ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: Well the Chancellor, George Osborne, was given a bit of a boost this week as economic growth predictions were upgraded again. The UK economy is now predicted to grow by 1.4% this year and 2.4% in 2014 but is it too heavily reliant on consumer spending and personal debt? Well Sir Stuart Rose is a king of the high street of course and a knight, he has managed Marks and Spencer, Argos, Burtons and the Arcadia Group and is now Chairman of Ocado. What he doesn’t know about retail isn’t of course worth knowing. Let’s say a very good morning then to Sir Stuart Rose, good to see you. Chairman of Ocado as I said there, have you made any money yet, turned a profit?

STUART ROSE: Listen, I didn’t take the job to take money but it’s interesting that…

DM: Not you, is the company making any money yet?

STUART ROSE: The company is in a good place and it is very interesting how life moves on and how behaviour moves on and how trends move on. I don't think it is a question of if people want that sort of service, everybody is now providing it, but it is about who can provide it and it’s about who can do it in a way that will eventually make money because the one thing we have to remember is, the customer doesn’t care if we make money, they just want the service. So it’s our job to reverse engineer it to make money. It’s quite an interesting challenge.

DM: It is interesting about this online world, given that Ocado has been around for so long now, it has got shareholders and they want to know when they are going to get a return too don’t they?

STUART ROSE: Well I have to say, as Chairman of the company, the shareholders are pretty good actually and they understand where we are headed. You have to give full credit to management because they weren’t one of the original disrupters, they came into the market saying the world is going to change and the only argument you could have against them if you wanted is perhaps they started a bit early but the world is changing and we have seen that massive change happening daily now over the last three or four years.

DM: What’s the economy looking like from your perspective? The state of consumer demand?

STUART ROSE: Well I would say this wouldn’t I but I’ve been saying for the last 18 months that the economy is on the mend and the numbers that come from the Office of National Statistics always run slightly behind. If you go outside London, which I do a lot, and see what’s happening, confidence has got up, companies are now actually recruiting again and you can see that with unemployment coming down. There is actually real signs now that things are beginning to move. Now we can have an argument about where the recovery is coming but I see it like a football match, a win’s a win and we’re winning. The quality of our win and the quality of our play, we can argue about that later but we’re still winning.

DM: But on that, it’s about the right kind of growth or the wrong kind of growth. Is there a right and a wrong or is any growth good?

STUART ROSE: Any growth is good at the moment because it does one thing, it starts feeding that most important thing which is confidence. We’ve seen how there has been a worry about how businesses are actually beginning to invest and I think there has been a reluctance of businesses to invest. Clearly what businesses have to do, particularly if they are in the public sector but also if they are private sector businesses, they have to conserve their resources, they have to get their balance sheets in order, they have to conserve cash, they have to cut costs, they have to make sure their business is going to survive and that’s what happened in ’08, ’09 and ’10. What we have to now say is right, we’ve now done all that, is the market in the right place, is confidence in the right place for us to now go on and invest and I think there are now signs that investment will come.

DM: Right, it’s at that junction, that has to occur. So would you say it is a bit of a gamble now, we have got signs of a consumer boom, a housing boom again, those parallels with say the mid noughties and what you are saying is that then has to spark a larger fire which is real investment by businesses, real growth, real exporting?

STUART ROSE: I think we are beginning to see it because if you go and look what’s happening now, many, many companies I think are preparing, if you like, to re-invest. I talk to a lot of people in businesses small, medium and large and that’s the impression that I get and it is wrong to say this is just a London-centric thing, I think this is a UK centric thing now. It has obviously spread out from London but I do think there are some good things happening and we just have to keep that confidence going. I think there will be some big deals this year, I think MNA activity will improve, the IPO market is beginning to open up or has opened up, money is going to remain cheap and that is really key here, we are going to see low interest rates now – and it has been signalled as wide as it can be – for at least the next two years and that will continue to give people confidence.

DM: But do you think we are in a position, if we were having this discussion in 2006 or 7, nobody saw that huge shock coming from over the Atlantic and over the hill in 2008, is the economy in a position where it could sustain not even that kind of shock but a lesser one or could that derail the whole thing? What are the risks here?

