I was recently invited to attend the Deloitte Indirect Taxation conference in Westminster, London. This is an annual event that brings together industry professionals to discuss indirect taxation matters and industry trends around invoicing and trade. While the conference covered a wide spectrum of subjects, from the recent EU white paper on the future of VAT to tax reform in India & Russia, the two keynote speakers focused on global economics and probable future trends.
The first speaker was an American, Carl Steidtmann, Chief Economist at Deloitte. Carl’s speech was entitled ‘a tale of two recoveries’ and he focused on how Europe’s recovery is comparing to that of the US. One of the grimmer statements made by Carl was that Europe was in fact facing a ‘depression’ based on the technical definition of continued recession trends.
The second speaker was the BBC’s own Paul Mason, Economics Editor at the Newsnight TV program. Again, Paul drew a fairly bleak picture of the situation we are all in, highlighting the ratios of sovereign debt vs. GDP. In short, the ratios are the highest since the Second World War.
However, pointing to the title of his speech ‘Beyond The Big Gloom’ (‘Big Gloom’ is Hollywood slang for the period in a movie where everything goes wrong for the heroes, before ultimately they overcome all challenges and win through..), Paul pointed to a historic trend in the post-second world war period where European governments fell from having the highest debt to GDP ratios, to some of the lowest.
Why was this? A 2011 report written Carmen Reinhart and Belen Sbranica revealed that post-war European governments employed a policy of ‘financial repression’, a combination of inflation and capital controls designed to erode the value of debt.
Both speeches where compelling, and their predictions interesting but neither could predict a quick-fix for European and US troubles. Unfortunately the expected statements prevailed – Greece to leave the Euro, Spain to experience a ‘Greece like’ situation and ultimately a northern European Euro, a rise in nationalism and an increase in protectionist policies, ‘dumping’ and trade disputes. If you think these guys are all doom and gloom, they are not the only ones!
However, one prediction that was consistent in both presentations was that technology use is seen as key to an overall global recovery. How will this manifest itself?
- First, innovative ‘market-making’ technologies will appear.
- Second, Governments and companies will become more efficient with their existing technologies and processes.
As a technology guy obviously this statement would appeal to me, but it is a little more to it than that. I am plugged into the e-Invoicing industry, working as Vice-Chair for the UK e-Invoicing Advocacy Group (UKeAG) the recognized UK National Forum on e-Invoicing sponsored by the Department of Business, Innovation and Skills. I am also an executive committee member for the European e-Invoicing Service Providers Association (EESPA). Over the years I have seen electronic invoicing emerge from what used to be a cutting edge business process technology, through to today, where the industry is finally crossing the chasm.
One of the big trends in e-Invoicing right now that justifies this viewpoint is the increased adoption by government, not only in Europe, but Latin and North America also. There have been multiple announcements recently that indicate governments are looking to capture the tax controls, process efficiencies and cost savings that electronic invoicing provides;
This is not small potatoes and it looks like B2B technologies can do their part help governments save cash. Within the UKeAG, we have estimated that the UK public sector can save between £2-4bn annually and that if all invoice transactions within the UK economy were electronic, £12bn would be saved. Other reports claim greater savings, for all European governments €40bn could be saved annually, and adoption by the United States Treasury alone equates to $450m savings.
Momentum continues to grow, and while austerity motivates some and tax evasion others, the fact is e-Invoicing adoption by government is a trend that will continue upward. A recent announcement from the Pan-European Procurement Portal On-Line (PEPPOL) team is a testament to this. They revealed that 19 European Union Government agencies have now signed up to e-Invoicing.
So will technology innovation help end the recession? No, but it helps, especially when combined with other government activities in e-Procurement and Financial Fitness.