Article published by The Guardian on 26 February 2017
Written by Will Hutton
Featuring: Big innovation’s purposeful company taskforce proves that companies which put their purpose before profit outperform companies that don’t. Change could happen. Purposeful companies could be built.
Our economy is at a watershed. We need a new capitalism that will stop firms thinking in the short-term.
It may have been nine years ago, but the financial crisis continues to throw its long shadow over Britain. Last week, RBS, at the time of the crisis the world’s biggest bank, announced another stunning loss of £7bn – so chalking up cumulatively some £58bn of losses since 2008.
It is now even clearer than it was at the time that had the government not stepped in, taking a vast £45bn stake, RBS would have gone bust, threatening a more widespread banking panic with cascading consequences hard to contain. At the very least, Britain would have had an even deeper recession – and much slower recovery. At worst, there would have been a full-scale depression.
In one way, £45bn has rarely been better spent; but, in another, a clutch of hard questions that would have been asked if the bank had gone bust were avoided. How could it be that RBS’s managers and shareholders could ever have allowed it to grow so large when so much of what it was doing was not just valueless, but actively value destroying? Why was the wider financial and regulatory ecosystem of which RBS was a part not more alert to what was going on, and instead, to an extent, egging the bank on? What system could permit a business horror story with such near-calamitous results; and even so was part of an inequitable capitalism that helped trigger the resentments contributing to Brexit?