The drug discovery pioneer: Zahid Latif

The drug discovery pioneer: Zahid Latif

The Pharmaceutical Journal
4/11 April 2015,
Vol 294, No 7856/7,
URI: 20068141
Royal Pharmaceutical Society
Report by Stephen Robinson


«Zahid Latif has worked in drug discovery projects across the UK and now leads efforts to promote innovative medical research collaborations between industry and academia.

»Industry pharmacist Zahid Latif is responsible for managing a £100m portfolio of investments supporting pioneering medical and health projects in the UK. He is currently head of healthcare at Innovate UK, an executive body of the government designed to support, fund and connect innovative businesses. Latif’s underpinning mantra, which has propelled him from his early work in drug discovery, is “keep your eyes open and do what intrigues you most”.

»“My goal is to make the UK the best place in the world to develop innovative ways of delivering health and care in the future, and grow UK businesses that help deliver these,” he says. “This involves working in partnership with many of the key players in academia, business and the health service, and funding projects that take people out of their comfort zone to help deliver this.”

»At the moment, his team is focused on projects around assisted living, stratified medicine, and cell therapy and regenerative medicine. In the project about stratified medicine —the concept of identifying the correct treatment at the right dose for individual patients— Latif’s team has brought together government bodies and medical charities to invest around £200m over five years to accelerate the uptake of this branch of medicine.

»Latif has worked at Innovate UK —formerly the Technology Strategy Board— since 2007, when he joined as lead technologist for medicines and healthcare. While in this role, he developed an £18m grant funding programme to boost the fledgling regenerative medicine industry in the UK.

»It was this work that led him to help establish the Cell Therapy Catapult Centre, an organisation designed to kick-start the UK’s cell therapy industry in response to recommendations made by technology entrepreneur Hermann Hauser in 2010. Since its formation in 2012, this centre has recruited more than 70 cell therapy specialists to help businesses move cell therapies to market and opened state-of-the-art laboratory facilities to help encourage collaboration on research.

»Latif, who now acts as a non-executive director for the centre, describes his contribution to its development as one of the highlights of his career so far.

»Joining the pharmaceutical industry

»Latif’s career began at Glasgow Royal Infirmary in 1992, where he undertook his pre-registration training after his BSc in pharmacy at the University of Strathclyde.

»While working as a locum in various pharmacy chains after registration, he studied for a PhD in pharmaceutical sciences, and joined the pharmaceutical industry in 1997.

»“Ever since my undergraduate degree, I had been fascinated by the lectures on how drugs were discovered and developed,” he explains. “It intrigued me the amount of exciting science and just pure luck involved in many of the earlier discoveries, as well as the drive of the individuals involved.”

»His first role involved isolating plant compounds for a natural products library to aid drug discovery at a company called Xenova Discovery. After two years with the company, he moved to MNL Pharma in Aberystwyth, Wales, where he led 13 staff across four teams in screening the in-house library for compounds including possible anti-cancer and anti-infective agents.

»After further roles in Hampshire and western Scotland (“Getting married, moving house four times, changing jobs three times and having two kids while doing my MBA at Cardiff University was an interesting time”), where he led a marine bio-discovery programme, Latif landed the role at Innovate UK.

»Get involved in pharmaceutical sciences

»Latif strongly recommends pharmaceutical sciences as a career choice for pharmacists considering their options. “Pharmacists have a huge opportunity to get involved in pharmaceutical sciences because of the breadth of training we receive at the undergraduate level and during our careers,” he says. “That gives us a huge advantage as we can translate from different disciplines; we have a broader understanding of chemistry, biology and physics as it’s applied to drug discovery and formulation, as well as what it means for patients.

»“My personal journey started in phytochemistry and analytical chemistry, and ended up in regenerative medicine and cell therapy, telehealth and telecare and precision medicine,” Latif explains.

»Where does he want to be in five years’ time? He says: “I aim to be involved in projects that intrigue and interest me and to continue working at the cutting edge of innovation development.” »


Johan Schot: «How to prepare for the next big economic transition»

How to prepare for the next big economic transition

The Malaysian Insider
Johan Schot*


«We are at the beginning of a second big transition. Our economies, our work and our lives will change hugely as we slowly adjust to the new demands of a technological age that could go one of two ways: towards a brutalised form of capitalism, or an inclusive one. It is a massive political responsibility for world leaders, but a neglected one. In Britain, as the May 7 election approaches, Ukip, immigration, and coalition partners define the debate instead.

