Major concern of Major Global Business Leaders
In today’s Globe and Mail, there’s an informative piece by Tara Perkins on what business leaders see as the number one economic worry currently: excessive government spending and debt. This take from the business community is a bit of a shift from what had been seen by governments as a critical and pressing need for stimulus spending.
The group of business leaders was made up of 32 of the world’s most influential CEOs, most of who were hand-picked by their respective national governments to attend a session of the recent economic summit.
The article quotes Gordon Nixon, CEO of RBC, saying: “reducing deficits is important not only because of direct sovereign risk, but also because balanced government books are key to restoring confidence, which is important for economic growth.”
Direct sovereign risk has been a burning issue lately, as countries from Iceland to Greece to Spain have had economic catastrophes beset them.
Additionally, consumer confidence has plummeted since 2008 and hasn’t posted very big improvements since. The governments need to do their part to address the part it has to play in this vital element, finance ministers of the G20 nations were told.
Business leaders were quite clear on the point that advanced governments are, in their rush to dole out stimulus spending and tinker with tax tables, creating vast uncertainties that limit businesses’ ability not only to adapt to the current conditions, but to pick up the slack and ultimately return the global economy to full health. Attendees were particularly worried about these elements in the United States, where a major problem for Mr. Obama is that businesses see him as reactionary – and prone to anti-business bullying.
The event ended with the traditional niceties that are the usual fare in these kinds of things, with governments and business leaders promising to work together:
“We should open an era of grand co-ordination by enhancing co-operation between the government and the private sector,” said South Korean Finance Minister Jeung-Hyun Yoon. “I sincerely hope the business summit can serve as a platform for public-private collaboration and the starting point of the new normal in the global economic architecture.”
The message to government leaders got through loud and clear, however. There is little support for additional stimulus spending which evokes the spectre of more government involvement in the economy, as well as probable tax hikes in the future. Time will tell how this plays out on the grand global scale and also for markets, businesses, real estate and home buyers in Canada in particular.
