PUBLIC AFFAIRS AND MEDIA RELATIONS BLOG - Clive Booth

Shop till you drop…

Even though it's hard to believe the UK's economy is bouncing back, here's something to raises one's spirit. The Confederation of British Industry (CBI) has announced that high street sales are growing at their fastest rate since the economic crisis began.

Is this a good indication that, even though it is not yet here, recovery is not far over the horizon? Or are families voting with their credit cards for a happy Christmas and shopping for presents, regardless?

The CBI conducted a survey of over 20,000 retail outlets and found that, of those surveyed, 41% said that sales volumes for the year to October had risen, while 33% said that they were down. The resulting balance of +8% was the highest since December 2007, when the balance was also +8%. Given that in August the figure was -16%, this news is more than welcome.

An increase in retail sales is undoubtedly good for the British economy and a boost to SMEs in that sector. It is a sure indication that consumers are once again spending their money.

What’s your commitment to carbon reduction?

Writing in Business Voice, Richard Lambert makes sense of the Carbon Reduction Commitment (CRC) to be introduced in April 2010. In terms of raising awareness it is spot-on and raises some interesting points.
 
The EU Emission Trading Scheme is getting so much coverage that is very easy to overlook the incoming CRC. But, as the initiative will affect over 6,000 businesses, the CRC is a big deal. It is a significant part of the UK Government’s laudable drive to decrease CO2 emissions by 80% on their 1990 level, by 2050.
 
Drastic as this cap-and-trade scheme is however, the CRC is no silver bullet. All it can be is an incentive for firms to grow greener and the Government must keep encouraging energy saving practices.
 
The director-general of the CBI also raises the problems SMEs face in adapting their practices. It is vital that energy-saving policies are formed with start-ups in mind. Mind you, SMEs have other challenges right now too.

In the FT today...

In the FT today, I read a piece by Andrew Hill that was, rather surprisingly, both amusing and uplifting. It highlights the Royal Bank of Scotland's intentions to re-brand itself south of the border by re-introducing the old Williams and Glyn's brand.

'Why is this important', I hear you say. Well, W&G prided itself on taking particular care of small and medium-sized customers and, as my colleague so accurately made clear, SMEs play a vital role in creating jobs and stimulating the economy.

It is hoped that this would increase, or at least facilitate an increase, in funding to SMEs. The bank would also have the bonus of not having all the bad debt and government ownership issues associated with its lagging parent company.

Significantly, the re-branding will most likely coincide with an IFAC paper on business support for SMEs to be released next year. It is good to see the much beleaguered SME sector on the agenda.

But, as would be clear to most readers, the motives for the split are in no way philanthropic. As RBS is seeking to win approval from Brussels for its participation in the Government's Asset Protection Scheme, the move would undoubtedly be a quid pro quo for state aid. But, means, ends, etc. Frankly, the fragile financial sector could do with the kick-start.

Up next, Lloyds brings back TSB.

Redrafting of global standards running at different speeds

Ahead of the next G20 in Pittsburgh, the US has an opportunity to show leadership and commitment to the principle of an accountable, transparent and sound system of international regulatory cooperation. ACCA has long argued that this is best achieved though the adoption of one set of reporting standards, the principles-based IFRS, to meet global market needs.

Along with others, ACCA also warned against political interference in the setting of international standards, as the reliability and predictability of accounting standards are key prerequisites for a sustainable and well-functioning capital market. Robust and credible accounting standards are essential for a speedy recovery from the financial crisis.

We have issued a news release concerning the lack of co-ordination between the world’s two main accounting standard setters on a vital new standard on fair value.

'Currently, the two boards seem to be moving at different speeds and towards different positions,' says Richard Martin, ACCA head of financial reporting. 'There are highly significant differences in the proposals which cannot be skated over.

'It also seems possible that IASB will have issued the first part of its new standard on financial instruments before FASB has consulted in the US on any proposals. This sequence continues the problem of demands for a "level playing field", which have prompted some adverse developments in financial reporting over the last year.

'We would prefer that the use of fair value was not expanded significantly from where we are,' continues Richard. 'There doesn't seem much support for the full fair value model that FASB is promoting.

'If more assets and liabilities are valued according to their market price, more volatile balance-sheets could result. This could produce a pro-cyclical result, as the market tends to overshoot on both the falls and the gains.'

Richard also expressed concern that a phased introduction of the new standard might create problems for people who prepare or use accounts, as many preparers will want to see the whole package before making their various choices and set their new policies. There are significant risks that there will be problems with having parts of a new standard to co-ordinate and work with parts of the old standard.