»Politicians have always struggled with the very long term. In December, the UK government released its strategy for science and innovation. This sketched out a useful blueprint, and made financial commitments to 2021, but was immediately undermined by the home secretary as short-term immigration issues designed to win votes took precedence. This is always the danger when devising strategies for the far future, but this is an important time for our politicians to think strategically about how we encourage the inventions, technologies and collaborations which will define us for decades to come.

»New threats and opportunities

»The first big transition has been with us since the late 18th century, from the start of the industrial revolution and into the modern age. It has seen the West grapple with the advantages and challenges of mass-production, mass-consumption and industrial technology. Mills were built, forges fired, fortunes made; some of us got cheap clothing, cars and abundant food. Innovation was rapid, sometimes fraught, and certainly not carefully guided by government. It has delivered a world dominated by intense energy consumption, and by battles to secure access to natural resources. The second big transition need not be like that.

»The risks of drifting down the road of brutalist capitalism are real. We can see the warnings in newspaper headlines of today; from incessant economic crises, to the fear that new generations may be worse off than their parents, to the steep rise in inequality. There has been an employment squeeze on the middle class, in part thanks to a digital revolution which has only just started and whose massive impact is still ahead of us. There is also a slow but steady hollowing out of the traditional powers of the nation state, with many of today’s most pressing challenges beyond the capacity of any single country to resolve.

»The key problem is that we rely on old means to fight new problems. The modern way of providing for our basic needs is not sustainable in the long run. We are already causing climate change on an unprecedented scale and it is clear that we simply do not have the capacity to globalise the developed world’s current ways of providing food, energy, mobility, healthcare, and water. These problems will stay with us as economic growth returns, and they will probably worsen as time progresses —risking even more climate change, more profound social turmoil, more tensions and more war.

»Oiling the wheels

»We need to move away from a costly business-as-usual approach and, in effect, devise a “second modernity”. This is a phrase coined by the German sociologist Ulrich Beck —who died earlier this year— but which is redefined here. In this modernity we keep our ability to innovate, yet also find new ways of directing it towards what you might call a common good. To do that, we need more people on the inside. Not only firms and the state, but also consumers, citizens and civil society.

»There is a very good reason for this. It is clear that science and technology are hugely implicated in all these issues; modern society is built upon the idea that promoting “innovation” is extremely positive and will bring many wonderful things that make our lives easier and more productive. But it is also clear that there is a darker side too —new technologies can lead to massive unemployment, the pursuit of resources can lead to more violence and the further destruction of our environment, and the primacy of data collection can impinge on our privacy.

»Policy plans

»The first point is that policies designed to spark creativity in engineering, technology and science should stimulate investment throughout the entire process. And that means from invention, to development, to re-invention and distribution. We should not only work on the emerging policy areas such as nanotechnology and biotechnology, but also on the redesign of existing technologies to make them energy efficient.

»The goal should be to encourage experimentation beyond the boundaries set by powerful corporate or public incumbents. It is understandable perhaps that large fossil fuel companies have built a formidable power base, and that successful early technology companies have quickly scaled up. No surprise either that politicians have sought to foster their success. But it is now vital to challenge the dominant ways of thinking, and invest in alternative community led initiatives.

»There are four potential avenues through which to do this:

»Foresight: Anticipating pressure points and adapting in good time can give voice to a wide range of expectations about the future. It can also help us to orient investment decisions, and prevent investment which might lead to major corporate losses in the future. Companies could create advisory groups with NGOs to shape and prepare their research and development portfolios.

»Experimentation: We need to allow for bigger experiments, build more connections between them, and focus on experimenting with how they affect society. For example, many cities experiment with new transport services, such as electrical vehicles, buses on bio-fuels or hydrocells, but they do not collaborate much and mutual learning and building to scale simply isn’t there.

»Collaboration: Innovation policy should also call on state, business, academia and other parts of society. One example is the Climate-KIC which is a European public-private partnership, working together to address the challenge of climate change. It brings together government and business, but could work more with civil society too.

»Versatility: We need to go beyond specialist career paths and develop a next generation of leaders who understand the need to work in interdisciplinary teams, and combine technological and social aspects in order to innovate. Research councils should set up more programs where they stimulate this kind of collaboration. Big science and engineering funding should always go with a social science component not as an add-on, but as a crucial ingredient. —The Conversation, April 27, 2015.

»* Johan Schot is director of the Science Policy Research Unit at University of Sussex.»


