February 20, 2009 in Entrepreneurship

Talking up Britian

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In the last few weeks, I have watched quite a few docudramas about Margaret Thatcher. Now had I lived in Britain during her tenure, I am sure I would most likely have disagreed with many of her political decisions. However, I admire her conviction, passion and all round love for Britain. Plus, she didn’t govern by looking at polling data and she wasn’t afraid to be vocal with her views. Everyone knew where she stood. She had a backbone, maybe even some “balls.” This seems to be lacking today from most British politicians irrespective of political party. Thus, I found it quite refreshing to hear that the business secretary, Peter Mandelson, had launched a foul-mouthed tirade against the Starbucks CEO for talking down the British economy.

Mandelson launches tirade at Starbucks boss over attack on UK economy
Andrew Clark in New York, guardian.co.uk, Wednesday 18 February 2009
The business secretary, Peter Mandelson, has launched an extraordinary tirade against the head of the Starbucks coffee empire, accusing him of spreading gloom and overly denigrating the state of the British economy.
Tonight he expressed regret at the tone of his outburst – but not the sentiment.
Earlier, angered at remarks by Starbucks chairman, Howard Schultz – who said the UK was in an economic “spiral” with “very, very poor” consumer confidence – Mandelson had accused him of spreading unnecessary misery and speaking out of turn.
At a diplomatic cocktail reception in New York, he said: “Why should I have this guy running down the country? Who the fuck is he? How the hell are they [Starbucks] doing?”
Mandelson’s remarks, made in front of journalists at the official residence of the British consul-general, came amid mounting concern in diplomatic and ministerial circles over hardening US opinion towards Britain’s economic woes.

British officials have been trying to persuade US economists and commentators that alarm over the country’s recession is becoming exaggerated.
Earlier in the day, Schultz singled out Britain as a source of anxiety for Starbucks – which has stores in 49 countries – during an interview with the CNBC television channel.
“The place that concerns us the most is western Europe, and specifically the UK,” he said. “The UK is in a spiral.”
He said it had taken a year to 18 months from the beginning of the credit crunch for consumer confidence to fracture in the US, but the deterioration had happened far more quickly in Europe once financial cracks appeared.
Asked about his biggest concerns, Schultz said: “Unemployment, the sub-prime mortgage crisis, particularly in the UK, and I think consumer confidence, particularly in the UK, is very, very poor.”
A charismatic and often outspoken entrepreneur, the 55-year-old built Starbucks up from a nascent operation in Seattle in 1982 to a global high street brand.
His wealth was estimated at $1.1bn (£770m) by Forbes magazine two years ago, although he is thought to have since slipped below the level of dollar billionaire.
Mandelson heard Schultz’s remarks while waiting to appear on the same television show and, once on screen, immediately took him to task.
“The UK is not spiralling, although I’ve noticed Starbucks is in a great deal of trouble – but that might be because of their over-expansion given the state of the market,” he said.
“So please don’t project Starbucks on to the UK economy as a whole.”
A government source said tonight that Mandelson regretted his language, but not the sentiment. British officials are becoming increasingly concerned that foreign economists and business leaders are exaggerating the scale of the downturn in the UK, leading to a potential collapse in inward investment.
Starbucks responded to Mandelson’s comments by insisting that it was still committed to the UK.
“It is a difficult economic situation in the US and around the world. Please be assured that Starbucks has no intention of criticizing the economic situation in the UK.”
“We are all in this together and as a global business we are committed to each and every market we serve,” said Starbucks.
And speaking in Barcelona this morning, trade minister Mervyn Davies insisted that the UK is not losing its position as a financial powerhouse.
“People who write off London as a capital markets centre – they do it at their peril,” said Davies.
Starbucks revealed a 69% plunge in profits to $64.3m for the three months to December. It announced that it was shutting 300 stores, in addition to 600 closures last year, at a cost of nearly 7,000 jobs.
According to official figures, Britain’s economy shrank by 1.5% in the fourth quarter of 2008 in comparison to the third. Unemployment is approaching 2 million.

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