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| UK business 'too focused on short-term' | UK business 'too focused on short-term' |
| (about 7 hours later) | |
| Short-termism has become an "entrenched feature" of British business and is damaging economic growth, a business leader has said. | Short-termism has become an "entrenched feature" of British business and is damaging economic growth, a business leader has said. |
| In a report commissioned by the Labour Party, Sir George Cox said overcoming a focus on short-term gains was the only way to ensure the UK economy grows. | In a report commissioned by the Labour Party, Sir George Cox said overcoming a focus on short-term gains was the only way to ensure the UK economy grows. |
| He recommended making changes to executive pay so some rewards were based on longer-term results. | He recommended making changes to executive pay so some rewards were based on longer-term results. |
| Labour welcomed the review and said short-termism had "failed our economy". | Labour welcomed the review and said short-termism had "failed our economy". |
| Sir George, a former director general of the Institute of Directors, said the pressure to deliver quick results to the potential detriment of the longer-term development of a company had "become an entrenched feature of the UK business environment". | Sir George, a former director general of the Institute of Directors, said the pressure to deliver quick results to the potential detriment of the longer-term development of a company had "become an entrenched feature of the UK business environment". |
| 'Economic prosperity' | 'Economic prosperity' |
| He said: "Short-termism curtails ambition, inhibits long-term thinking and provides a disincentive to invest in research, new capabilities, products, training, recruitment and skills." | He said: "Short-termism curtails ambition, inhibits long-term thinking and provides a disincentive to invest in research, new capabilities, products, training, recruitment and skills." |
| This meant British businesses were not developing the "internationally competitive businesses and industries that are essential to the UK's future economic prosperity". | This meant British businesses were not developing the "internationally competitive businesses and industries that are essential to the UK's future economic prosperity". |
| The UK's Corporate Governance Code should be extended to ensure sufficient long-term incentives are incorporated into the pay of executives and non-executive directors, he suggested. | The UK's Corporate Governance Code should be extended to ensure sufficient long-term incentives are incorporated into the pay of executives and non-executive directors, he suggested. |
| The code could call for at least 30% of executive directors' pay to be deferred and based on long-term results, said Sir George. | |
| Changes also needed to be made to the rules for takeovers, he went on - so that investors and businesses could build for the long-term, adding that a new mechanism was needed to ensure major infrastructure decisions were made for the long-term and not subject to political cycles. | Changes also needed to be made to the rules for takeovers, he went on - so that investors and businesses could build for the long-term, adding that a new mechanism was needed to ensure major infrastructure decisions were made for the long-term and not subject to political cycles. |
| Sir George said the economy would only grow if short-termism were overcome, adding: "Economic growth needs to become an objective, with strategies to achieve it, not a forecast on which all other decisions are dependent." | Sir George said the economy would only grow if short-termism were overcome, adding: "Economic growth needs to become an objective, with strategies to achieve it, not a forecast on which all other decisions are dependent." |
| Shadow chancellor Ed Balls said: "Sir George's report sets out a clear plan for creating that more long-termist economy including radical reforms to executive pay, tougher rules on takeovers and encouraging longer-term shareholding and we will now study his detailed proposals as part of our policy review. | Shadow chancellor Ed Balls said: "Sir George's report sets out a clear plan for creating that more long-termist economy including radical reforms to executive pay, tougher rules on takeovers and encouraging longer-term shareholding and we will now study his detailed proposals as part of our policy review. |
| "It's vital that we take action to kick-start our flatlining economy, but now is also exactly the right time to make the long-term changes we need to make our economy stronger, more balanced and better able to attract new investment and create skilled jobs for the future." | "It's vital that we take action to kick-start our flatlining economy, but now is also exactly the right time to make the long-term changes we need to make our economy stronger, more balanced and better able to attract new investment and create skilled jobs for the future." |