Sklaroff: "Robert is probably best known to us as what you might call ‘the voice of the crisis’. As the BBC’s business editor, he reported on the developing banking emergency starting with the troubles of troubles of Northern Rock.
"Robert then guided us through the many ups and downs of what became a series of very turbulent years. But of course Robert’s career in journalism goes back well before 2008. He has a distinguished record as a print journalist in newspapers and magazines, including the Independent on Sunday, the Daily Telegraph, the Spectator, and the FT.
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"I noticed the other day that his original entry in my contact list was as a formidable editor of the FT, which reminded me that he and I are survivors of the reign of Alistair Campbell at Downing Street, who was press secretary when Robert was a journalist and I was a director of communications.
"We haven’t yet compared scars. Robert is of course now economics editor of the BBC, and it’s hard to think of anyone better qualified to talk to us about the economic context in which we all do business."
Peston: "It’s a great pleasure to be here, and also something of a surprise: I’m described in the guest list as the principal guest. I know that some of you in those dark days of 2007 and 2008 were throwing things at the TV screen when I came on, so I’m pleased that I’m welcome here.
"What I do passionately feel is that you [the leasing industry] are the good guys. What you do is vital to our prosperity as a nation, and you’re the ones who can sort out the mess.
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By GlobalData"I’m going to talk about how things are going right [in the UK] but you know me well enough that it’s not going to be a few minutes of unbridled optimism, because what got us into the mess in the first place in 2007-08 was that we had about 10 years of believing that what goes up can’t come down, so I will talk a little bit about what I see as the risks.
"That said, it’s been a pretty good time for the British economy, after several dire years. Last year, 2014, we were the fastest-growing of the G7 economies. We grew faster than Germany; we even grew a bit faster than America. It doesn’t seem unreasonable to forecast that we’re going to do better than almost everybody this year as well, maybe excepting America.
"Nonetheless things are going pretty well, and it’s a more balanced economy than we had feared, in the sense that there has been much more business investment over the past few years than the geniuses at the Office for National Statistics told us – they revised their figures, and we discovered that business investment was actually better than we had been told. It eased off a bit. That said I’m slightly concerned that as an economy we are too dependent on household consumption, and household debt.
"One of the things that is of particular concern, is that if you look at the official forecast of the Office for Budget Responsibility, which is a forecaster independent of the Government, in 2019-20 what it sees as the drivers of growth is a significant increase again in household indebtedness.
"If you remember, at the time of the crash, household indebtedness was an extraordinary 165% of household income and GDP. That came down over subsequent years to around 140%, which was massively high by historic standards, but debt continues to be powered by consumption: the OBR expects that to be powered by business investment.
"The other aspect that seriously worries me about the UK is we are shipping-in debt from the rest of the world at a record rate. We have record current account debt at the moment. It is 6% of GDP. A lot of that is not the deficit in trade; it’s that we are not earning as much from our investments overseas, particularly from the eurozone, but shipping-in debt at a rate of 6% of GDP is not sustainable. We do have to do something to earn more from the rest of the world.
"The big challenge for the UK is there. That said, I do believe there’s momentum to this recovery at the moment.
"Where do I see the risks? They are broadly outside the UK. China, the world’s second-biggest economy, has dominated the development of the global economy over the past 20 years. It is now a big accident waiting to happen. The big story there is that their indebtedness went up by 100% of its GDP over the past five years.
"When we stopped buying stuff from them, they kept the engine of growth going by lending for investment on an astonishing scale. I think that most of you know what happens when you lend at that rate. A lot of the debt goes bad. And the great risk with China is that before the slowdown comes they do have significant financial hiccup.
Then, of course, we still have a flatlining eurozone. A Greek exit from the eurozone would of course be a very significant shock, as the eurozone is still a very significant export market [for the UK] so it’s good it’s off the agenda for now, but it’s not off there permanently.
"They are still labouring under astonishing debts. The government has debts of 180% of GDP; its completely unaffordable – it’s more sticking plaster applied to the region that has not done the fundamental things that will put it on a sustainable long-term basis. And I would consider the eurozone as a continuing risk to the global economy for us.
"Finally, over the coming months, a big risk for all of us is the reckless financial behaviour of institutions and individuals in politics.
"Politics is a huge risk in Europe, and what I’m thinking about at the moment is the rise of nationalist and extremist parties across Europe, which reflect a very strong feeling among millions of Europeans that the eurozone is not working for them, that it is impoverishing them, and then in this country we are facing an election the like of which none of us can remember.
"The rise of Ukip, the rise of the SNP, the rise of the Green Party – all make it impossible to predict the outcome of this election. It’s likely there could be a coalition, but unknown what that Coalition could be, a Tory-Ukip, a Labour-Lib Dem coalition?
"I do think we live in astonishingly important historical times, and the bad news for the leasing industry is that it does make business planning very difficult for a few months.
"The underlying economic performance is good, but the political situation in the UK is difficult, so expect to see me on the television a bit more!"
