Thursday

17 Nov 2022
Why we should pray for crypto’s survival

Note to self: don’t sound smug about the sudden collapse of FTX – the Bahamas-based crypto exchange whose valuation has been zapped from $32 billion to zero – because however much it plays to I-told-you-so instincts about the mug’s game of crypto, the episode may herald a wave of wealth destruction that’s the last thing the financial world needs when there’s already so much bad stuff going on. Still, smugness is a strong temptation here – and what could be more provoking of that sentiment than a photograph in the Daily Telegraph of Sir Tony Blair and Bill Clinton on an FTX-badged stage alongside the firm’s 30-year-old founder Sam Bankman-Fried in his shorts and scruffy trainers? This is a complex emerging scandal in which large sums of FTX client funds may have been mis-appropriated, allegedly to fund high-risk bets by Alameda Research, Bankman-Fried’s trading business that ran alongside FTX.

Why we should pray for crypto’s survival

Thursday

10 Nov 2022
Made.com is a dotcom parable from an earlier era

‘Reparations’, much bandied about at Cop27, is a dangerous word. It speaks of an admission of historic guilt, which no one can deny has a place in public discourse. But its intention is to put a punitive price on guilt itself, rather than to advance collaborative work needed to rectify damage that can be traced back to bad acts, whether committed through greed, prejudice, aggression or ignorance. It says, in short: ‘Don’t send us your supposedly superior expertise and your lectures about how to improve ourselves. Just send cash. And keep sending it until your tortured conscience is assuaged.’ But in relation to climate impacts, the argument over who pays, who receives and how much would rage for decades while the damage gets worse and the repair costs rise.

Made.com is a dotcom parable from an earlier era

Thursday

3 Nov 2022
The morality of begging for trade with Saudi and Qatar

Cop27? Me neither. Barring a last-minute call to join Boris Johnson’s Sharm El Sheikh entourage, I’ll be minding my carbon footprint at home. But I’m sorry not to be reporting firsthand from a more controversial Middle Eastern gathering of the global elite: the Future Investment Initiative in Riyadh, or ‘Davos in the Desert’. A ticket to Cop27 is a virtue signal in itself. But attendance at last week’s FII, an annual showcase for progressive sovereign spending within Mohammed bin Salman’s otherwise medieval Saudi state, is a moral conundrum. Just as the UK relies on Qatar for liquefied natural gas supplies while our dignitaries queue to cite the emirate’s human rights record as reason not to go to the World Cup there, so we beg the Saudis to buy gilts and British-made arms but we don’t want to be seen cosying up to the regime that butchered Jamal Khashoggi.

The morality of begging for trade with Saudi and Qatar

Wednesday

26 Oct 2022
After the Truss-Kwarteng crash, a tentative welcome for Sunak

Let’s hope Tuesday’s partial eclipse of the sun was a good omen for the return of Rishi Sunak to Downing Street, this time as Prime Minister. Understandably, he looked more earnest than triumphant. Business leaders and financial markets gave him a positive welcome but – understandably also after months of turmoil, with huge challenges ahead – rather a tentative one. Ten-year gilt yields dropped from a panic-driven 4.5 per cent to a still worried 3.8 per cent, double their recent lows; the pound blipped up, then settled back to its recent benchmark of $1.13. A ‘dullness dividend’ is what money men are hoping for, we’re told, after Johnson’s narcissistic inattention and the crackpot Truss-Kwarteng entr’acte. We know we’re heading for austerity and orthodoxy; we await the fiscal statement due on Halloween.

After the Truss-Kwarteng crash, a tentative welcome for Sunak

Sunday

23 Oct 2022
Spectator Briefings
Innovator of the Year Awards: London
23 min listen

For the final round of The Spectator’s Economic Innovator of the Year Awards, our kind sponsors, Investec, hosted us at their offices on Gresham Street, London. We met 11 finalists for lunch — out of a record total of 176 entries across the whole of the UK — to pitch their ventures to our distinguished panel of judges. Our finalists are: UpCircle Beauty, Elvie, Ultromics, Silverstream, eConsult Health, Itaconix, Thought Machine, Recycleye, Project Etopia and Housekeep.The judges; Matthew Robinson who works in Private Equity with ICG;Eva-Maria Dimitriadis CEO of Conduit Connect, and finally Kate Gribbon and Michelle White from Investec. We hope all the companies we meet gain from the networking opportunities, benefit from the accolade of being selected as finalists and enjoy the buzz, the conversation and the lunch.

