More Future Shocks for UK Treasurers

The first was the unexpected UK general election result on 7 May, which saw the ruling Conservative party headed by David Cameron return to power with an absolute majority, while the Liberal Democrats – their coalition government partners for the past five years – were decimated at the polls. After weeks of speculation that no one party would be able to govern without seeking support from others and there would be a prolonged period of political uncertainty, UK companies have a pro-business administration in power for the next five years.

The second came with news that the UK has joined some of its European neighbours in experiencing deflation. The consumer price index for April was -0.1% lower than a year ago; the first time that a negative figure has been recorded in 55 years. At the moment the data is being treated as good news and evidence of lower energy prices, rather than a warning sign of economic malaise – as has been the case elsewhere in Europe.

“Conversations at the start of this month among treasurers were on how they’d handle the anticipated period of uncertainty for the next three to six months,” says Paul Taylor, head of sales for GTS, Europe, the Middle East and Africa (EMEA) at Bank of America Merrill Lynch (BofA Merrill). Many experts now expect attention to turn to whether the new government can build on its reputation for economic competence, which was very much the defining focus of the election.

One prevailing uncertainty is the UK’s willingness to remain a member of the European Union (EU). Cameron has promised voters a referendum on the issue by 2017. Many now expect this date to be forwarded to May 2016, with an active campaign over the next 12 months to convince Britons that despite the gripes that many have with the legislation that emanates from Brussels, it would be detrimental to British businesses if the UK was to withdraw from the EU. However, with EU treaty change scheduled for 2017, France and Germany will be reluctant to offer too many concessions to placate the UK.

Challenges ahead

Future uncertainty also featured in the opening remarks at the conference from the ACT’s new president, Yann Umbricht, partner at PwC. “The role of treasury is all about looking forward and considering what might happen in the future,” he says. “It’s how he or she adds value to the organisation.

“We’re witnessing some highly significant trends at the moment and we don’t always know fully what their impact is going to be. Having a strong network is vital in meeting these new challenges.

According to keynote speaker Ronan Dunne, chief executive officer (CEO) of telecoms group Telefonica UK, uncertainty is a positive in offering treasurers the potential for career development.

“You need to put yourself in a position where you can be lucky, by taking advantage of the opportunities that arise,” he suggests. One of them is in using social media to the fullest extent possible. “Twitter and LinkedIn are the modern equivalent of walking the shop floor and hearing both what your customers and employees have to say.”

Another is in utilising the high level of digital literacy that he sees evidence of in the UK – particularly among individuals who are unemployed. Dunne suggests that this is one of the top priorities between now and 2020 for the new government.

“It’s essential that we develop these digital skills, particularly as too many schools are still teaching the skills needed for jobs that no longer exist,” he claims. “The best focus is in matching talent to opportunity if we are to grow the economy.” And economic growth will be essential to the UK over the next five years. As Dunne reminded his audience, the country still has a massive debt load that threatens to cloud the country’s prospects.


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