Well no-one said it was going to be easy. After all, the UK’s financial deficit position is dreadful, and I think by now that most of the population has received that message quite clearly. However, some of the rhetoric needs to be far more precise than much of the political ‘band standing’ that goes on. A good example has been some of the references to the UK’s national debt. Yes, it is high and a daily approximate cost in interest of over £125million is certainly an awesome figure, but the UK in fact does not really have a debt crisis; we just have a lot of it. Our national funding for government debt is over ten years so the problem, although needing to be addressed, is not necessarily such an immediate issue.

What the UK does have is a major problem with its deficit with more being spent each year than coming in. This is the unsustainable element that has to be addressed. Unfortunately, such bigger picture issues are lost when the question of the future of our local amenities, like your nearby elderly daycare centre, is at stake. Most of us realise that we have to address this issue, but of course are far happier when it does not impact on our own area!

So, what the brighter politicians have to do is not just fill us with doom and gloom. After all, real income levels and higher taxation has already had its impact, but they also have to provide us with the leadership to show us the way out of the ‘slough of despond’ (or swamp of despair). So where can this come from? The answer we are told from Number 10 is from growth.

Thus, now is the time for some imaginative, constructive, radical and if possible inspirational ideas to start rebuilding confidence – and confidence is one of the key struts of a successful economy.

The good news for young George Osborne is that despite the economic shrinkage in the last quarter of 2010, he has had some bumper tax receipts in January thus giving him a little more wriggle room for a package of growth initiatives and incentives which will no doubt be in the forthcoming Budget.

One thing that is also worth highlighting is that growth encouragement does not have to be sobriquets for cash ‘give-aways’, as these all too often disappear like water into sand. Rather, George can look to be more creative with reformed taxation and an effective programme of tax incentives.

I am sure he has had no shortage of ideas being thrown at him but let me add my tuppenceworth as well.

Firstly, the old EIS and VCT schemes, which have served the market well, could be brought up to date to focus investment more effectively towards the ‘SME’ sector. This would not fill the hole already there but could form part of the package to foster more attention to this area where we know the UK economy is likely to respond.

I would also extend this to the notion of Enterprise Zones to foster new investment. These have had a patchy record but there have been some notable successes where entrepreneurialhotspots (especially around universities) attract further investment interest.

Secondly, the banks’ guarantee schemes. Some of the key dates for these are coming up and they need to be restructured and extended. Simple government guarantees should make it easier for banks to lend and are a lower cost way of supporting the banking system, as of course they only become painful when the guarantee is called upon. If the government wanted to be more radical it could even use the vehicle of the RBS, which it already owns, to act as the lead ‘national investment bank’ to provide guarantees which would encourage other banks to follow in behind them.

One guarantee that used to be a well known trade support was the ECGD (Export Credits Guarantee Department). Sadly, during the days of the financial services boom, such an old fashioned structure as an exports service seemed awfully outdated. Yet this was often the backbone of major export structures and was supported by global departments of the major UK international trading banks like HSBC, Barclays (especially when it was BBI), Standard and Chartered, Lloyds (BALSA in South America) and the old Midland bank. Alas, when trade banking gave way to investment banking so did the profile of the ECGD. Now however, I hope it is to be regenerated by the appointment of the eminently qualified and experienced Stephen Green, former chairman of HSBC, as Minister for Trade with responsibility for ECGD and UK Trade and Investment.

The question I have though is just how many experienced ‘international trade’ bankers are left who would understand the difference between their revocable, irrevocable, confirmed or not, transferable or even Back-to-Back, Red Clause and Revolving Letters of Credit.

Next: Stamp Duty. Forgive me for mentioning this again, but this is a regressive tax that acts as a deterrent to spending and housing mobility. The government is earning pitiful sums from this source – because there aren’t very many transactions! The government would earn, I suspect, a lot more from VAT on all the decoration and repair carried out as a result of house moves – so remove the barrier!

There is also a related issue here which could assist the housing market and that is to reform the leasehold legislation which is far too focused on short term leases and does little to encourage long term rental. This would be especially beneficial for all of those who are going to find it increasingly difficult to obtain a mortgage over the next few years.

Capital allowances for Investment and Plant write-offs. Last year’s Emergency Budget showed that if there is one thing the Chancellor of the Exchequer can’t resist, it is fiddling with the capital allowances rules. The changes to come into effect from the 1 April 2012 included a reduction in the AIA (Annual Investment Allowances) from £100,000 to £25,000; a reduction in the main plant and machinery capital allowances rate from 20% to 18%; and a reduction in the ‘special’ (i.e. lower) rate of capital allowances from 10% to 8%. Well maybe it is time to stop fiddling and look at the bigger picture of encouraging further plant and equipment investment.

There has been a whiff just recently of the reform to Pensions and opening up the usage of these financial ‘lock boxes’ by their beneficiaries. Whilst I understand the concept, I do fear that allowing reckless plundering of retirement savings as being a recipe for future disasters. However, controlled application of a proportion of family pension funds into longer term business investments (and not holiday homes) could be very constructive, especially if pension funds are given life beyond that of the current contributor and providing longer term family investment and value. Time for some original thinking here?

There is one other crucial issue for growth and that is effective leadership. One does not require the unconvincing grinning enthusiasm of New Labour, but equally we don’t need the air of sustained gloom from our Chancellor. What is required is measured communication of what has been achieved so far, despite the pain, and what the constructive prognosis is for the next stageand beyond.

Probably the best phrase is that of the unofficial motto of the Royal Tank Regiment "From Mud, Through Blood to the Green Fields Beyond".

Also, when does debt become good debt rather than bad debt? The answer in my view is when it is investing and not just current spending. Gordon Brown tried to differentiate between these types of debt, but certainly this became rather confused as his cycles were fudged and expenditure announcements baffling. However, the opportunity to lead investment in strategic projects, especially around infrastructure, is both an economic and confidence building issue.

Obviously we could point to the HST2 train initiative but to me this is too far away to be tangible for most (personally arriving 21 minutes earlier in Birmingham in fifteen years time isn’t really the point). How about the regeneration of our power capacity, power grid (and certainly not those acres of silent and often seemingly static windmills) and improving the current transport structures?

And finally........a great headline from Quincy, Illinois – “Driver passes out at wheel after getting tongue pierced”.

Jared Drew Hill, 27, was driving a Dodge Durango and approaching an intersection, where he stopped. The engine revved where upon the vehicle went through the intersection, left the street about mid-block and struck a traffic sign at the mouth of an alley on the east side of the road. It then continued north through a yard and struck the southwest corner of the house, according to Quincy Police.

Hill sustained minor injuries. The person inside the house was not hurt, but the house has both exterior and interior damage.

Hill told police he had just come from the Quincy Mall, where he had received a tongue piercing and was heading home. Hill said the last thing he remembered was driving north when he apparently passed out.

Obviously piercing tongues does not align itself with piercing intellect.

Have a good week.
Justin