At a time of seemingly fearful headlines it is so easy to be dragged down into a fit of financial depression. Thus all the more reason therefore to remember that the world is in fact not ending quite yet and that the global economy grew by just over 5% last year. Sadly though, of course, this is not spread evenly around the world. Welcome then to a world of two halves – the vibrant developers and the indebted developed.

With serious warnings from the IMF there have been mutterings that more should be being done, not just in the UK but throughout the developed nations and especially the US, UK and the Eurozone. Much of the media discussions this week have been around how the Governments can try and get things moving and especially here in the UK. However, with politicians often caught up in their own rhetoric, they tend to find it embarrassing to change their plans and policies in public – saving face rather than necessarily facing reality. There comes a stage when even King Canute‟s advisors must have realised the flaws in their knowledge of tidal flows in the English Channel. One of their descendants might well have become Chancellor of the Exchequer and consequently realised that things have changed and thus some policies might have to be „adjusted‟. They should have listened to John Maynard Keynes, who famously said “When the facts change, I change my mind. What do you do, sir?”

However, the very fact that mention has been made of potentially a „Plan A+‟ to replace „Plan A‟ if not an actual Plan B, means that we must be being softened up for some form of „adaptation‟ of policy. Although this is not just an issue about new policies, but rather about giving confidence to the country that not only is something being seen to be done but also that both consumer and businesses can take greater confidence that things will eventually improve. It‟s all about confidence.

However, let‟s put things into perspective, the global economy (although growing) seems to be slowing and thus being able to get an economy to export more when others are also weakening has all the likely success of trying to light matches in the rain. Whilst all the focus is on the austerity measures, perhaps we would be better to also focus on the growth prospects. So what to do? The answer is to get money moving. If we can increase the velocity of money through the economy we can encourage greater expenditure and wealth creation: the slower it flows, the slower the growth. It is just like trying to push water through our plumbing system – and if we don‟t, it will fur up.

Firstly, the UK is quite likely to set up around 400,000 new businesses this year – we may not be a nation of shopkeepers (thank you Napoleon) but we are a nation of small businesses. So why not help here? After all, small businesses create jobs. The Government could introduce a „start ups‟ holiday from tax, national insurance, business rates and employment rules for say three to five years. Add this to the planned Enterprise Zones and this could create a compelling entrepreneurial spur for action.

Secondly, get rid of Stamp Duty on housing transactions.

It will encourage more moving, thus certainly boosting new expenditure on kitchens, bathrooms, etc. and probably earn
more tax revenue in VAT than Stamp Duty– but it gets more money moving. The earnings from Stamp Duty I believe are less than £6bn and far less than VAT at some £83bn. It is a regressive tax that deters expenditure, not encourages it.

Next, create direct incentives to get house building moving – good for employment and good for expenditure and there is a demand that grows and gets more money moving. However, this would also require action on the banking and finance side, but that may be for another time.

Now bring forward the infrastructure plans from roads to rails and broadband to bridges. This not only encourages expenditure but we also need the updated facilities for the economy. It is also being seen to be doing something. Personally I think we can be a bit more imaginative than a high speed train to Birmingham (and beyond, eventually) and have a more direct and shorter term positive impact. All of this helps confidence, so that although we all know we have a serious overdraft (deficit) problem, if we can see things are being done and showing that there is light at the end of the tunnel, then we will all feel more positive.
Oh yes and for some more finance for this? How about some tax free „Infrastructure bonds‟ whereby new money can be pulled in to pay for the infrastructure projects and not increase the Government‟s own debt? Could this raise more new money than the 50p tax threshold?

And finally...... more news of the growing air of liberalism sweeping The People‟s Republic of China. Reuters reports that episodes of talent show Super Girl, akin to American Idol or the X Factor, were supposed only to run for a maximum of 90 minutes, according to rules set in 2007, but sometimes exceeded the limit.

Hunan Satellite Television, which produces Super Girl, has agreed to follow the broadcast regulator's ruling to remove the show and replace it with public service programming. The newspaper quoted deputy editor-in-chief Li Hao as saying, "Instead, the channel will air programmes that promote moral ethics and public safety and provide practical information for housework". Perhaps we could let them have a peak at the Jeremy Kyle Show to really have a demonstration of public ethics and moral behaviour.

"I believe the reason that forced the administration to 'regulate' this program is that some television hosts in the programme made inappropriate comments and some did not dress properly," Jin Yong of China Communication University, told the paper.
China routinely censors anything it considers politically sensitive or offensive, from songs to films, in contrast to the stirring patriotism fare it promotes on mainstream stations, though widespread piracy means bans are often easy to skirt via bootlegged DVDs, or on the Internet.

Super Boy, another singing contest, was ordered in 2007 to show only „healthy and ethically inspiring songs,‟ avoid „gossip‟ and not show „bad taste‟ scenes of screaming fans or tearful losing contestants, the China Daily said.

Well given that I now have access to over 900 channels and still can‟t find anything I want to watch, perhaps a programme on „practical information for housework‟ could take off – „Strictly Hoovering‟ or „Britain‟s Got Cleaners‟?

Have a good week.

Justin A. Urquhart Stewart Director Seven Investment Management Limited