Is the end nigh?

By Fiona Czerniawska.

Probably the single most terrifying taxi ride I’ve ever had was in Macau about 20 years ago. With traffic lights in short supply (I spotted just the one set while I was there), the strategy when approaching any junction was to drive as fast as possible in the hope that other drivers would give way…

I was reminded of that recently as I sat through yet another meeting in which the management team of a large, international consulting firm rightly agonised about the timing of a downturn in the rate at which the consulting market is growing. Everyone expects it (client demand doesn’t grow for ever; market adjustments are inevitable), but eight years after the US consulting market bounced back from the global financial crisis (which it did with a speed that remains the envy of most European consulting markets) there are still very few signs of impending disaster. True, demand definitely slowed in the second half of last year in some key markets (the US, the UK); also true, many firms are seeing quite volatile performances this year (a really good month is followed by a disastrous one). But there still isn’t any sign of clients consistently and systematically reining in their expenditure on consulting services. If anything–and this is a point we made earlier this year–clients are planning to invest more, more quickly than they did last year.

I heard part of the explanation for this behaviour listening to Talking Politics, a podcast from David Runcieman and the Department of Politics and International Studies at Cambridge. One of the items being discussed was why post-election uncertainty, crisis, and chaos in the UK hasn’t been reflected in the financial markets, as they might have been before 2008. That’s because, it was argued, the markets are paying more attention to the actions of the world’s central banks (quantitative easing and interest rates) than to the vagaries of the political landscape. That’s had some strange consequences. How can the Italian government borrow so cheaply when it’s borrowing so much? It’s zero interest rates, stupid. The markets are prepared to do this, the podcast panelists proposed, because the alternative, to take account of all the risks the global economy faces at the moment, was just too awful to contemplate, and would trigger yet another financial crisis. The markets, essentially, are in denial.

And clients may be, too. And the key thing about this is that at the point at which they realise this, we may hit a substantial crisis very suddenly, and almost without warning.

“Literature is like phosphorous,” wrote the French philosopher Roland Barthes. “It burns most brightly just at the point when it’s about to die.” He was referring to the swansong of the nineteenth-century novel, but the comment could equally well apply here. Clients’ spending has accelerated precisely because they, too, are frightened about what the future holds; they’re investing today because they think they won’t be able to tomorrow. Like the Macau taxi drivers, they’re rushing to the junction in the hope that they survive the ensuing collision.