Paying the price

WHEN a successful company owned and run by its employees feels the need to cut its staff bonuses, it shows that the recovery of the country’s economy is fragile at best.

Falling profits mean that staff at the John Lewis Partnership, the retail bellwether which operates both John Lewis and Waitrose stores, are braced for a bonus cut for the first time in three years.

There will be many who feel that these 77,000 employees – known as partners – are fortunate to be working for a company which is able to offers such bonuses.

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Yet that it is making cuts for the first time since 2009 is not necessarily a reflection on the workforce; it is in their interests to offer the best possible service. It is a clear warning sign that few companies are immune from the wider pressures on the economy.

Even though the firm which has taken on the mortgage books of Northern Rock and Bradford & Bingley has increased its repayments to the Treasury to more than £2bn, the country still faces a long and challenging road to recovery. More than £46bn is still owed from this one deal and it could take 15 years to honour this.

The message which Ministers and banks must take is that securing growth – that is sustainable and not fuelled by reckless lending – is all important.

This goal must underpin the way in which banks get the economy moving by lending to businesses and the steps which Chancellor George Osborne takes to ease the cost of living for hard-pressed taxpayers without undermining the need to tackle the deficit.

Britain do not need to look too far across the English Channel to mainland Europe to see the consequences of failing to achieve this.

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