Innovation, entrepreneurship can eradicate poverty: Union Minister Nitin Gadkari

Innovation, entrepreneurship can eradicate poverty: Gadkari

Zee News


«Concerned over suicides by farmers, Union Minister Nitin Gadkari on Thursday said India can wipe out poverty by promoting innovation, entrepreneurship and technology.

»“In the area of Vidarbha in Maharashtra, more than 10,000 farmers have committed suicide. I am working in rural areas and really understand it... Innovation, entrepreneurship and technology can eradicate poverty,” Road Transport and Highways Minister Gadkari said at the Global Sankalp Summit here, organised by business solutions firm Intellecap and industry body Ficci.

»About 2,000 small industries are being set up in Vidarbha region to provide employment to farmers, he said, emphasising on the need to promote innovation in organic farming.

»He said innovation, entrepreneurship and technology could change the socio-economic scenario and address India's basic problem of poverty by creating multitudes of jobs.

»Urging industry bodies to come forward to promote innovation among youth, he said India Innovation Foundation, Ahmadabad, alone had done 20,000 innovations and if tapped well these small initiatives could result in economic prosperity of the nation.

»Speaking at the same event, Science and Technology Minister Harsh Vardhan said his ministry is promoting an initiative 'Prism' wherein support is provided to start-ups and individuals, including scientists, technologists, farmers and students for converting innovative ideas into workable models or prototypes.

»“Technology Development Board has also collaborated with CII to create global innovation technology alliance” to leverage Indian creativity expertise, he said.

»Meanwhile, US Ambassador to India Richard Verma said the partnership between India and US has evolved through years from strategic priorities to the one that is now driven by innovation and technology.

»“India and US now work together in developing countries in Asia and Africa and triangular efforts showcase Indian leadership and know-how,” he said.

»He stressed on the need for more emphasis in areas of sanitation and water, saying, “2.5 billion people lack access to improved sanitation and 780 million people still do not have access to safe drinking water.”»


«Newsletter L&I» (n.º 50, 2015-04-27)

A semana do Canvas (BR)

O Canvas da Proposta de Valor na Prática [web] [intro]

Curso e Palestra Inovação no E-Commerce Utilizando o Business Model Generation Canvas [web] [intro]

Business Model Canvas. Com Prof. Sergio Seloti Jr. (Parte I) [web] [intro]

Startup One FIAP: Canvas proposta de valor & Exemplo de Canvas proposta de valor. Com o Diretor de Empreendedorismo da FIAP Marcelo Nakawa [web] [intro]

A semana do Canvas (PT)

Explicação do modelos de negócio da Vista Alegre [web] [intro]

The Business Model Canvas: Estrutura do custo [web] [intro]

Canvas: Este suíço recusa ser canivete para os fazedores de todo o mundo [web] [intro]

My Chief Officer: Modelo de Negócio / Business Model Canvas com processo de RESET [web] [intro]

La semana del Canvas (ES)

Cómo hacer un modelo de negocio con un canvas o lienzo [web] [intro]

Metodología Canvas, una forma de agregar valor a sus ideas de negocios [web] [intro]

Modelo canvas (lienzo) para la creación de un plan de empresa. Innovación pymes 2015. Con el prof. Juan Cabrera Revuelta [web] [intro]

Nueva Shooting Session: Think Tank para empresas basadas en el metodo #Canvas [web] [intro]

La semaine du Canvas (FR)

Le Carrier Management Canvas: un nouvel outil pour gérer agilement sa carrière [web] [intro]

Business model canvas: Une méthode efficace pour créer son business plan [web] [intro]

De Lagos à Abuja, les start-up dessinent le visage d’un autre Nigeria [web] [intro]

Testez la cohérence de votre projet avec le Business Model Canvas. Innover c'est pas compliqué [web] [intro]

The Canvas week (EN)

Business Model Canvas Explained [web] [intro]

'Ten Types of Innovation' App Gives Innovators a Canvas [web] [intro]

Business Model Canvas, Innovation, and Lean Startup Best Practices in Large Organizations (Peer Group Meeting Feb 10)[web] [intro]

Achieve Product-Market Fit with Value Proposition Canvas [web] [intro]

Licencia Creative Commons Licencia Creative Commons
4.0 Internacional


Business Model Canvas, Innovation, and Lean Startup Best Practices in Large Organizations (Peer Group Meeting Feb 10)

Business Model Canvas, Innovation, and Lean Startup Best Practices in Large Organizations (Peer Group Meeting Feb 10)

Strategyzer Blog
Alexander Osterwalder


«The Business Model Canvas and Lean Startup methodologies have become standards in the startup world. Yet, in large organizations they have only started to scale over the last 1-2 years. We’re often asked how to do it and how other organizations do it. In response, we are organizing the first peer group meeting of like-minded executives from large organizations who apply these methodologies.

