true. And we all know why.
A few years ago, I wrote that there were three certainties in life: death, taxes and the eurozone crisis. But, earlier in 2014, I was beginning to think the worst of the crisis may indeed have passed. My optimism appears to have been premature. Not only is the eurozone crisis back with us; the truth is it never actually went away. While there is less talk of a eurozone breakup than before, there is no disputing that the region is afflicted by very low growth, very high unemployment in certain countries, and the looming spectre of deflation.
Then there is Japan, which is trying to stimulate growth through a large-scale quantitative easing programme that has yet to yield significant results. Instead, the world’s third-largest economy has plunged into its fourth recession since 2008, partly on the back of a hike in its sales tax that took effect earlier this year.
Throw into the mix political tension over Ukraine, conflict in the Middle East, volatility in some key emerging markets and the threat of a worldwide ebola epidemic, and you have what can only be described as a very worrying macro picture.
But it is Christmas, so therefore I feel I should end on a positive note by mentioning some of the highlights of this issue. These include a review of the ACT’s role in developing treasury qualifications globally, on page 20, and an interview with Anglian Water’s group treasurer, Jane Pilcher, on page 26. I would also like to take this opportunity to wish you a very merry Christmas and a happy New Year.
