The UK under Truss is turning into Debenhams – hear me out

A horrible thought occurred to me as I was half killing myself on the hand bike at a nearby outdoor gym: the country we live in is turning into Debenhams.

We’re approaching the end of another tumultuous week in which Britain’s IOUs have been trashed once more, the Bank of England has started to look almost as hapless as the government, and the latter is still insisting that it is sticking with a fiscal policy for which the most suitable adjective would seem to be “suicidal”.

Those of us who aren’t either bankers, corporate executives, city lawyers or hedge fund managers, the fortunes of whom appear to be the government’s only priority, have found ourselves up a certain infamous creek.

Which was exactly where Debenhams ended up. You remember Debs, right? The department store chain breathed its last in 2021, after 243 years of trading on the high street. There’s still a website and a brand of sorts. They were ultimately bought in a closing down sale by Boohoo, an online fashion retailer. Kind of appropriate really. Investors shed a lot of tears over the thing, not to mention its – now mostly former – employees.

Several things tend to happen before the collapse of a big retailer like Debs. First up is the profit warning, when the company tells the stock exchange that all is not well and analysts are going to have to re-do their forecasts because it’s making a lot less money than they expected – if it’s making any money at all.

The people running UK plc haven’t yet issued one of them, chiefly because they aren’t bound by stock exchange rules, which require public companies to update the market in a timely fashion.

In contrast, the government first shut out and then tried to muzzle the Office for Budget Responsibility (OBR) until the end of November. Now it’s the end of October. In the meantime, the markets keep puking.

Resisting the inevitable always ends in tears. In Britain’s case, the analysts are the Institute for Fiscal Studies (IFS), the people who scribble about sovereign debt for the big banks, and credit ratings agencies like Fitch. Turns out they didn’t need the OBR to spell out what everyone already knows: if you have shares in the UK, you’d better sell because the place is run by a pack of fruit pastilles which appointed a broken Microsoft Zune to serve as the nation’s chief financial officer.

When struggling retailers like Debs get into a jam, they start to experience difficulties with refinancing their debt and the cost goes through the roof. This, of course, is exactly what’s now happening to UK plc. And we’re going to be paying the price for years to come.

Next, insurers, scenting blood, withdraw cover so suppliers start running scared, revising their terms and demanding early payment. Trade creditors always take a kicking when a company goes down. At this stage, the business starts to enter a death spiral. The board usually ends up crying “save us” and bankers are hired to find a buyer before the administrators are called in. UK plc is not quite there – yet. But it may end up there in the absence of further U-turns. Don’t let’s kid ourselves; it’s happened before – and in living memory.

The administrators of a country which has gone bust don’t work for PwC or Deloitte or similar. They come from the International Monetary Fund (IMF). Tories of a certain age used to enjoy reminding people that the IMF, which has already cried foul over Britain, was called in to bail out the crisis-wracked nation in the 1970s, with fairly unpleasant results. Such bailouts come with strict conditions. Think George Osborne’s austerity was bad? You ain’t seen nothing yet.

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Can the fruit pastilles and the broken Zune pull off what the Debenhams executives weren’t able to? It doesn’t look good. It’s not as if they can find a bidder to waltz in and sort things out, as sometimes happens with struggling companies if there is enough value locked up in their businesses.

But Britain isn’t a basket case – it just looks like one. Under new management it could at least turn into, say, M&S? After a long run of very expensive and not very good CEOs (sound familiar?) the latter settled upon insider Steve Rowe, who steadied the ship. He’s now gone and while it continues to sail through choppy waters, no one’s talking about death spirals at the company.

It’s rather sad that M&S is perhaps the best we can aspire to be. It’s too much to expect someone to turn us into an Amazon, but we ought to be able to look at, I don’t know, the clothing retailer Next? The trouble is that we’ve managed to hire some real berks recently, people who wouldn’t be allowed anywhere near the boardroom if they were in corporate life.

What’s happened to Britain is a bit like a retailer handing over the entire business to the person running the branch on Thetford high street – with all too predictable results.