»The objective of the meeting (which is kindly hosted by MasterCard at their HQ) is to learn from peer practitioners in other large organizations how to better apply and scale the Business Model Canvas and Lean Startup methods. The challenges of applying these methodologies in large organizations to design, prototype, test, and iterate business models are distinct from those in a startup context.

»We believe that this facilitated exchange among peers, of what works and what doesn’t, is the best way to help practitioners from large organizations advance and overcome these challenges. We have designed specific hands-on and interactive exercises to facilitate this knowledge sharing. We’ll share the collected learnings with participants and a summary of these learnings from the meeting on our blog, without revealing the identity of any of the participating organizations (the workshop will take place under Chatham House Rules).

»Participants will drive the topics addressed, and the knowledge, experiences, and best practices shared. Themes will cover – but not be limited to – the following:

»– Sell: Convince leadership.

»– Overcome: Remove obstacles to application and adoption.

»– Explore and Prototype: Create a mindset of exploring alternatives.

»– Innovate and Experiment: Shift culture change from planning and execution towards early, quick, and affordable experimentation.

»– Organize: Design structures to implement these tools and processes.

»– Scale: Spread tools and processes, boost organizational adoption.

»– Measure and Succeed: Find out if you are making progress and work towards results.

»– Your topic: Tell us what you want to learn most about.

»Has your organization adopted the Business Model Canvas, Innovation, and Lean Startup approach over the last year or two? Do you have lessons learned to share? Could you benefit from peer insights and their experience in overcoming some of the same challenges in a large organization?

»Limited spots are still available for participants from a few more organizations (download peer group meeting brochure). If you are interested and meet the participation criteria below, get in touch with us at enterprise@strategyzer.com. Participation is by application only.

»Participation Criteria:

»BM Canvas or Lean Startup adoption/working on adoption systemically at department or organization level.

»Senior position championing and managing the process.

»Organization size over 1,000 employees.

»Lessons to share (success stories, failures, major challenges your facing).

»Implemented BMC/Lean Startup into processes and working systematically with it at organization or department level for over 1 year already.

»Have you implemented the Business Model Canvas and/or Lean Startup in a large organization? Share your insights, challenges, and more with us.»


«Newsletter L&I» (n.º 49, 2015-04-20)

A semana do infográfico (BR)

O mundo dos veículos autônomos [web] [intro]

Ferramentas para seu Negócio [web] [intro]

Prefeitura de Maceió comemora 100 mil fãs no Facebook [web] [intro]

Como usar o Instagram para alavancar seus negócios [web] [intro]

A semana do infográfico (PT)

Ébola. Temos uma infografia para lhe explicar o que está a acontecer no mundo (Outubro de 2014) [web] [intro]

Conheça o universo das startups em Portugal [web] [intro]

A Re-Evolução do Marketing Continua! [web] [intro]

Prestashop vs Magento vs OpenCart [web] [intro]

La semana de la infografía (ES)

Seducir a las tribus: son grupos de jóvenes sub 25 que permiten anticipar las tendencias [web] [intro]

Datos actualizados de Smart Social Sicav [web] [intro]

El consumidor conectado en España [web] [intro]

El infográfico del PSG: Todos los detalles del rival del Barça en los cuartos de final de la Liga de Campeones [web] [intro]

La semaine de la infographie (FR)

L'innovation, un moteur pour les entreprises [web] [intro]

Débrider l’innovation: enjeux pour les entreprises et l'emploi, défi pour les politiques publiques [web] [intro]

Les chiffres clés de l’innovation française [web] [intro]

5 pays avancés qui résistent à la crise [web] [intro]

The infographic week (EN)

The Rise Of The Startup Factory [web] [intro]

How technology is saving lives [web] [intro]

Africa and Global Mobile Money Landscape [web] [intro]

The Rules of Engagement for the App Economy [web] [intro]

Licencia Creative Commons Licencia Creative Commons
4.0 Internacional


«Newsletter L&I» (n.º 48, 2015-04-13)

Fab Lab (BR)

