BQ Yorkshire Editor Mike Hughes meets a man with his finger on the pulse of the economy – Santander chief economist Barry Naisbitt
Barry Naisbitt is an utterly engaging, fascinating and knowledgeable man. Which makes him a really difficult person to interview.
You’ll know what I mean if you have ever had the good fortune to hear him address an audience. What he says and how he chooses to put his thinking across is so interesting that you forget to write it down.
The assembled audience in the Santander Breakthrough Box in City Square, Leeds, paid close attention to his predictions and interpretation and it was easy to see that this was a man of influence, whose years of experience had given him a rare insight into the market behaviour.
So having had to snap out of it and commit some words to paper, what makes this man so important? Firstly, I imagine he would say he isn’t. Important, that is. As chief economist at Santander he does a job for the bank by bringing pinpoint clarity to a wall of graphs and daily – hourly – indicators from economies, multinationals and households that, pieced together, tell him what has just happened and what it means for the UK at home and abroad.
“I have been telling people over the last two or three years ‘there has been a steady and cautious optimism’, and ‘things are improving’,” he says, adding “dot, dot, dot” to emphasise that there is more to come for the economy. “But perhaps we are now in the state where that seems a bit too negative.
“We have now had eight straight quarters of economic growth and that gives a feeling that the economy is improving and is a better place to be.”
That’s the thing about Barry. He makes the economy interesting and relevant. Alive. I think it was 30 slides he used later when he was addressing his audience in the box. That’s dangerous territory – 20 is taking a bit of a risk, but 30?
He is also an observer of the observers, analysing what the analysts are saying as if he isn’t one of them. “Economists tend to focus on growth figures a lot,” he says, “but it is things like employment, unemployment and investment – a whole range of things. I guess I’m not the sort of person who uses ‘upbeat’, but it is a lot more positive a picture than we have seen.
“It doesn’t mean that there aren’t things that could be a lot better, but these successive periods of growth are an important element. One thing I certainly take heart from is that the growth hasn’t been spectacularly quick, but it has been steady.
“While I suppose I would like the spectacular, it’s nice that we have the steady.
“For companies in particular, there is a desire to see things continually improving, without it necessarily looking as if the improvement is too rapid and in risk of turning around on itself again.”
Some Yorkshire businesses may say growth has to be fast, so there is something to show for the effort and you can move on to the next item. Others say careful, steady, progress means a higher quality product and the likelihood that the foundations will still be around in a century or so (or through the next Parliament, to return to the subject in hand). Barry seems to be a fan of the craftsman approach – good, home-made building blocks fitting together to make an impressive home that can be handed on through the generations.
“The pace of growth is a good thing for the newer firms as well,” he tells me. “Bank lending figures have strengthened, although still nowhere near as strong as they were in the years leading up to recession, but they are better than they were.
“One of the slides I use in my presentation shows that firms of varying sizes are keen to take on people, which means we are running at a high rate of vacancies in the UK, and all these things are positive.
“Entrepreneurs will see that there are opportunities and these are people who want to start their own business, perhaps because they have had that great idea, or want more personal control rather than working as part of a bigger company – or perhaps they see there are more options.”
Current financial decisions, particularly planning for the future, are going to be directed by the looming election. Mr Cameron isn’t seeking a third term, which might influence economic confidence one way or the other, but who will be running which bit of the country in a few weeks’ time is a vital cog in the UK’s machine.
I suggest the election is a spanner in those works, but Barry chooses his words better. “I don’t think things will grind to a halt, but big events like an election will obviously give people pause for thought and some may think they want to pause and wait for things to clear.
“But if I had something ready to go I would want to get it out to market as quickly as I could.”
Big events like the election and Greece’s predicament aside, he agrees the general climate seems bright for businesses. “We have been through a prolonged recovery and, looking around, the US is growing at quite a respectable rate – snow permitting – and Eurozone policy is now much more accommodating.
“The consensus of external views is that UK growth will be about the same this year as last and Eurozone growth will be slightly faster than last year. There is no expectation I’ve seen that growth is going to slow in a dramatic way. Regional and national economies need to have a long-term view just as much as any investor or manufacturer and while Barry is making it clear that the indicators are hugely variable and need watching and cross-referencing minute by minute, there are some things to look out for.
“We all know we have incredibly low inflation at the moment, and it could even go slightly negative for a few months this year – that seems on the cards largely but not totally due to low oil prices.
“Very low inflation in the short term means we will be starting to see real earnings picking up and that will be followed by consumer demand. Unless something from left field comes to knock us off course, there will be a more solid background for households and people selling to households.
“I also think we could be entering a period where we no longer expect growth to be very rapid and we start to get used to the idea of it being reasonable at two or two and a half per cent.
“This gives companies more opportunities to actually sell their products.” This down to earth analysis and clarity of thought is also applied to the next big step for growing and confident firms – exports. “The slow Eurozone growth rate has clearly hurt our exports, so if we see those markets picking up a bit, that would be positive for us. But equally as important is the impetus for British firms to look further afield.
“Santander has played its part in that, particularly through our connections in Latin America, but those further markets are the ones that are growing more rapidly and it is important that companies become more connected to those markets.”
Those international lessons can also be applied at home. When Jim O’Neill, former chief economist at Goldman Sachs (and Sheffield University graduate), coined the acronym BRIC to identify and link as a potential markets Brazil, Russia, India and China it transformed the way those markets were perceived. Around the UK there is an ongoing push to have companies speak with the same regional voice and work together ‘for the greater good’.
Barry sees the value in that for Yorkshire, but “there is a danger that people will think we’re all the same – which we clearly aren’t.”
So there is a balance to be struck where the pride of representing Yorkshire and being a player in its economy is highlighted alongside the individuality of its ‘members’. Different circumstances will bring out the best in different companies and perhaps that individual success, multiplied so many times, is Yorkshire’s unique strength.
But regionally and nationally we can’t stop ourselves wanting to do more and Barry certainly isn’t taking his foot off the accelerator completely. “There is definitely a danger in resting on our laurels and not continuing to seek out those new opportunities. I don’t think the urgency to grow is lacking at the moment, but if these factors we are seeing don’t stimulate activity, then I don’t know what will.
“For companies here and further afield, standing still isn’t an option – but then I’m not sure it ever was.”
Barry Naisbitt will quickly deny he is anything special. He will say he analyses and reports. And he would be right. But then a 40-year-old Rolls-Royce has a wheel in each corner just like a 40-year-old Skoda. But that doesn’t make them the same.
Trust me – Barry has the touch of class.