With the election of a new government and the prospect of a June Budget, the private sector has every right to look a little anxiously at what the public sector will be doing overthe next few months. Those who spent time at the recent ACT Annual Conference probably heard the phrase "cautiously optimistic" more than once over the course of the packed two days.
Despite the immense economic and financial problems facing governments, treasurers seem sanguine about the medium-term prospects for the world economy in general and presumably for their own corporates’ fortunes in particular. Few expect any return to boom. While governments and businesses may have avoided going spectacularly bust, it is clear that we are heading for an age of austerity with no certainty over the exact consequences.
One of the constant themes of the conference was regulation: how much, how far and to achieve what? Much talk to be followed by much action from various agencies, but what this will mean when the dust has settled for the financial industry, and its clients, remains unclear.
The conference heard that there are signs that financial services are on the cusp of recovery. And along with this recovery is a promise of a mindset from banks that looks to rely less on manufacturing and distributing complex financial instruments and more on engaging with businesses that can offer a decent business plan and a sensible management approach.
That has to be welcomed, especially by those who need to access the capital, liquidity and related services which realistically only the banking sector can provide in sufficient depth with a commanding geographical spread. Without that, the non-financial sector will struggle to function and grow. In this new era it seems likely that money will be more expensive and spreads wider, but there is a good chance that sufficient finance will be available. One overwhelming message that came from the conference is that the desire for a genuine relationship between corporates and banks remains undimmed by the financial crisis. Despite the tales of banks’ relationship managers blanking treasurers and credit committees battening down the hatches, it seems that relationship banking may have emerged stronger.
Treasurers themselves have had a good crisis: their role has been widely recognised and their skills much sought after. The PwC survey published at the conference confirmed as much, and the challenge for treasurers is to work out how to continue to enjoy success as the crisis comes to an end and something approaching normality returns. Treasurers must ensure they continue to shape the future.
Peter Williams
Editor