Blog: Dave LeggettCool heads needed

Dave Leggett | 10 February 2009

A relatively reassuring response to the banking crisis and subsequent global economic downturn has been the quick and coordinated actions by governments to firstly prevent complete international financial collapse and secondly act to support weakened economies (and companies).

Some will say more could be done, but there are some very big stimulus programmes in place or coming and they will eventually have some effect. Bad though these times are, things could be a lot worse.

And when we get to the second half of this year, the year-on-year comparisons – whether general economic or auto industry metrics – will be against already weakened numbers and therefore looking rather better than the first half. We should start to get a sense of having at least hit the bottom, statistically speaking, people looking for upturn.

But the issue of national government support for economies and indeed companies does not come without complications. Taxpayers will be concerned, and rightly so, that their financial support is properly targeted to national economic interests.

However, that's easier said than done. None of the major players in the auto industry are purely nationally based. And there's a danger that a beggar-thy-neighbour approach on state support could transition into something with a more protectionist slant. Government support packages and measures need to be carefully put together to meet taxpayers' concerns, broader national economic needs and still have a suitable fit with existing company strategies.

And the hope must be that international institutions remain robust enough to hold protectionist sentiment in check and that individual governments exercise some responsibility on the matter. A general bout of protectionism leading to less world trade and international investment would be bad news for everyone and put global economic recovery further back. Cool heads – and language – are needed now, more than ever.

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