STUART ROSE: Listen, I made a speech the other day and I said look, the good news is, the recession’s over; the bad news is, there will be another one! If you go back in your working life you’ll see there has been quite a number, probably six or seven in my working life, but I think we’ve learned some very big lessons from what’s happened. It has been a global crisis, it has been a crisis of significant dimensions but I think we have learned from it and the actions put in place by governments, and it has been a government action across the globe, will stand us in good stead.

DM: I always ask you this since you left M&S, you’re free of the levers of power there, we like to keep an eye on it, I’m sure you do – M&S as you always described it is this great juggernaut, turning it round, do you think it’s heading in the right direction now?

STUART ROSE: Listen, it’s been around for 130 odd years, I’ve lost count now, 1884, and it will be around for another hundred years I have no doubt. It will have its high points, it will have its low points, I’ve been there in the high points and the low points and I wish them all success. I’m sure they’ll have a pretty good Christmas and I wish them well, I’ve got a lot of affection for them.

DM: Dealt with deftly as always. What about somebody, and I don't think it’s a company you ever have been involved with, maybe you have, Tesco – another giant there and it’s a market you know very well. We’ve seen it going through some difficulties, what do you see as being its strategic errors and challenges? Was it America that was its biggest mistake?

STUART ROSE: Well what happens to countries, is what happens to big businesses and what happens is the phrase that was given to me a long time ago by an old boss of mine, he said ‘Stuart, if you don’t look out of the window every day, one day when you do you’ll find the world has passed you by.’ I think what happened in Tesco’s case, and I’ve never worked in the business and I’m not that close to it, is that they worked very hard if you like expanding their business into a global presence, which it still is. They probably milked the business too hard in the UK using the cash that the UK cow was generating and then it turned round and found, looking out the window, that the UK business was not as structurally sound as it should have been and hadn’t taken account of some of those trends that I talked about at the beginning of this interview. Suddenly you find yourself wrong footed. Catching up when you are wrong footed, particularly if you are a very large organisation, is a massive task. This is a largest food and general merchandise retailer in the country so it is no easy task to turn around, I understand what it must be like but they have got to keep going, there is no alternative and it still is a big business, it is still a fine business and I’m sure they’ll be successful.

DM: Okay, talk to me about hard working people. You talk about trends, it is going to be a trending discussion, starting in the New Year, I’m talking about Romanians and Bulgarians and all the restrictions on the EU members and their citizens coming to this country. A huge argument, and we all know about that, and one of them is well okay they might not be coming here for benefits and indeed they may find them restricted, they are coming her to take the jobs that many people who live here will not take.

STUART ROSE: That is not their fault. I’m a free market economist, we live in a free market, I don't think we’ve found any better way to run the world if you like than capitalism. It’s got its flaws, certainly, and we can have an argument about the distribution of wealth and the fairness of that but the fact of the matter is, we operate in a free market. These people are entitled to come here and if these people want to come here and work the hours they are prepared to work for the wages they are prepared to work, so be it and there is nothing against that. I believe that if I was out of work tomorrow morning that I could find a job by tomorrow afternoon and it is up to people to decide whether they want to do the work for the pay that’s being offered and if they don’t, somebody else is there to do it. What’s wrong with that?

DM: So you are not saying there are people who haven’t got jobs now in this country moaning about Romanians and Bulgarians when in actual fact, take the job then.

STUART ROSE: I think there are a lot of people who complain about their lot. Life’s tough for everybody at times. People will look at me and say, well it’s all right for you but I started off with pretty well nothing, I did a lot of very menial tasks when I was young. I didn’t worry about the status of the job, I didn’t worry about the pay of the job, I was more worried if you like about my self-esteem, it was the fact that I had a job and I could look myself in the mirror and say, look, I’ve earned a few bob this week, what I did with it is my business but at least I earned it.

DM: Stuart Rose, thank you very much indeed for coming along and telling us about that, a very wide ranging interview. Very good to see you, Stuart Rose there.