SCOTLAND'S finance and sustainable growth secretary, John Swinney, last week declared that co-operative business could play a greater role in Scotland's international success and provide sustainable economic growth.
This was an interesting point, especially when, if we believe everything we read and hear, the economy is about to vanish into a black hole. However, I firmly believe this is exactly the time when everyone in Scotland – including consumers, busine
sses and the media – needs to grasp the mantra of the co-operative and work together through a sticky patch. After all, the important feature of co-ops is that by their very nature they work together for a greater benefit.
While these things happen as part of any normal economic cycle, they haven't happened for some time and consumers today are used to low interest rates and available credit.
Just 15 years ago most people would have viewed a mortgage with an interest rate of just 7 or 8 per cent as a godsend.
Rates are still low, although there is no denying there is a short-term credit issue. Lenders are being very selective with their funds but getting a good deal is more difficult, not impossible.
The key phrase here is that it is a short-term issue, although external advisors have indicated it may last for up to 18 months.
The current crisis could be likened to an oil slick. The economy is not going to grind to a halt, but the surface has become a little sticky and will slow things down for a short while. Once it has cleared, things will return to normal; it might not be exactly the same but it should produce a stronger, more sustainable economy.
For example, liquidity is now an even more important factor for businesses. Having cash in reserve, in case of unexpected issues such as the current credit crunch, is something we can expect to become a greater priority. Another change is more stringent credit profiles and lending criteria, so that people borrow within safer limits.
There is no need for a knee-jerk reaction to short-term issues as this is more likely to cause long-term damage than just sitting back and going with the flow.
• Simon Cocker is head of business development at Dunfermline Building Society
The full article contains 384 words and appears in The Scotsman newspaper.
