Why oh why are councillors wanting to join the retail game?
I am glad to read that councillors are horrified by the adventurism of the Shropshire Council cabinet into retail investment.
Perhaps some financial responsibility may now prevail at County Hall.
From it’s Treasury Policy Document, the council is already borrowing money and interest rate risk on these liabilities appears to be un-hedged. At a time of increasing interest rates to unknown levels the council is proposing to invest in a highly speculative asset, retail development in Shrewsbury. Perhaps our council friends should take a walk around our Shropshire towns and see the quantity of empty retail premises.
Economic forecasts are for our rate of economic growth to fall from 1.6 per cent to 1.1 per cent, primarily driven by reduced retail consumer demand. As interest rates increase, so our debt-burdened population will spend less and less on goods and services and more on interest.
- Shrewsbury shopping centres - Shropshire Council cabinet agrees move to buy Darwin, Pride Hill and Riverside
It is a fact that footfall in the retail sector is also reducing because of more and more online shopping. The cost of much that we purchase will increase as our exchange rate weakens. The price of oil is again on the rise, adding to inflationary pressures which will again reduce the demand side of our economy.
How many more negative investment signals for the retail sector must be ignored before our council cabinet eventually sees sense? Clearly they have little or no knowledge of basic economics, interest rate markets, commodity markets or retail real estate markets. It would be interesting to know what our councillors’ qualifications actually are in this field. Did anyone ask why Standard Life really want out of this type of portfolio?
Given that the retail sector is hoping for a boost at Christmas, the proposed timing of the investment in late January, when consumers have less money than at any time of the year, seems to sum up the staggering level of unadmitted incompetence that exists in some of our (amateur) local, empire-building politicians.
While most councillors probably do not have experience or qualifications in asset-liability management, surely they can work with those who do?
Peter Cartledge, Tetchill