That’s politicians for you. Not so long ago, David Cameron made everything perfectly clear. There were two principles of civilised society — “hug a hoodie” and “bash a banker” — and who could object to that?
Well, not any more. Either the PM’s gone soft or the bankers have got to him — and, surely, not just because the chancellor’s trying to flog the taxpayer’s stakes in Lloyds Banking Group and Royal Bank of Scotland. Barely a week goes by without some fresh concession to the masters of the universe who nearly blew it up. The hated bank levy? Adjusted downwards to appease HSBC. The hated Martin Wheatley? Kicked out of the Financial Conduct Authority. The hated fines for PPI mis-selling? Soon to be time-limited away.
Clearly, there’s only so much lobbying from bankers a chillaxing PM can take. Why, soon we’ll even have Bob Diamond back in charge of Barclays. Or at least Jes Staley, another American investment banker. The political mood has changed. But it’s wrong to say we’ve learnt nothing from 2008’s financial crisis. We’ve learnt pragmatism: that Britain doesn’t have too many industries like the City of London, so we’d be daft to regulate it away.
Indeed, regulators are now admitting through gritted teeth that they got some things horribly wrong: namely, the guilty until proved innocent rule for the “senior managers regime” that was an affront to British justice. As the Institute of Directors pointed out, it was “unworkable” — except for lawyers, of course, who’d have worked up endless legal challenges.
So, will the ring-fence prove more durable? Probably not. Britain decided not to make a clean break between retail and investment banking, instead constructing a giant piece of bureaucracy guaranteed to prove the subject of endless bank lobbying. It’s not even obvious what problem the ring-fence is supposed to solve: it wouldn’t have saved Northern Rock or Bradford & Bingley. And, aren’t regulators meant to have tackled the main issue — undercapitalised banks — by forcing them to hold more capital and cut leverage?
Advertisement
Predictably, the banks were yesterday claiming victory over the latest bit of fence adjustment: being allowed to transfer capital, in the form of dividends, from their ring-fenced operations to other parts of the business as long as they kept within prescribed ratios and tell the Bank of England. One day, they’ll find a way to dismantle the fence altogether. They’re bankers, after all.
Check-mate
No wonder Christopher Bailey is Burberry’s chief creative and chief executive officer. It takes a creative type to come up with so many excuses.
Analysts were looking forward to 5 per cent sales growth in the latest quarter. Instead they got a like-for-like 4 per cent drop — the worst quarterly sales figure since 2009. The reason? Not so much that the Chinese didn’t fancy Burberry’s pricey trench coats and scarves, what with having done their money on the local stock market. Just that they weren’t buying them in China or Hong Kong. No, they were travelling to currency-whacked Japan to buy the stuff there. Or else, France, Italy and Spain. Unluckily, too, for Burberry, given it’s got too few shops in those locales. Japan’s less than 2 per cent of revenues.
Advertisement
So, that’s Burberry, for you: a sort of punt on correctly forecasting looming currency depreciations and the travel plans of the Chinese and then opening the right number of shops. Who’d have thought it was that sort of business in July last year when shareholders were protesting over Mr Bailey’s £30 million pay?
Back then, the shares were worth around £14.50. Now they’re down to £13.02 after yesterday’s 8 per cent fall, with Burberry cheekily pointing out that it now expects full-year profits to be “broadly in line with the average of those analysts who have recently updated forecasts”. That’s to say, those who have already cut them from about £462 million profits to a consensus £445 million. To hit that, though, it’ll need a good Christmas. Say the Chinese travel to the wrong place?
Dim energy policy
What a shocking day for candlemakers. No blackouts this winter. Or so says National Grid, despite the capacity margin — the difference between forecast peak demand and available supply — shrinking to the lowest level for a decade.
Advertisement
It’s down to 1.2 per cent, though the Grid’s got that up to 5.1 per cent by putting mothballed power plants on standby and asking factories to crank down to save the ‘leccy — moves that add 50p to the average bill. The GMB’s Brian Strutton puts it better than most: “We have the bonkers position where National Grid is using consumers’ money to pay firms to stop work in order to avoid winter blackouts.”
But don’t blame the Grid. Blame the government’s constant U-turns on energy policy, meaning many of the £220 billion of power projects we need have got no further than the National Infrastructure Plan. Even Hinkley Point C is years away. Anyone got a match?
Black day for reef
Have you been to the Great Barrier Reef? Go soon before it’s not there anymore. The Australian government’s just re-approved plans for India’s Adani, to build a $16.5 billion coal mine, just a boat trip from the coral. Haven’t the Aussie’s spotted that the coal price keeps hitting new lows — and that climate experts, such as Bank of England guv’nor Mark Carney, see no future for the stuff. The project almost got killed over fears for the yakka skink and ornamental snake. Far too precise a line of argument.