Author Archives: Damian Ward

About Damian Ward

Damian studied at the Manchester School of Management before beginning his academic career at Bradford, where he now teaches business economics to postgraduate MBA students. His research interests focus on the financial services sector and he has acted as an advisor to the UK Financial Services Authority. Damian is also the author of the leading textbook, Economics for Business.

Specialties: Business economics, Financial services, Efficiency of the UK mortgage market, Economic predictions

The value of a degree? It is the person you are, not your CV that will get you a job

EmployabilityI watched last week’s ITV Tonight programme on the value of a degree with dismay.

The focus of the investigation was on the importance of employability. But “employability” to them meant whether a degree certificate and CV of work experience results in a more highly paid job. All institutions aim to provide impressive figures on employment rates of their graduates but who is to say that these are jobs they couldn’t have got without a degree? What is it that universities can offer that really add value and give graduates something extra for their fees over their long term career?

At induction, I stress to new students that a degree certificate and CV of work experience may get them an interview but it is who they are as a person that will get them the job and career they want. University should not just be an educational experience, but a transformational one; it should shape who you are – your values, beliefs, interests, passions.

Prospective students need to be thinking beyond what degree subject and work experience placement they need for their chosen profession. They also need to look at what personal and professional skills and values they will be able to bring to an organisation when they graduate. Three important things to consider are:

1. Choose a degree subject you are passionate about

Your choice of degree subject should be led by what you are passionate about. That way, you will be motivated to extend your learning and experiences beyond the classroom. Employers don’t look for teams of people who are all the same. Any good team needs diversity, strong values and the ability to challenge each other. I know big accountancy and law firms that take on English and History graduates because of their ability to research and delve into issues or physicists and chemists because they are trained to challenge premises and solve problems.

2. Make sure you can gain university experiences beyond the classroom

We encourage students to think about what life experiences they can gain to make themselves a more interesting, well rounded person when they leave university. This could be anything from pursuing hobbies, joining campaign groups and volunteering to travelling, work or studying abroad. In the classroom, we teach students to be independent learners and assess them on what they bring back in assignments that they weren’t taught by the lecturer. But ensuring that the ability to learn independently translates into their personal lives is important because it makes them the sort of people that strive to continue learning and gaining new experiences throughout their careers and lives. These personal transferable skills make them effective communicators, problem solvers, leaders and innovators.

3. Look at what values the university celebrates

The values you learn in and outside of the classroom at university will help to shape who you are as a person and what you can bring to an organisation. The values of the institution you choose will run through all of their programmes, both curricular and extra curricular. At Bradford, we are highly focused as a university on sustainability and this runs throughout every module on every course and into other experiences we encourage students to gain. And by sustainability, we mean that we teach students to do things in a way that will continue into the future and have longevity. This gives them the ability to take a long term, well informed approach to decision making, problem solving and relationship building, whether as a leader of an organisation or valuable member of a team.

How did you or someone you have employed get the most out of university and how has it benefited your / their career?

General election – Prudence back in the economy?

Prudence-2Prudence was a lovely girl, much beloved by the sombre Gordon Brown. But when it came to the electorate dear lovely Prudence didn’t set the pulse racing. You see Prudence liked to save, Prudence liked to tax and Prudence thought it better to pay off debt rather than take on more. Prudence was not the sort of girl to ramp up charges on her credit card, nor fill her wardrobe with frivolous and flirtatious outfits, buy cars on tick, or think buy-to-let was a pension. Prudence was boring, not with the times and voters didn’t like her.

In 2000, Prudence was dumped and in walked something far more exciting – an economic minx who liked to live life fast. Spend, borrow and party hard! Saving boring, taxes ditto. The public loved her and so did the banks. The minx rejunvinated health, education, local services and a fair few MP’s moats, duck ponds and second homes.

But we all know that a minx is trouble and at some point we need to rekindle our affection for Prudence. That time has come and Prudence is going to take a lot of wooing. Even if we strip out our funding of the banks, reduce unemployment and return the economy to balanced economic growth, we will still be borrowing 8.5% of GDP each year. Prudence will be aghast and if our relations with Prudence are to return to the levels of 2000, then a long courtship is in order.

Of course, the minx will still flash you a look. Be wild, be adventurous. We can fund today by earning more tomorrow.

Your romantic choices will soon arrive in the form of the general election. The minx is dangerous, Prudence is boring. Not a great choice, but that’s life.


Welcome to

financial-dataThere is so much chaff in economic data and opinion these days, it is difficult to know what to think.

First we were told that the UK economy barely limped out of recession in the final quarter of 2009. 0.1% growth in GDP made for an annualised rate of growth of 0.4%. With such weak growth concerns over double dip recessions abounded. Then a textbook based spat between rival groups of economists took place in the national press. Cut government spending or risk a debt crisis, versus keeping spending or risk a continuation of the current economic crisis. The CBI launched into the debate with higher than expected retail figures for the early part of the year, Yippee! Quickly followed by the Office for National Statistics, ONS, releasing data that showed investment spending had collapsed, boo! Today the biggest smoke bomb was let off, with the ONS revising its initial estimate of GDP up to 0.3%, or a compound annualised growth of 1.2%. Welcome to!