Innovator of the Year Awards: London

Friday

21 Oct 2022
Spectator Briefings
Innovator of the Year Awards: Bristol and Birmingham
34 min listen

For this year's Midlands and Southwest Innovator of the Year Awards, the judges met four finalists at each region respectively. These eight finalists were shortlisted down from a record 176 applications. In Birmingham, the finalists in this podcast were MoM incubators, Hybrid Air Vehicles and Bambino Mio. The judges, Martin Vander Weyer, business editor of The Spectator met Steve Hewitt, non-executive director of Gymshark; Clive Bawden, COO of Warwick Music and former finalist of the Innovator of the Year Awards and Michelle White representing Investec.The judges faced the tough task of comparing businesses in very different sectors and stages of development. But all four made compelling pitches – and the variety of entries is part of the fun of these awards.

Innovator of the Year Awards: Bristol and Birmingham

Wednesday

19 Oct 2022
The truth about corporate taxes

I’ve chosen to write about corporate tax rates this week not because they’re the sexiest subject available but because – unlike the government’s frontbench, the value of the pound and the scale of winter fuel bills – they’re unlikely to change dramatically during the shelf-life of this column. An increase in corporation tax from 19 per cent to 25 per cent, originally announced by Rishi Sunak, will go ahead in April, despite new Chancellor Jeremy Hunt’s own leadership campaign pledge to cut the rate to 15 per cent, which would have placed the UK between Ireland and Singapore in competitive tax tables. The uplift will, we’re told, tip £19 billion (based on HMRC’s reckoner of £3.1 billion per percentage point) into the public-finance black hole which so spooked the bond market.

The truth about corporate taxes

Sunday

16 Oct 2022
Spectator Briefings
Innovator of the Year Awards: Leeds
23 min listen

For the next round of The Spectator’s Economic Innovator of the Year Awards sponsored by Investec, we met in Leeds at the Dakota hotel and restaurant. For the Yorkshire and Northeast region, three finalists joined us for lunch — out of a record total of 176 entries across the whole of the UK — to pitch their ventures to our distinguished panel of judges. The finalists you’ll hear about on this podcast are: Testcard, in the healthcare sector; MudDaddy, a portable dog shower and Tofooco. After lunch, we also met Powersheds via Zoom who couldn’t make it to the pitching lunch. The judges were Gordon Black, venture capitalist and former manufacturer; Caroline Theobald, entrepreneur and chair of the Newcastle Business School at Northumbria University.

Innovator of the Year Awards: Leeds

Saturday

15 Oct 2022

Friday

14 Oct 2022
Spectator Briefings
Innovator of the Year Awards: Edinburgh
26 min listen

The second regional podcast for The Spectator’s Economic Innovator of the Year Award sponsored by Investec was set in the picturesque city of Edinburgh where the judges and finalists met for lunch at the Dome on George Street. We invited four finalists for the Scotland and Northern Ireland region — out of a record total of 176 across the whole of the UK — to pitch their ventures to our distinguished panel of judges. The finalists you’ll hear about on this podcast are: Cardinal Analytics a fintech business that predicts when enterprises are about to go bankrupt; MacRebur a novel invention for road surfacing; Roslin Technologies which make lab-grown meat; and Synaptec which work in manufacturing for fault sensors in power networks.

Innovator of the Year Awards: Edinburgh

Wednesday

12 Oct 2022
A house-price crash won’t be the only effect of the Kwarteng calamity

Where next for house prices? Clearly, they’re going down as mortgage rates go up – and my forecast in May that they would shed ‘recent froth’ and then stagnate rather than plunge, has been entirely overtaken by events, or at least by Kwasi Kwarteng’s calamitous ‘fiscal event’ last month. Reverberations from the Chancellor’s debut continue apace, with more emergency bond-buying by the Bank of England despite news that the OBR-assessed forecast missing from his September speech will now be unveiled on 31 October instead of on 23 November. But even if the books can be cooked in a way that makes more sense than markets expect, hundreds of mortgage deals have been withdrawn and average two- or five-year fixed offers have already moved above 6 per cent.