Ex-alunos do Ciência sem Fronteiras criam espaço Brasília Fab Lab para inovação [web] [intro]

O complexo cultural Memorial da América Latina tem o primeiro Fab Lab comunitário do Brasil [web] [intro]

Fab Lab Floripa. Cultura maker e fabricação digital [web] [intro]

O que é um Fab Lab? Eduardo Lopes (Beta Garage 2) [web] [intro]

Zona Económica Especial (ZEE) (PT)

Prémio distingue qualidade da Zona Económica Luanda-Bengo [web] [intro]

Cristóvão Bolacha: Os (enormes) desafios da nova Zona Económica Especial [web] [intro]

Zona Especial de Desenvolvimento Mariel [web] [intro]

Líder da UNITA Isaías Samakuva visita Zona Económica Especial de Luanda [web] [intro]

Música (ES)

La Sinfónica de Galicia opta al premio Classical:NEXT Innovation Award [web] [intro]

fiiS (Festival Internacional de Innovación Social): Celebramos el Espíritu de Cambio. ¡Para cambiar el mundo hay que pasarlo bien! [web] [intro]

Con la Orquesta Sinfónica de la Comunidad Autónoma de la Región de Murcia: primera edición del programa Músicos en el Aula (Consejería de Educación, Cultura y Universidades de la CARM) [web] [intro]

Music Hack Day 2015: Wearables e interpretación musical [web] [intro]

Santé (FR)

Contre l’hépatite C, une nouvelle approche innovante [web] [intro]

Une machine innovante face au cancer à Boulogne [web] [intro]

Une technologie innovante pour venir en aide aux aveugles dans les transports en commun [web] [intro]

L’innovation au CHU Dijon Bourgogne à l’honneur dans Sciences & Avenir d'avril [web] [intro]

Austerity (EN)

John Redwood: How free enterprise and innovation cut austerity. After the crash, innovation will get us moving [web] [intro]

Christopher Dembik: How France lost its economic oomph [web] [intro]

Ambrose Evans-Pritchard: Exhausted world stuck in permanent stagnation warns IMF [web] [intro]

Rob Edens: Russian tactics on Ukraine likely to backfire [web] [intro]

Licencia Creative Commons Licencia Creative Commons
4.0 Internacional


Rob Edens: Russian tactics on Ukraine likely to backfire

Russian tactics on Ukraine likely to backfire

Rob Edens


«While the media’s attention was focused on the tragic events that led to the first airplane crash on French soil since the tragic 2000 Concorde accident, the US and Russia tested a total of three inter continental ballistic missiles in what is definitely the most shocking example of sabre rattling since the end of the Cold War.

»Trapped by their own rhetoric and hot on the heels of the simmering Ukrainian crisis, both Moscow and Washington have so far escalated the crisis with each new week to dangerous levels.

»While for some commentators Russia’s aggressive rhetoric is cause for alarm and signals the dawn of a ‘new normal’ where the ideals of a peaceful European continent have been more or less quashed, a more measured approach would point out that Moscow’s brazen efforts are nothing more than signs of desperation.

»Indeed, Russia seems to be running out of options in Ukraine, resorting to brute force to intimidate Western governments, knowing full well that it cannot impose sanctions or cut off gas supplies without mothballing its own flagging economy.

»According to this line of thought, the more aggressive Russia becomes, the greater the desperation within the Kremlin for a quick way out – in a world where wars are costly affairs, the paper tiger roars harder than it can bite.

»Moreover, the Kremlin knows that obtaining a sphere of influence should not cost it the very capacity to exert power over it.

»If one were to give credence to the second school of thought, then it means that soon we will reach a stalemate on the chessboard of Europe, where both parties will be unable or unwilling to make the mistake of taking their bellicose rhetoric to its ultimate logical conclusion.

»What should we expect?

»With a bit of wishful thinking, Alexander Motyl, a Ukrainian-American commentator, noted a few months ago that “some combination of cold war, cold peace, and hot war will transform Ukraine into a South Korea, Taiwan, or Israel”, a nation living under the looming spectre of imminent war but endowed with strong institutions and a healthy democratic system.

»Indeed, violence and the persistent fear of violence have usually acted as a catalyst for states to enhance their security, providing the banner underneath which the various actors can unite and spearhead economic and political development.

»The other side of the coin in the Ukraine crisis is that Russia’s long shadow should force the country’s political class to work together in order to weaken the Kremlin’s grip.

