The euro crisis, particularly relating to Greece and potentially one or two other countries, following the earlier "train crashes" in Iceland and more recently Ireland, is undermining confidence. The US debt issue has also spooked the markets. There have been a few extraneous shocks, too. The ash clouds were bad for business and heavy snowfalls two years running contributed to consumers staying away from shops. The impact of the earthquake and tidal wave in Japan was well documented as a factor in many economies and the restrictions of ‘just in time’ management became apparent, particularly somewhere like Britain where much of its manufacturing is Japanese owned.

What will hold back development is a number of these issues dragging on. In particular, a lot of our pre-recession growth was driven by a lax, some would say badly regulated, lending environment. People effectively enjoyed a free second income every year, extracting more and more of the apparent equity, often with better and better deals. If our market follows the path of other housing bubbles, such as Ireland and Spain, and corrects more materially this will hamper growth. There is often the argument that uber-rich foreigners buying into prime London property negate this but are their volumes statistically significant? And what about all the ordinary foreign workers going home or indeed the hedge fund workers moving to Zurich?

What this means for investment depends whether you are talking about packaging or printing. For the latter, I think investment will be in consolidating the industry overall – major new capex is behind us, at least for quite a while. New investments may be in digital production methods and for communications with consumers at the point of sale. In packaging, consumer convenience will be key. In austere times people will be more careful with food. Our clients tend to be interested in acquiring businesses with resealable packaging, or, like RPC with its ‘fridge packs’ for baked beans, innovating it for themselves. Food packaging should prove robust – recently reported falls may be due to consumers destocking their larders – but more careful reuse will have an impact on volumes.

Investments otherwise will be driving efficiencies and this will be particularly true in commodity or packaging areas which are associated with consumer durables, or, potentially luxury items where expenditure can be postponed or cancelled.
Lending is getting better but varies considerably from bank to bank. It would be easier to borrow for funding amalgamation and synergies rather than a greenfield operation.

Nicholas Mockett is a partner at Moorgate Capital