A house-price crash won’t be the only effect of the Kwarteng calamity

Sunday

9 Oct 2022
Spectator Briefings
Innovator of the Year Awards: Manchester
28 min listen

This year’s regional podcast series for The Spectator’s Economic Innovator of the Year Awards kicked off with a fascinating lunch at The Ivy Cafe in Manchester. We invited four finalists for the North West region — out of a record total of 176 across the whole of the UK — to pitch their ventures to our distinguished panel of judges. The finalists you’ll hear about on this podcast are: LoveRaw which makes vegan chocolate; Ordo which makes electric toothbrushes; Interact, which drives energy efficiency in data centres and IT systems; and Better2Know, which provides sexual health testing services.The judges were Gabriel Fysh, whose company Transcend Packaging, in South Wales, is one of our former winners in this region; private equity and venture capital investor Steve Morris; and Richard Greenhalgh and Michelle White representing our sponsor, the wealth manager and investment bank Investec.

Innovator of the Year Awards: Manchester

Wednesday

5 Oct 2022
Is Credit Suisse the tornado on the banking horizon?

Headlines about ‘alarm over CreditSuisse’ might be read as a sign of normality in financial news, rather than the reverse. The second-ranked Swiss bank (behind UBS) has slipped on so many banana skins in recent years that, as I wrote in February: ‘I sometimes wonder how and why it survives.’ As a recognised basket-case, its difficulties are not usually seen as harbingers of systemic trouble. But in the Kwarteng-induced febrile mood of London’s markets, the question has to be asked. This is October, the devil’s favourite month for provoking crashes. Could Credit Suisse be the tornado on banking’s horizon? Amid rumours of critical balance-sheet weakness, Credit Suisse’s shares have fallen 60 per cent this year. More recently, the price of its credit default swaps – a form of insurance against the bank failing to repay its bond debt – multiplied almost sixfold.

Is Credit Suisse the tornado on the banking horizon?

Wednesday

28 Sep 2022
City slickers’ reaction to Kwarteng’s unfunded plan is entirely rational

‘Fury at the City slickers betting against UK plc,’ shouted the Daily Mail on Tuesday, after Monday’s mayhem saw the pound hit an all-time low of $1.03. A more accurate corporate metaphor, though less punchy as headline material, would have been something like this… Activist mavericks seize boardroom control of giant sluggish utility. Novice finance director slashes prices, raises dividends for rich shareholders, shuns in-house forecasters and says he’ll borrow whatever it costs. To which markets reply: ‘Blimey, mate, that’s bonkers. So we’re dumping your shares and the cost of your debt just doubled.’ And that, I’m afraid, is an entirely rational response, not a wickedly speculative one. Moments after Kwasi Kwarteng’s Commons performance last week, a banker I was with said, in trepidation rather than glee: ‘Interest rates will have to go above 5 per cent’ – and so they will.

City slickers’ reaction to Kwarteng’s unfunded plan is entirely rational

Wednesday

21 Sep 2022
Is this really the moment to scrap bankers’ bonuses?

Chancellor Kwasi Kwarteng – keen to sharpen the City’s competitive edge, we’re told – wants to remove the legislative cap, imported from Brussels in 2014, that limits bankers’ bonuses to 100 per cent of their base salary, or up to 200 per cent with shareholder approval. That raises interesting questions. Was the cap a good idea in the first place? If not, why wasn’t it binned as soon as we left the EU? Is now the ideal moment to do so? And are bankers still a breed of greedy bastards? The answer to the first question is certainly not. This column called the cap a ‘boneheaded’ measure that would merely provoke wily moneymen to find ways of gaming an unwelcome restraint on their wealth. Its stated aim was to discourage a return to the excessive risk-taking of the mid-2000s, but banks themselves claimed it increased risk by adding to their fixed costs as base pay rose accordingly.

Is this really the moment to scrap bankers’ bonuses?

Thursday

15 Sep 2022
Let’s see some energy policy action

At His Majesty’s Treasury, it’s all looking a bit like Year Zero in revolutionary Cambodia. Kwasi Kwarteng’s first act was to sack the respected but ‘orthodox’ permanent secretary Sir Tom Scholar. Now the FT reports the Chancellor ordering underlings to focus ‘entirely on growth’, presumably at the expense of financial discipline. I’m picturing a locked basement of fearful officials labouring under Kwarteng’s lash to translate his forthcoming ‘fiscal event’ – tax cuts on top of massive spending to cap energy bills and unlimited borrowing to pay for it – into the sort of Whitehall language that might make it sound reasonable. Meanwhile, businesses large and small remain completely in the dark as to the detail and value of the government’s promised six-month energy-subsidy scheme.

