50 CITY
THEWEEK2November 2019
Commentators
ManyWesternbusinesspeoplestilldefendtheIndianPM
NarendraModi,saysTheEconomist.Evenifhisparty’sHindu-
nationalistideologyis“badfordemocracy”,theysay,“hispro-
businessphilosophyisgoodfortheeconomy”.Butthatargument
nolongerwashes.India’s“incompetentlymanaged”economyis
performingbadly:growthfellfrom8%inthemiddleoflastyear
tojust5%year-on-yearintherecentquarter.“Worse,the
slowdownlookslesslikeadipthanaprolongedshower.”Indian
banksface“a$200bnmountainofbaddebts”,whileconsumer
demandhaslevelledofforfallen.WhenModi’sgovernmentcame
topowerin 2014 ,itinheritedplentyofproblems,butdid“too
little”totacklethem.Thelatestdownturn“continuesthat
disappointingpattern”.Withrareexceptions,“theofficial
responsehasbeenscattershotandtimid”.Thefearnowisthat
insteadofg ettingtogripswiththeeconomy,Modi will“stop
posingasa reforme r”and“full yembracehisaltereg o”asachest-
thumpingnationalist.Ifso,expec tthe“stasis”tocontinue.
TheclosureofpaydaylenderQuickQuidlastweekwashailedby
jubilantcampaignersasanothernailinthecoffin“ofadeeply
unpopularindustry”thathastargetedvulnerableborrowerswith
extortionaterates,saysHarrietRussell.Buteventhewatchdogs
“whosetougherrulesputpaydaylendersoutofbusiness”admit
theyhaveleftagap.Wherewillthousandsofpeople,whorely
onshort-termlendingtocoverunexpectedbills,turnnow?
Alternativesarecroppingup.Onerelativelynewsourceof
fundingispeer-to-peerlendingfirms,whichmatchsaversdirectly
toborrowersattemptingratesofinterest.Buttherecentcollapse
ofLendy–whichleft9,000savers,withacombined£ 152 mon
theplatform,facingbiglosses–highlightsthedangersofthe
model.Lesscontroversialalternatives,suchasold-fashionedcredit
unions,mighthelpfillthegap.Butmanyhavebeenstruggling
themselves“tokeeptheirfinancesonanevenkeel”:nineofthem
wentbustlastyear.QuickQuid’scollapserevealsa“hollowed-
out”sector.Newversionsofthemodelare“suretospringup
again”;inthemeantime,there’salwaysthepawnbroker.
“Britainis,onsomemeasures,thebiggestplayerintheglobaltax
havengame,”saysNicholasShaxson.“Aspider’swebofsatellite
havens...captureswealthfromaroundtheworld,polishesitand
feedsittotheCityofLondon.”AnewreportfromTransparency
Internationalshows“howwidelyanddeeplytherothasspread”.
Muchofthe£325bnsiphonedoffbyfinancialcriminalsfrom
morethan 100 countrieshas“aUKnexus”.Indeed,theworld’s
crooks“findaccomplices”inourestateagents,the“BigFour”
accountingfirms,our“globe-striding”banks,and“acrossour
politicalestablishment”.Everynationneedsbankingandfinance,
butoncethesectorexpandsbeyondits“idealsize”androle
providing“useful”services,“itturnsnasty”–boostinginequality,
curbingentrepreneurialismand,ultimately,slowinggrowth.
Britainhasclearlyfallenvictimtothis“financecurse”.Growing
theCityis“exactlythewronggoal”tobepursuing;“toprosper,
wemustshrinkitdowntoitseconomy-supportingcore”.The
answerto“harmfulfinancialinflows”issmartercapitalcontrols.
Thinkofitas“theoppositeofataxhavenstrategy”.
“Manyofusassumethatsuccessbreedssuccess –andthatfailure,
especiallyanearlycareersetback,isa signofmoretroubleto
come,”saysSusieAlle n.But accord ingtoastudybytheKellogg
businessschool,thegoodnewsforlaggardsisthatearlyfailure
oftenbreedslatersuccess.Aresearchteam,ledbyD ashun Wang,
lookedathowyo ungbiomedicalresearcher shadfaredsince
makingimportantgrantapplicationsbetween1990and2005.
“Atsome univer sities ,receivin goneofthes egrants –worthon
average$1.3m–canputayoungscholaronasurepathtowa rds
tenure.”Yetlong -term,itwa sthescientists who’d“narrowly
missedout”whoendedupontop,jud gedbythenumberof
“successfulpapers ”theywentontopublish.Theanalysissuggests
“theactof failingitselfmayhavepushedthefrustratedscientists
toimprove”. It’sahopef uldiscoveryforWang,whojokesthat
heconsidershimselfanexpertinth earea,du etoh is“exten sive
experienc eoff ailure”whenapplyingfo rgrant shimself.It turns
outthat“maynothavebeensuchaliabilityafterall”.
TheBarclaybrothers
Aftermonthsofspeculation
aboutfutureownership,the
Telegraphnewspapergroup
hasbeen“putupforsale”
–aspartofabroader
winnowingofthemulti-
billion-poundempirebuilt
bytheoctogenarianBarclay
brothers,saidRichard
FletcherinTheTimes.
Anothernotablefamilyasset
upforgrabsistheRitzHotel
inPiccadilly.Thisisn’tan
emergencyfiresale:twins
SirDavidandSirFrederick
(below,leftandright)–
whocelebratedtheir85th
birthdaylastSunday–are
estimatedtobeworth£8bn.
Thedisposalshaveinstead
beendrivenbywhatone
insidercalled“agenerational
shift”withinthesprawling
Barclayclan.Slimmingdown
theportfoliowillgenerate
capitaltoallowthe“buyout”
ofsomefamilymembers.
Thetwins,whodividetheir
timebetweenMonacoand
theChannelislandof
Brecqhou,arenotoriously
“shyofthelimelight”.Born
inhumblecircumstancesin
London,theymadetheirfirst
fortune“convertingboarding
houses into hotels”, before
diversifying into shipping,
retail, hotels and news-
papers. Still, it’s fair to say
the financial performance of
several key businesses “has
proven patchy of late”, said
The Guardian. The largest
companies in the portfolio,
which also includes delivery
firm Yodel and online retailer
Shop Direct, reported
combined losses of £290m
at the last count. There’s no
shortage of suitors for the
Telegraph Media Group –
everyone from Daily Mail
owner DGMT to Washington
Post owner Jeff Bezos is said
to be in the running. Still, it’s
sobering to note that the
mooted £200m price tag is
aroundathird of the £665m
the Barclays paid in 2004.
It’s time to
shrink the
rotten City
NicholasShaxson
TheGuardian
The crisis in
the short-term
lending market
HarrietRussell
TheDailyTelegraph
Modihas
madeamess
ofIndia
Editorial
The Economist
Thebenefits
offailing
young
Susie Allen
Quartz
City profiles
