Davos 2012: Europe must open its jaws

Everyone has seen the impressive image of a shark opening its jaws. I like to compare it to the evolution of a business – the top jaw representing the business’s incomes while the bottom jaw represents its costs. The jaw opens up when profit increases and the difference between income and cost gets bigger.

As we all know, these days, many European countries focus their plans solely on moving the bottom jaw down, with austerity measures to reduce their deficit. In any business, cost efficiency is mandatory and in all countries, you will find examples of not managing their budgets well. So these cost control measures are necessary.

However, European countries must not forget the top jaw. Cost reduction plans should leave room for investment. Governments need to ensure immediate payment of all their outstanding invoices to companies. This will inject a large amount of money into the system, which is needed. But we also need to foster and incentivise growth at the same time.

Our challenge as leaders is to open both jaws. Investing in growth means supporting entrepreneurship, reducing tax pressure for new hires, creating incentives for investments in technology and increasing budgets to extend the use of information and communications technology to make companies and governments more efficient and agile. I know of entrepreneurs and companies with sustainable businesses able to create employment who are just missing funding.

Our responsibility is to keep the European “jaws” more open than ever. These coming days at Davos should us help all to reflect on what the contribution of each one of us should be to open the jaws.

Luis Alvarez, President, BT Europe, Middle East, Africa and Latin America

Picture: A sand tiger shark and other fish species swim inside a tank in the Madrid’s Zoo Aquarium. REUTERS/Andrea Comas