Let’s see some energy policy action

Thursday

8 Sep 2022
Can anything halt the pound’s fall?

My predecessor Christopher Fildes looked at exchange rates through a cocktail glass: three negronis for the Italian lira equivalent of a tenner, good; a $2 martini for £1, even better. That latter ratio applied briefly 30 years ago when, he wrote, the favoured tipple ‘brushed against my lips like an angel’s kiss’. It recurred during the financial crisis of 2007-08, when no one was really able to enjoy it, and has never been seen since. On Monday, as Liz Truss was crowned, the pound dipped below $1.15, in sight of its 1985 all-time low of $1.05. ‘The prospect of …parity versus the dollar,’ said Bloomberg, ‘is becoming ever less outlandish.’ What cocktail of misfortunes brought us to this? The first problem is that the dollar is so strong.

Can anything halt the pound’s fall?

Thursday

1 Sep 2022
Will energy bills kill off working from home?

‘The jury’s out’, was Liz Truss’s pert response to the question ‘Macron: friend or foe?’ at last week’s Norwich hustings. ‘I’ll judge him on deeds not words.’ In a video clip of the event you can see a bald bloke in the second row applauding wildly, as if she had just delivered from memory the whole of Henry V’s speech before Agincourt. Hard to know which is worse: whether as Foreign Secretary she thinks it’s shrewd diplomacy to cast doubt on the bona fides of our nearest ally and Europe’s only current statesman; or whether, even with victory in the bag, she’ll say anything to win the vote of every last backwoods xenophobe in the Tory party. OK, I’m a committed Francophile – and yes of course their peacock president can be a bit annoying.

Will energy bills kill off working from home?

Thursday

25 Aug 2022
It’s time to clear out the Bank of England’s board

Liz Truss says she intends to review the Bank of England’s mandate, which has been fixed as a 2 per cent inflation target since Gordon Brown gave the Bank its independence in 1997. We’re told Governor Andrew Bailey, keen to keep his job, thinks a review is ‘probably the right thing’. But is it? A return to the long-term inflationary average of 2 per cent is highly desirable as soon as global price spikes subside – but if the odds-on next PM thinks the Bank incapable of achieving it, setting more dynamic inflation-and-growth objectives would surely be an overreach. Instead, maybe she should take her axe to the organisation, starting with the Bank’s board of directors, known as the Court. I have a fine photograph of the Court in the days when my father (veteran banker and deputy chairman of BT) was among a dozen corporate chiefs – the likes of Lord Nelson of GEC, Sir Hector Laing of United Biscuits and Sir John Baring of Barings – around the antique table.

It’s time to clear out the Bank of England’s board

Thursday

18 Aug 2022
Blaming Saudi won’t make energy cheaper

How outraged should we be that Saudi Aramco has reported a world-record quarterly profit of $48 billion, representing a giant bonus from the global oil price spike provoked by the war in Ukraine? Well, that’s how the cookie crumbles when you’re sitting on oil reserves so abundant and so easily accessible that your marginal cost of producing the next barrel is less than $10 when the market price has just doubled to $130 – as it did in March, before settling back to around $95 today. And you might think that this recent price retreat is likely to continue as oil demand begins to shrink with the onset of recession in developed economies – just as you worry that your own reserves will one day dwindle. So reaping maximum short-term returns is the best thing you can do for your still underdeveloped desert country, especially if (as Aramco likes to do) you can present a narrative about reinvesting some of the proceeds in hydrogen and other green technologies that will eventually take you to net zero.

Blaming Saudi won’t make energy cheaper

Thursday

11 Aug 2022
How to save money: switch to cash and reprogram your boiler

We’ll find out shortly whether official statistics agree with economists surveyed by Bloomberg who say UK GDP probably shrank by 0.2 per cent in the second quarter. But at an uncomfortable moment when we know things can only get worse, looking backwards doesn’t help and nor does holding out hope for a miraculous ‘emergency budget’ in September. As for forecasting beyond that, it’s almost too scary to contemplate. Better to shun economists and politicians and focus instead on facts that tell us what’s happening now – such as data from Barclaycard – and things we can do keep our own budgets in balance. Spending on ‘essential items’ was up by 7 per cent in July year-on-year, says the card company, but on utility bills by 44 per cent and on fuel by 30 per cent – a pretty good sketch of the state of inflation.