»Post-Budapest reality

»Ukraine’s security and territorial integrity used to be based on the guarantees hashed out in the 1994 Budapest Memorandum, where the US, Russia and the UK extended security guarantees to Kiev in exchange for its nuclear arsenal.

»As the memorandum was essentially shredded after the annexation of Crimea, Ukraine is in a rather delicate spot. Since the West is locked in a game of cat and mouse with Russia, where the extent of support offered to Ukraine is conditioned on the Kremlin’s moves, it’s obvious that Ukraine must stand on its own two feet and muster the strength to help itself.

»The $17.5 billion financial package offered by the International Monetary Fund (IMF), albeit necessary, comes with painful strings attached.

»Starting from April, the centrepiece of the reforms demanded by the IMF will see a tripling in the price of natural gas in an effort to wean the consumers away from costly government subsidies.

»Unfortunately, even with a social safety net in place, the hike will slash consumer spending, lower standards of living and increase the disconnect between the Kiev government and an already impoverished population. A weak or otherwise unpopular government lacks the capacity to implement meaningful reforms, such as the thorny Minsk II agreement that calls for a new Ukrainian constitution.

»What Ukraine needs is a country strategy, a serious inner reflection of how to crawl out of the economic hole in which geopolitical struggles have thrown it into in the past year.

»The austerity-driven, one-size-fits-all policies of the IMF have therefore to be complemented by the tailored and innovative ideas that the private sector would champion.

»For example, on 30 March, the financier George Soros announced that he would be ready to invest $1 billion in Ukraine in profit orientated “agriculture and infrastructure projects”, if the West would offer risk assurances and outlined steps for a $50 billion financing package.

»Indeed, foreign direct investments could jump start much needed economic growth, a topic not addressed by the structural reforms demanded by the IMF.


»A bolder initiative came from Ukrainian billionaire Dmitry Firtash and his Agency for the Modernisation of Ukraine (AMU), a body devoted to developing sectorial policy recommendations meant to restart growth.

»Counting on an impressive list of members, such as staunchly anti-Russian French philosopher Bernard-Henry Levy, the former French foreign minister Bernard Kouchner, former German finance minister Peer Steinbrueck and Nobel Peace Prize winner Ferdinand de Klerk, the AMU aims to come up with concrete proposals within 200 days.

»Firtash, bemoaning the lack of progress made by the Kiev administration, argued that Ukraine needs to attract $300 billion in investment funds for its immediate reconstruction and to stabilise the economy.

»Some have pointed to Firtash’s checkered past and his current case for extradition to the US on bribery charges to question the viability of the AMU.

»But this would be a somewhat reductionist approach which would turn the AMU into one man’s affair.

»For starters, the program is supported by a wide array of influential Western political figures with the same goal in mind – to reform Ukraine’s economy and trade policies, build a platform to battle corruption, and attract investment into a country that has seen foreign investor flee at record speed.

»The bottom line, and one often ignored by pundits, is that Russia’s aggressive actions will strengthen Ukraine in the long run.

»Laudable initiatives such as Firtash’s AMU or Soros’ pledges could prove to be a boon for Ukraine’s future and provide the impetus needed to reform the country from the ground up.

»The road ahead is definitely long and arduous, but Kiev should forge its own path. It is the only way it will ever manage to break free from the whims of its neighbours.»


Ambrose Evans-Pritchard: Exhausted world stuck in permanent stagnation warns IMF

Exhausted world stuck in permanent stagnation warns IMF

The Telegraph
Ambrose Evans-Pritchard


«The global economy is caught in a low-growth trap as innovation withers and the population ages across the Northern Hemisphere. It will not regain its lost dynamism in the foreseeable future, the International Monetary Fund has warned.

»The IMF said the world as a whole has seen a “persistent reduction” in its growth rate since the Great Recession and shows no sign of returning to normal, marking a fundamental break in historical patterns.

»This exposes the global economic system to a host of pathologies that may be hard to combat, and leaves it acutely vulnerable to a fresh recession. It is unclear what the authorities could do next to fight off a slump given that debt ratios are already at record highs and central banks are running out of ammunition.

»“Lower potential growth will make it more difficult to reduce high public and private debt ratios,” the IMF said in an advance chapter from next week’s World Economic Outlook. "It is also likely to be associated with low equilibrium real interest rates, meaning that monetary policy in advanced economies may again be confronted with the problem of the zero lower bound if adverse growth shocks materialise."

