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Would you invest your savings in Great Britain Plc?

Let’s imagine a friend or financial adviser called you up and suggested you invest your life savings in a promising company called Great Britain Plc (GB).

The first thing you asked might be, “could you tell me a bit about the top management of GB?”

“Well”, your contact replies, “the CEO used to work in the PR department and has never run a major organisation or even department before. But he seems nice enough, though a bit vacuous. The Financial Director is one of the CEO’s closest chums, but has no financial qualifications – in fact he’s a history graduate with no real work experience apart from folding towels in a department store”.

 “What about the rest of the management team? Surely they know what they’re doing?” could be your next question.

“Umm,” your contact hesitates for a moment, “actually most of them have been caught fiddling their expenses and using company money to pay partners, friends and children as supposedly working for them. One is a convicted criminal and another a fraudster. And they’ve been pushing for more generous expenses and a massive pay rise even though GB’s results get worse every year and its share price has fallen by about 30% in the last 5 years”.

By now, you’re not feeling too excited about the prospect of investing your cash in GB. But, just in case there’s something you’ve overlooked, you ask, “what’s GB’s financial situation like?”

There’s a long silence, then finally your contact admits, “unfortunately GB spends £750m for every £650m it earns, its debt is rising by £100m a year and markets will soon lose confidence in GB’s management. In just five years from 2010 to 2015, GB’s debt will have doubled from £700m to £1.4bn and soon the company will only be able to borrow money at almost extortionate rates of interest. Unless GB’s management do something pretty drastic and do it quickly, GB may go  bankrupt” (click to see picture more clearly)

gb plc

Hearing this, you politely suggest that there’s no way you’d consider putting your hard-earned money into a seemingly obvious disaster like GB.

 “Ah,” your contact quickly replies, “it’s not as bad as it looks. There’s a very strong rumour that a new management team will be taking over GB in May 2015”.

By this time, you’re pretty doubtful this will improve the situation. But out of politeness you ask, “what’s the new management team like? Have they a better record than the current team?”

“The person likely to be the next CEO is quite young and was most people’s second choice for the job. Everybody preferred his brother, whom he stabbed in the back to get his job. He was very close to the former Financial Director, who got booted out 4 years ago when GB got into severe financial difficulties. He has little to no experience and isn’t really that impressive. In fact, most people think he’s a bit of a nerd,” your contact hesitatingly reveals.

“And” your contact continues, “the likely next Financial Director is a loud-mouthed bully who was very closely involved in the last management team but one. During a time when business was booming, they unfortunately more than doubled spending while revenue only increased by about 60% and they pushed GB’s debt from £350m to over £700m even though sales had never been so good. This meant that when business conditions worsened, as they always do after a period of unusually strong growth, GB got into real financial trouble and the whole of the previous management team was replaced”.

“So,” you ask your contact, “you’re telling me that key members of the team responsible for wrecking GB’s finances will soon be back in charge?”

 “Yes” you contact replies, “but although they won’t admit to making any major mistakes last time they were running GB, they’ve promised to be a little more careful if they take over in 2015. So, it’s a great investment with a great future”.

Being a rather cynical person, you’re not convinced and decide to put your money elsewhere – Australia Plc, for example, or even Russia Plc as both seem to have quite tough CEOs.

Now, I don’t know whether comparing a country with a company is valid. But what this little parable tells me is that Britain’s future looks a little worrying as neither of the two management teams likely to run the country have a track record of success. And neither has either the ideas or the courage to solve Great Britain’s financial problems.

Oh dear, that’s ruined my weekend. I wish I’d never written this.

2 comments to Would you invest your savings in Great Britain Plc?

  • Paris Claims

    The MSM is continually going on about economic recovery whilst failing to mention the big picture. We consume more than we produce and the Government spends more than it takes. The government continues to chuck money around like confetti, whilst allowing hundreds of thousands of largely worthless immigrants to invade.
    The nation has been turned into welfare junkies and the welfare is going to run out.

  • Anthony

    Brilliant piece.

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