How to save money: switch to cash and reprogram your boiler

Thursday

4 Aug 2022
Why British Gas’s owner is right to restore its dividend

‘What’s worse, they’re paying the profits to shareholders,’ said a grey-haired woman ahead of me in the Co-op queue. ‘Bloody shareholders,’ her friend of similar age and class spat back. I guessed they were talking about Centrica, parent of British Gas, which at a time when domestic energy bills are rising 23 times faster than wages (as Frances O’Grady of the TUC puts it) has announced half-year operating profits of £1.3 billion, up from £262 million last year – and the restoration of a penny-per-share interim dividend after a three-year gap. Both ladies looked likely to be beneficiaries of pensions nourished by dividends from the likes of Centrica, Shell and BP. But I resisted the temptation to interrupt them by quoting Centrica boss Chris O’Shea, who has said ‘You’ve got to restore [the dividend] at some point, you’ve got to give people a return – and I think our shareholders have been very, very patient’, while also acknowledging that ‘it’s difficult to see the word profits or dividends… when people are having a tough time’.

Why British Gas’s owner is right to restore its dividend

Thursday

28 Jul 2022
How to save Royal Mail

The government’s ‘cost-of-living tsar’, Just Eat co-founder David Buttress, was appointed last month as a Canutian gesture against the inflation tide. He says his role is to encourage retailers and utilities to offer discount deals that might relieve short-term pain for consumers. But wouldn’t it be good if he also had powers to shame companies or sectors for profiteering by whacking their prices up far ahead of inflation? Any firm for which energy or scarce raw materials are major cost elements has possible reason for scorching price rises; many others do not. Buttress could start by looking into hire-car rates, which have doubled (and more) across Europe since 2019 – stinging holidaymakers who prefer to brave airport queues rather than endure Channel port gridlock in their own cars.

How to save Royal Mail

Saturday

23 Jul 2022

Thursday

21 Jul 2022
Sack Heathrow’s boss? No, put him on the front line

Airports are on my mind, since I’ve just stepped off an on-time early-morning flight from East Midlands to Bergerac – yes, Ryanair, efficient as ever. But what a relief not to be battling through Heathrow, where such anarchy has taken hold that the Civil Aviation Authority and Department for Transport have given chief executive John Holland-Kaye an ‘ultimatum’ to sort it out – after he capped passenger numbers at 100,000 a day, forcing innumerable flight cancellations. As the airport that used to be Britain’s gateway to the world becomes a global embarrassment, attention turns to the question of whether the man in charge should resign or be fired. I had always assumed Holland-Kaye was no more than a flak-taking PR, but I see he takes credit for delivering the Terminal 2 refurb on budget in 2014 and has a background in housebuilding.

Sack Heathrow’s boss? No, put him on the front line

Thursday

14 Jul 2022
My Tory leadership race fantasy game

‘Black swan’ theory, developed by the writer Nassim Nicholas Taleb, refers to unexpected events that have extreme consequences but are rationalised afterwards by pundits who say ‘That was always going to happen.’ Covid was a big one; Putin’s war on Ukraine another. It’s in the nature of global events that there’s always a dark-feathered disruptor lurking somewhere, waiting to make its presence felt. Right now, it just might be hidden in reports of protestors in Zhengzhou, capital of China’s Henan province, demanding their money back from four local banks that suspended withdrawals in April. Runs on small banks are not unknown in China; nor is embezzlement by corrupt managers. The authorities’ response – using security forces to smash crowds and changing some depositors’ Covid-app codes from green to red to prevent them travelling to protest – is par for the course under Xi Jinping, whose greatest fear is widespread social unrest.

My Tory leadership race fantasy game

Thursday

7 Jul 2022
Is our card-only culture fuelling inflation?

Is anything anywhere getting noticeably better – economically speaking – or at least less bad? Are commodities and manufactured goods beginning to move more freely, for example, to ease the demand pressures that are stoking inflation? It’s good news that the number of container ships anchored off Los Angeles-Long Beach waiting to unload has fallen from more than 100 in January to around 20 at the latest count, but I note also that dockers there are demanding a 10 per cent pay rise. Drewry’s World Container Index – the handiest indicator of global shipping costs – has fallen 32 per cent from its peak last autumn, but remains five times higher than in the autumn of 2019. Likewise, prices of most fertilisers dipped last month but are still scorchingly higheras input costs for food producers than a year ago.

Is our card-only culture fuelling inflation?