Ten years on from the financial crisis - what lessons have we learned?

Posted by Neil Ashbridge

Fri 28th, Sep

This month is the tenth anniversary of the collapse of Lehmann Brothers and reminds us all of the long term financial, social and political impact of the 2008 financial crisis.  The anniversary has also prompted commentators to make comparisons between the current economic climate and that leading up to 2008.

Notable was the Bank of England Governor Mark Carney's warning that the impact of a no-deal Brexit could be just as catastrophic for the UK as the 2008 financial crisis, impacting on unemployment, house prices and transport links with the EU. His comments were of course welcomed by anti-Brexit campaigners, and greeted with scepticism by those on the other side.  Neither side however pointed out that this was not a prediction but a worst-case scenario.

Looking back over the last decade it hasn’t been without sizeable economic shocks.  Such shocks would include the Eurozone debt crisis, a Japanese earthquake, a US/China growth soft patch and, more recently, President Trump’s protectionist threats (some of which are turning into reality).

Despite these economic shocks meaningful and quick support from policymakers across the globe has meant that the world economy is in far better shape than it might otherwise have been.  Clearly a lesson learnt from the 2008 financial crisis when more timely and synchronised intervention, especially by the ECB, might have been more effective in kick-starting the upturn and moving on from the crisis.

A second key lesson has been the importance of fiscal stability.  Over the last decade there have been co-ordinated global efforts to ensure that banks and other financial institutions are sufficiently robust to withstand major economic shocks and to continue to support the real economy in a downturn.  The economy is only healthy if business and consumers have confidence in financial institutions, markets and infrastructure.  In the UK the 2017 stress test showed that the UK banking system is resilient to severe domestic, global and market shocks and highlighted that banks were three times stronger than they were before the financial crisis.  It was also judged that the UK banking system could support the real economy through a disorderly Brexit.

The third lesson is the need for fiscal responsibility: in short it pays to repair the roof when the sun is shining.  While growth has been patchy since 2008 and governments continue to labour under large deficits, the need to take an aggressive policy approach during the recovery period is crucial i.e. removing support to create a higher base from which to provide support again when the need rises

While lessons have been learned in the last ten years, the effects of the 2008 financial crisis will take significantly longer to overcome.  And, the impact of Brexit –- deal or no deal – adds another uncertainty for the UK and the rest of the EU. 

In my experience, however, UK businesses tend to be pretty resilient.  But, what most businesses need, to continue to thrive and support economic growth is certainty, clarity and above all, the confidence that their voice is not only being heard but also heeded.

And finally...

This year's Chamber Annual Dinner Awards will be celebrating excellence in business. Our keynote speaker is Liverpool born Mike Moran, Chief Executive of Proton Partners International whose inspirational vision to create a better future for cancer patients on an international stage, is exactly what makes our business community amongst the best in the world. We hope you will be able to join us on Thursday 1 November to hear more about Mike's fascinating story. For more information on the dinner please visit here.

Leave a comment

Why now is the right time to take IoT seriously

Mon 27th, Jul

Guest blog by Alan Nunn – Communications Subject Matter Expert at CGI

How IoT can create a sustainable future for water

Mon 27th, Jul

Guest blog by Graham Hainsworth – Director Consulting in CGI’s Water Sector Business

Happy 9th Birthday 6th Door Ltd

Tue 19th, May

As I’m leaning on the stand-up desk in my makeshift home office, that over the weeks has been turned into a video and podcast recording studio

How to take back control of your water costs

Fri 13th, Mar

While most businesses already have a comprehensive strategy in place for their electricity and gas consumption, water management is often overlooked.

How to choose an energy consultancy

Fri 13th, Mar

Most business owners recognise the advantages of shopping around for the best energy deal, but without the time, resource and expertise to find the best tariff, it can be an almost impossible task.

Business energy: Don’t get caught out by rollover rates

Fri 13th, Mar

As a busy business owner, you may feel there are not enough hours in the day to secure your next energy contract. You know you’ll get around to it, but when you’ll get around to it is another matter.

Business water matters – Top 3 water saving tips

Fri 13th, Mar

Water is often referred to as ‘the forgotten utility’. While many large businesses are clearly focussed on their comprehensive energy strategies, it seems many are yet to implement a strategy around managing their water usage.

Know where your cloud data is stored or risk a GDPR fine

Thu 27th, Feb

For businesses who have chosen cloud-based data hosting services there’s a temptation to relax and think “great, we’re paying someone else to take care of our data, we don’t need to worry about it any more.”

Transparency plans could slow down region’s business growth

Thu 27th, Feb

Efforts by regional start-up initiatives that have led to Merseyside outperforming the rest of the UK when it comes to business growth could be hampered by new government proposals, a leading legal expert has claimed.

Backup or risk losing your business

Thu 13th, Feb

Maintaining a robust backup is hard work, it’s important to not only build the correct solution for your business and trust your IT support provider to look after it, but to also maintain a sense of urgency as a business owner to...