»The developing world is likely to limp on with average growth of just 1.6pc from 2015 to 2020, too little to make a dent on the edifice of public debt left from the Great Recession.

»The Fund said global bourses have charged ahead of reality, soaring to new highs despite a 25pc slump in levels of business investment since 2008. There has been a chronic lack of spending on the sorts of equipment and computer software that drive gains in competitiveness. “This development is worrying, because business investment is essential for supporting the economy’s future productive capacity,” it said. “In some countries, weak business investment has contrasted with the ebullience of stock markets, suggesting a possible disconnect between financial and economic risk taking,” it said.

»The great hope is that booming asset prices will trigger a surge of investment, allowing economic fundamentals to catch up with markets. But it is far from certain that this will happen unless governments change policy and launch a blitz of spending on infrastructure and research to unlock frozen capital and set off a virtuous circle.

»While the IMF has supported quantitative easing in the past, the implicit message is that this form of stimulus chiefly has the effect of boosting asset prices and has proved a very blunt tool for the real economy, at least in the manner currently conducted. It cannot fully counter the effects of fiscal austerity.

»The IMF says Europe and the US began to falter at the turn of the century. Total factor productivity growth – the primary driver of wealth-creation - slid from 0.9pc to 0.5pc even before the collapse of the financial system in 2008.

»The emerging world has since succumbed to the same malaise as it runs into structural barriers and exhausts the low-hanging fruit from easy catch-up growth, forcing the IMF to downgrade its global growth forecasts repeatedly since 2011.

»Productivity in these countries has almost halved from 4.25pc to 2.25pc since the Lehman Brothers crisis and is likely to fall further as they hit the “technology frontier”, where the middle income trap lies in wait for any that fail to adapt in time. Many need root-and-branch reforms of their product and labour markets, and an assault on excess regulation.

»The report almost seemed to describe a spent world where the great leap forward from the computer age and the internet is already over and little more can be squeezed out of universities as the “marginal return to additional education” keeps falling.

»Casting a shadow over all else is the demographic crunch. The working-age population will be shrinking at a rate of 0.2pc a year in Germany and Japan by 2020, with Korea close behind, and China following on hard. Almost the whole of Eastern Europe faces an ageing crisis.

»Whether the world really is nearing the end of its growth miracle is a hotly disputed theme. Ben Bernanke, the former chairman of the US Federal Reserve, insisted in a recent inaugural blog for the Brookings Institution that the US economy would right itself naturally as so often before.

»He reminded pessimists that leading economists fretted about the end of growth in much the same way during the Great Depression. Harvard’s Alvin Hansen – the leading American Keynesian of his age – coined today’s vogue term “secular stagnation” in 1938, arguing even then that population growth was slowing and the big advances in technology were mostly finished.

»He lived long enough to witness three decades of spectacular global progress after 1945.»


Christopher Dembik: How France lost
its economic oomph

How France lost its economic oomph

Saxo Bank Group
Christopher Dembik*


«In 2013, I had the chance to meet former Polish finance minister Grzegorz Kołodko who is considered the key architect of the Polish economic miracle by pushing for a liberal agenda in the middle of the 1990s. We discussed the French economic slowdown and I will always remember his witticism about the 75% marginal tax rate on the wealthy: “Even the communists would not have dared such a measure!”

»Since 2012, much attention has been devoted to the perception of France as being “anti-business” and “anti-wealth”. Tax hikes and support for protectionism by former economy minister Arnaud Montebourg were of no help to the French economy. It had negative economic impact and certainly contributed to the decrease of direct foreign investments in 2012 and in 2013.

»A decade ago, France was at the forefront of European economies. France’s GDP per capita was the same as Germany’s. Now, it is 8% lower. While Germany implemented a very pragmatic reform program, the so-called Agenda 2010, France was sleeping on its laurels. France has always been in the cradle of some very innovative companies which quickly become leaders in their businesses in Europe or even in the world. Its desire to innovate has driven France to build incredible things such as electric cars and high-speed rail. The country ranks well among the world’s best education systems and is well-known for its start-up culture.

»Persistent stagnation

»Despite its strengths, France seems unable to recover from the crisis. It has not been accustomed during the past 100 years to an economy growing at close to zero. The situation did occur much more often in the 19th century. However, all the economic figures indicate that France is stuck in stagnation. In the best-case scenario, France’s economic growth may jump slightly above the key level of 1.5% in 2016. This level of growth is barely enough to reduce unemployment. In any case, the French may need to get used to high unemployment considering the natural rate of unemployment has increased from 7% to around 9% over the past several years.

