The Partners of Crescent Search & Selection make no claim to be macro economists but we have argued for years that there is a need for more levers which can be used to bring immediate control to the economy and react to inflationary pressures.

Compared simply, there are 5 levers available for immediate movement to control a car in a stream of traffic (accelerator, brake, clutch, gear box and steering wheel) but only one such lever to control the economy and inflation (bank interest rate). Is it enough?

To abbreviate our thinking over the years, there are probably two main forms of inflationary pressure; high street spree buying (including houses) and wage inflation. 

Should not the government have seen recently that borrowing by individuals was getting out of control (now approximately equal to two year’s GDP and therefore impossible to repay).  The simple control lever could at least have been a variable requirement on deposit percentage of any item being bought on credit.  A level which could be moved at very short notice and varying from, say, a minimum of 2 or 3% in hard times up to, say, 20% or more in times of plenty.

Wage inflation could be controlled by a similar lever by moving the rate of NI contributions. Higher NI would encourage workplace efficiency and the government could store the additional revenue raised to be spent on financing major capital schemes (such as building new railways) when unemployment is subsequently rising.

There are plenty of counter-arguments of course but one former (and well regarded) Chancellor of the Exchequer has agreed that the concept of multiple rapid response levers including the two mentioned here would certainly be effective.  He did admit somewhat wryly however that it would not be exactly a major vote catcher!

If you think that there are more levers or have strong thoughts in this area, do feel free to respond.

What this has to do with our skills in senior management and professional staff recruitment is debatable but at least in that area we do claim to be fully informed rather than in the area of macro economics!