Unfortunately, there is no online comparison search site, which can help you make sense of the competing economic data. And with economists taking varied and opposing views on the best direction for policy, what can you do?

My best advice is not economic. It instead draws on a discussion with a doctor from A&E. “This must be a challenging job” I ventured. “Not really, pretty easy to tell if someone is critically ill or not. A few vital signs, pulse, breathing, consciousness.” He replied.

You see, experience, pragmatism and the plain obvious are what matter. As a business person you probably have these in spades. Listen to your customers and suppliers, examine your finances, check your revenues and costs and listen to what your employees are telling you. And follow economic data at your peril.

The thaw may have begun….

…..but we are still in deep winter.

money-1900Data out tomorrow (Tuesday 26 January 2010) is likely to show that the UK has finally emerged from recession. However, the economy is so battered and bruised that any return to normality is a long way off.

The Office for National Statistics will release its estimate for economic growth in Q4 2009 on Tuesday. A set of strong retail Christmas trading figures, falling unemployment, rising inflation and some improvement in corporate investment have all recently hit the headlines.

All as lead indicators are driving the presumption that the UK economy has finally grown for the first time in almost two years.

If the news is positive, then we can factor in an additional couple of points of growth in GDP. This is because the ONS is known for its conservative first release estimates and generally revises its measure of growth up in the following months as more data becomes available.

Any sign of growth and an exit from recovery will be a welcome boost to confidence. Firms may feel more able to expand employment and households may feel comforted enough to splash some cash.

However, exit from recession should not be a champagne moment. While the thaw may have begun, we are still in deep winter. Examine the chart below from the Bank of England’s most recent inflation report. If we take current levels of GDP and track back using the red dotted line, then we last saw current levels of GDP in 2005. The recession has destroyed five years of economic growth! Such a battering has huge implications for company profits, wages and households’ ability to service debt and spend.

Some bounce back in GDP might be quite rapid. Exporters are reporting year on year growth, mostly stemming from the fall in sterling and the rapid growth in emerging economies. Other companies are beginning to expand spending and rebuild stocks. But if we track forward from the peak of the economy in 2007, the blue dotted line shows us that it will be well into 2011 before we see similar levels of GDP. A timeline which suggests a loss of 4 years of growth.

So if you are happy to hear that the recession is over, great. But don’t be planning for an economic version of a barbeque summer.


Debt is hanging around the necks of households


Debt is hanging around the necks of households, like Christmas cake on the hips.

Spanish researchers* have recently confirmed the existence of a long-run relationship between house prices and home loans, a so-called co-integrating relationship. Nothing particularly startling in that result. But dig a little more into the results and a more troublesome finding can be unearthed.

Like in the UK, Spanish home loans did not just grow alarmingly quickly in recent years, they are now markedly above their long-run trend and so too are house prices. As access to loans grew, house prices grew; and as house prices grew, the value of loans grew and so on. A co-integrating relationship; and one which was compounding terrible errors.

With house prices above long-run equilibrium levels there was an overvaluation of house prices, which fed through into a false sense of no over-indebtedness. A correction is now in process and the results of the study indicate that adjustment to trend will be lengthy.

The splurge on household debt will hang around the necks of households, like Christmas cake on the hips. A serious bout of debt dieting and restrained consumption is now on the cards. House price inflation will also be modest, because as banks reduce lending back to trend, house prices must fall back also. Any restraint in house prices will act as a substantial drag on household wealth and the ability to borrow and spend. Put simply, this all adds up to low economic growth into 2010 and beyond.

* Ricardo Gimeno, Carmen Martínez-Carrascal, The relationship between house prices and house purchase loans: The Spanish case, Journal of Banking and Finance, forthcoming, DOI@ 10.1016/j.jbankfin.2009.12.011

Successful managers make the wrong decisions

business-peopleAn economist studying the game of cricket has uncovered some important implications for corporate decision-makers. The study in the Economic Journal, examines decisions to bat first in 1,300 one-day international cricket matches. The key finding is teams who win the toss, then consistently and systematically fail to make the correct decision to bat or ball.

The author of the study, V Bhaskar (a self-confessed cricket nut), points out that poor decision making is difficult to understand. Elite cricketers spend their prime years learning how to play optimally; experience the same game scenarios frequently, so can learn from past mistakes; and face high-powered sporting and financial incentives to make decisions that lead to victory. According to Bhasker, the most powerful explanation for consistently poor decision-making is teams overweighting their own strengths (and weaknesses) and underweighting the strengths of their opponents.

Corporate decision-makers are no different to sports people. As junior managers, prime years are spent in MBA style education; time is also spent developing the art of management; as well as understanding the inner workings of the company and the industry. Competitive scenarios with rival companies are frequently repeated and lessons can be learnt. Finally, the financial incentives associated with corporate success and failure are nothing but high-powered. But if corporate decision-makers overweight their own strengths and underweight their rivals, then consistently incorrect decisions are likely.

The lessons from cricket and economics are simple. Work out your best decision, remind yourself that you are wrong and do the opposite.