PREVIOUSCorporate Responsibility
We continued to make substantial progress
in pursuit of the Board's objective of ensuring that Barclays is a leading company in the field of corporate responsibility. For the seventh successive year we are producing a separate Corporate Responsibility report, reflecting the importance your Board attaches to this increasingly complex agenda. Corporate responsibility is, first and foremost, about responsible business conduct. For us, it is founded on the principles, ethics and values that Barclays has embodied for over 300 years.
In the area of financial inclusion, our work was recognised by research conducted by the Corporate Citizenship Company, which commented: “Barclays has done most to advance both thinking and action in Financial Inclusion and its efforts put it ahead of other banks assessed worldwide.” Barclays remained the only financial services company in the world to play a role in the Business Leaders' Initiative on Human Rights and we retained our membership of both the Dow Jones Sustainability and FTSE4Good Indices.
In terms of environmental management, Barclays entered the ‘premier league' of companies for the first time, ranking in the top 20 of 300 FTSE companies. We continued to expand our extensive community programme, launching our flagship UK community programme, Barclays Spaces for Sports, with two main sites and 40 local sites completed. This programme will invest £30m over three years to create sustainable sports facilities in communities across the UK.
Economic Outlook
Global growth slowed to a more sustainable pace of just above 4% in 2005 after reaching nearly 5% in the previous year. Nevertheless, the past two years represent one of the fastest periods of back-to-back annual expansion in the global economy since the 1970s. Moreover, the outlook for 2006 is equally positive, with global growth again expected to exceed
4%. The coming year should also see some modest rebalancing of demand with slower growth in the United States offset by a faster pace of expansion in Europe and Japan. Growth in the UK also slowed in 2005 to 1.8%, mainly in response to higher interest rates. However, both unemployment and inflation have remained largely stable although we have seen some pressure on household cash flows which has led to a deterioration in consumer credit quality. The outlook is for UK economic growth to increase during 2006 although conditions in the consumer credit sector are expected to remain challenging.
Strategy Execution
The strategy we pursue of diversifying both our portfolio of businesses and the geographies in which we compete has proved to be sound. The growing contribution of our global businesses and of our International Retail and Commercial Banking businesses has reduced our dependence on the home market. This shift is evident in this year's results. It continues to be our goal to generate at least 50% of our earnings from outside the UK while improving the contribution from our UK-based businesses. We are making very good progress towards this goal. Our overall strategy remains unchanged.
Matthew W Barrett
Chairman
