The UK economy is a known mess.
In Q2, the economy shrank 0.7%.
Not only is the country back into a double-dip recession, but the economy is even growing slower than the Eurozone, where Q2 GDP only shrank 0.2%.
A big culprit is the austerity agenda of Prime Minister David Cameron, who came into office in 2010. Cameron cut government spending, with the aim of restoring confidence and unleashing the private sector.
The path has been such a flop that economists who supported David Cameron when he came into office are now urging him to back off, and re-pursue an agenda of infrastructure-driven growth.
But in the eyes of Cisco CEO John Chambers, Cameron has successfully pursued a pro-growth agenda.
After Cisco earnings came out, Chambers was on CNBC with Maria Bartiromo, and he said the following:
MARIA BARTIROMO: In terms of the US, we have so many issues that we’re talking about whether it be the fiscal cliff, and certainly the unemployment story. What do you think it will take to shake up things in the U.S. in terms of getting growth moving again?
JOHN CHAMBERS: I think it’s simple. Regardless of who is President, we have to see what they did in the United Kingdom or Canada. The governments had a very pro-growth environment working with businesses saying what do we do to create jobs, getting consumer and business confidence up and that means predictability. We have to be a great business nation and we will add head count and go. that’s exactly what Mr. Cameron is doing. We can learn a lot from both them them.
Later in the segment, Chambers delved a little more into what he likes about the UK, and it mainly seemed to have to do with favourable tax treatment. The UK doesn’t tax overseas repatriated cash the way the US does. This is a big issue for global tech giants, like Cisco, which have epic piles of cash, most of which is overseas.
Still, the idea of Cameron being very “pro-growth” is not only theoretically wrong (Cameron advocated a policy of contraction) it’s actually wrong: The UK economy is an experiment gone awry.
Also in the interview, Chambers says he’s a pretty big Romney supporter, but mostly he sounded a ton like a lot of the Fortune 500 leaders you hear, talking about bringing back confidence, restoring certainty, and just being more “pro-growth.”
But if his definition of pro-growth is an economy contracting 0.7% and doing worse than the Eurozone, but having tax policy that’s favourable to Cisco, then it’s a pretty big warning that when CEOs give policy advice they should be taken with a big grain of salt. If this is the advice he’s getting, it’s probably smart that Obama isn’t meeting with his jobs council.
Here’s the video. We’ve set it to start right at the part above.
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