»Contrary to its neighbours, France seems least likely to benefit from the exceptional economic conditions (historically low interest rates, weak euro and a decrease by 50% of oil prices). The two recent periods of strong economic growth (1986–1990 and 1997–2001) were characterised by an oil shock and accommodative monetary policy but a third element is essential for economic growth: technological revolution and/or financial innovations.

»Financial liberalisation was a key driver for the period 1986–1990, which experienced an annual average GDP growth at 3.4%, while the development of the internet ecosystem pushed up the economy at the end of the 1990s.

»Innovations are still numerous in the fields of fintech, dronautic or renewable energies but it hasn’t yet fostered the development of large new industrial sectors. The current technological cycle is still in its infancy and cannot therefore have a significant positive impact on the economy.

»Private investment dearth

»The low level of private investment is probably the biggest challenge of France’s economy. Despite the so-called “responsibility pact” with business, private investment will remain at least for the next two or three years under its pre-crisis level. The road for innovation implies higher private investment. But companies cannot maintain a decent level of OPEX and investment if their expected profitability does not recover at some point.

»Since the 1980s, French companies’ profitability has decreased considerably because of the gargantuan and complex French tax system. In France, companies need to pay more than 153 direct and indirect taxes compared with 55 taxes in Germany. This has clearly created disincentive to invest. Only further tax cuts for small and medium-sized companies could reverse this negative trend and impact positively business confidence.

»For instance, it would make sense to give them a competitive advantage compared with bigger companies by reducing the corporate income tax under the reference rate at 33.3%. It would be just and fair considering that big corporations have more money and knowledge to exploit loopholes in the law to pay less tax than smaller corporations.

»But France lacks political will to reform. François Hollande was not elected by his base to pursue austerity but rather to boost growth and keep a high level of public sector jobs. Under the pressure of the EU, he pushed for a very moderate reform agenda but the opposition was so strong inside the Socialist Party that the government had to resort to rarely used constitutional measures to force the bill through by decree. It does not look very good for further reforms in the short term. Two years before the presidential election, it is very likely that François Hollande will adopt a wait-and-see position.

»The problem is that the economic situation is not bad enough to push for ambitious reforms. Despite an economic growth rate at 1%, France remains one of the wealthiest countries in the world. It does not encourage policy makers to take courageous measures. Facing electoral wipeout in 2017 against the Front National, Socialist MPs may even feel the need to distance themselves from the government and its moderate reform agenda in order to save their seats. There is not much to expect in terms of reforms over the next two years. France’s economy will certainly grow slightly but it will be lagging behind Europe’s economic recovery.

»Reasons to be cheerful

»However, France is not a lost cause. There are many reasons to be optimistic in the long term. France is opening the door to new cultures, experiences and models. Hiring foreign business leaders to manage French company used to be a heresy ten years ago. It is not unusual anymore. Right now, France focuses a lot on the German model but there are also many things to learn from Eastern Europe, North America or even Asia and that can inspire policymaking in France.

»The French are traditionally risk averse, which is a cultural trait, but things are slowly changing. They have realised that the welfare state is not sustainable any more because of the impact of the demographic pressure on the labour market and the pension system and the high level of public debt. The discourse has changed; the state encourages risk-taking and creates better incentives for entrepreneurs and foreign investors. “The more risks you take, the more risks we will take” says economic minister Emmanuel Macron. It will take time but things will get better. I have no doubt France’s golden age is before us, not behind us.

»* Edited by Clare MacCarthy
Christopher Dembik is an economist with Saxo Bank in Paris


John Redwood: How free enterprise and innovation cut austerity. After the crash, innovation will get us moving

How free enterprise and innovation cut austerity. After the crash, innovation will get us moving

The Commentator
John Redwood


«Allowing people to borrow sensibly, enouraging them to work, and giving them a tax system which treats them like adults, all come together to create a recipe for growth and an end to austerity. That's the reality, whatever Left-populists think.

»Free enterprise capitalism is the parent of higher living standards and better lives for the many. The luxuries of the few of the previous generation can become the norm for most in the next.

»Today we can enjoy service and facilities that we could not even dream about twenty years ago.

»In the 1950s, many homes had no tv, no fridge, no car, no telephone. These middle class luxuries arrived gradually in the 1960s as people got pay rises and as these luxury products became cheaper relative to wages. The financial system also found new ways to help people of modest means to buy them. .../...