CBI chief seeks regional funding model

THE twin shocks of the credit crunch and the recession will change attitudes to corporate leadership and finance for a generation, business group the CBI said today.

In a report – “The Shape of Business – The Next 10 Years” – the organisation says the commercial landscape may have changed forever, with a new era of collaboration, flexibility underpinned by new forms of business finance.

The study, based on the findings of a poll of 500 major companies sponsored by the CBI and business advisers Deloitte, reveals that business do not expect credit terms and the availability of debt to return to levels seen before the credit crunch.

CBI director general Richard Lambert said smaller companies would look for alternatives to ‘debt-driven growth’ and raised the possibility of a regional financing system.

He said: “Businesses want to adapt to a harsher credit climate by finding new sources of funding. Why not encourage new forms of institutions to finance the growth of small and medium-sized enterprises through equity and debt?

“And why not make it easier for companies to raise money locally, perhaps through new regional banking and investment institutions, rather than having to rely on a few very big players in London and Edinburgh?”

The report also suggests that businesses will reorganise and re-examine their approach to working with partners – from suppliers to universities, and even competitors.

Ongoing concerns over a ‘domino effect’ of supply chain failures and issues around trade credit insurance will compel firms to forge more collaborative supplier relationships.

It alo predicts that sustainability and ethics will become more integrated into the business modelin the future and that a more flexible workforce will evolve, assisted by developments in technology and training.

Mr Lambert added: “What we now need is a more balanced, less risky pathway to growth – one in which the short-term returns may be lower, but the long-term rewards for management success will be a lot more sustainable and secure.

“There are important questions around how businesses are going to finance growth and investment in the future. And in a more collaborative, less transactional world, closer relationships with customers, suppliers, employees and shareholders look like becoming the new norm.”