This recovery still needs business investment to head off stagnation Having failed to get any rebalancing without growth, policymakers have juiced the economy accordingly in the belief that even the old, undesirable form of growth is better than no growth, and the hope that eventually it might spark something more durable, including improvements in investment and net trade. Unfortunately, it seems unlikely there will be any help in this regard from Britain's European partners. Outside Germany, demand in the eurozone remains as flat as a pancake, forcing Britain back into its traditional role as Europe's consumer of last resort in order to have any growth at all. Still, for the moment these are early days in the upswing, with consumption growth led more by increased employment and a reduced savings rate than another credit boom. It may be the wrong sort of recovery, but no doubt it has at least another two or three years to run before it becomes unstuck. As Tidjane Thiam and Katherine Garrett-Cox argue, a sustained recovery requires increased business investment - and one of the key engines is household savings, which provide a significant proportion of the finance for such long-term investment. However, if business investment doesn't pick up sharpish soon - and, worryingly, there is no obvious reason why it should, with so many uncertainties from Europe to Scotland and the election itself still on the table - then the next government, whatever political colour it might be, faces the near certainty of renewed stagnation and crisis. Having so far ducked serious structural and fiscal reform, some tough political choices lie ahead. Royal Mail pricing was not open-and-shut case At one point during yesterday's Business Select Committee hearing into the Royal Mail sell-off, an exasperated Vince Cable hit back at MPs with some aplomb. Responding to suggestions that he had been misled by advisers who persuaded him to sell Royal Mail too cheaply, he said: "We can't base the whole policy of Government on the view we're dealing with criminals." To say that Mr Cable has not always been a friend of the banking community is something of an understatement. At the Liberal Democrats" conference three years ago, he memorably described them as "spivs and gamblers," adding for good measure that their role in the financial crisis had done more harm to the British economy "than Bob Crow could achieve in his wildest Trotskyite fantasies." So, if even Mr Cable believes the attacks on their handling of the Royal Mail flotation have gone too far, he must be on to something. "I categorically refute the view that six weeks is enough time to assess the share price," he told MPs, adding that some analysts believe that the shares could drop to a tenth of their value. Michael Fallon, the business minister, made a similar point, insisting: "We could not have got a higher price for the 600m shares we were selling. That is surely right. And, leaving aside the fact that it is premature to be reaching a definitive judgment on the right price for Royal Mail, we should not, anyway, allow ourselves the luxury of hindsight. During the roadshow to investors, the threat of industrial action hung over the flotation. It was always going to be a race against time between the Government and the Communication Workers Union to see whether they could get the flotation away before postal workers went on strike, damaging Royal Mail's reputation perhaps irreparably. In the event, the Government outflanked the CWU, but that was not obvious at the time - and even senior figures at Royal Mail were surprised that the anti-flotation campaign promised by the union never really got off the ground, ending with a whimper rather than a bang. But, most important, the valuation of Royal Mail was never the open-and-shut case the Government's critics claim. As recently as 2011, the company was making big losses; yesterday's maiden results were testament to the success of Moya Greene's turnaround programme, but, at today's price, investors are paying for a future level of profitability that is yet to be achieved and may never be achieved. Royal Mail shares are now looking very expensive.They trade on a price to earnings multiple of 15.8 times forecast earnings, compared with a sector average of 14.5 times. The closest comparable company, Belgian operator Bpost, trades on a P/E ratio of 12 times forecast earnings. We shouldn't forget that, on the eve of the flotation, talks over Royal Mail's valuation stretched late into the day. Indeed, according to one senior figure, it wasn't just the flotation price that was being hammered out - it was the very principle of whether to go ahead with the flotation. That ministers were apparently prepared to abandon a flagship policy at the 11th hour suggests the rip-roaring success of the historic privatisation was not considered the surefire bet it now appears.