The_Week_UK_-_Issue_1251__02_November_2019_UserUpload.Net

CITY 53

2November 2019 THE WEEK

Talking points

ThiswastheweekBritainwasmeant
toleavetheEU,saidtheFT.Instead,
weareheadingforwhatcouldbethe
“mostimportant”electionforthe
economy“sincetheendofWWII”.
AvictoryforJeremyCorbyn’sLabour
“couldleadtoawholesaleshift
towardsstateintervention”.Indeed,
someoftheparty’spromises–suchas
reducingUKcarbonemissionstonet
zeroby 2030 –wouldrequirea“trans-
formation”oftheeconomy.Yetthe
outlookdoesn’tlooksogreatunder
thePM’sBrexitdealeither,saidFaisal
IslamonBBCBusiness.TheNational
InstituteofEconomicandSocial
ResearchcontendsthatJohnson’sdealwillleadtoa“slightly
worseeconomicoutcomethanTheresaMay’s”–leavingtheUK
£70bnworseoffoutsidetheEU;andthattheoverallimpactof
“moreregulatorybarrierstotrade”outweighsthebenefitof
“gettingBrexitdone”.Individualbusinesses“maywelldisagree”.

AtleastCityscribblers“canputaway theirabacuses,forthetime
being”,now thattheChancellor,SajidJavid,hasditchedhisfirst
Budget,whichwasscheduled fornextweek,saidAlexBrummer
intheDailyMail.Thepostponement–togetherwiththe endless
speculationaboutthechoiceof anew BankofEngland governor

• are “freshsourcesofuncertainty” forinvestmentandconsumer
  confidence.Butthe Budgetcannotbeheld off forever.TheOffice

forBudgetResponsibility(OBR)is

obligedbylawtoproduceofficial

forecastsfortheeconomyand

publicfinancestwiceayear,although

thedateisflexible.Withanelection

on 12 December,aBudgetmightstill

bepossiblebeforeChristmas.

SomuchforJavid’spledgetoend

austerity,saidRichardPartingtonin

TheGuardian–instead,helooksto

be“Chancellorinnameonly”.The

suspicionisthattheOBRreport

“wouldhaveembarrassedJohnson”

beforeanelection“byconfirmingwhat

iswidelyknown”:thattheeconomyis

slowingandpublicborrowingissoaringasBrexituncertainty

holdsthecountryback.Yetthat’snothingcomparedwiththe

deceptivelyinnocentproposalbeingsoldbyshadowchancellor

JohnMcDonnellundertheguiseofwhathecallsthe“demo-

cratisation”oftheeconomy,saidJulietSamuelinTheDaily

Telegraph.Aswellasnationalisingutilityandrailcompanies,

Labourwouldlaunch “amuch broader expropriation ofassets,

supposedly onbehalfofworkers”, aswell asan“overhaul”of

“corporatecontrol”.“Labour’sremodelledstatewillsupposedly

causepowerto cascadedown the system.”ButwhatMcDonnell

real lywants isfor“the state totake over, wholesale,thejob of

allocatingcapital”in linewithwhathe thinks is“virtuous”.Faced

withthat, most companieswouldchoose “uncertainty”anyday.

Issue of the week: the election and the economy

InvestinginSaudi: whattheexpertsthink

●DesertDavos
The WhiteHouse
“seems tobe over”
themurder ofSaudi
journalistJamal
Khashoggiin October
lastyear,saidQuartz.
PresidentTrump’sson-
in-law JaredKushner
andtheUSTreasury
secretarySteve
Mnuchinboth
travelledtoRiyadh
thisweek,toattendSaudiArabia’sFuture
Investment Initiative –aka“Davos inthe
Desert”–anevent widelyboycotted last
year. They weren’t alone,said The New
YorkTimes.“Bigbanks”were also “back
in force”att he conference,which is meant
“tohighlight th ekingdom’s work with the
biggestcompanies in theworld”. Bosses
from Citi,Goldman Sachs andHSBCall
turned up–asdid the billionaireJapanese
tech investor Masayoshi SonofSoftBan k.
Butothertop figures in techand enter-
tainment were absent–perhapsstill
“waryof being seenas closelytied to
the kingdom” afterKhashoggi’s killing.

●Aramcocomes to market
The headlineeven tofthe meeting wasthe
unveiling of the“long-awaited on-again,
off-again” fl oat of the kingdom’s giant
state oilcompany,Aramco–billed as the
world’s biggest IPO, said Ben Marlowin
The Dail yTelegraph.Trading is scheduled

tostartinDecember.

Aramco, which sits on

one-fifth ofthe planet’s

oil reserves, is“the

world’smostprofitable

company”, andalisting

“willpumpup Saudi

Arabia’sclout”.Still,

the IPO“can hardly

be considered anover-

whelmingsuccess”.

Despite “grovelling”

fromthe world’s pre-

eminentstock markets,Aramcohas

chosen tofloat solelyat firstonthe

Tadawul–the kingdom’s stock market.

Then there’sthe valuation.The country’s

de factoruler,CrownPrince Mohammed

binSalman (MbS),hasinsisted A ramcois

wort h$2trn, bu treportssuggest he’llbe

forced to accepta$1trn-$1.5trnprice tag.

●An unforgivingclimate

With theoilprice down frommorethan

$80abarre llastyearto$60 today, the

marketisconsidered“veryunforgiving”.

The missile attacksonAramco plantsby

Yemeni rebels in Septemberdidn’ thelp,

said theFT. Norhas the broader economic

backdrop.“Foreign direct investment into

the kingdom is at historicallylowlevels”

and the economy is againclose to

recession. AsRiyadhstruggles to overhaul

its oil-dependentfinances,the challen ge

for MbSist oturn the“glitz ”ofhis de sert

event intosolid“inward investment”.

SajidJavid:“Chancellorinnameonly”?

Aramco:theworld’sbiggestIPO

Switching wars

“Who are the big winners in the bank

switching war,” asks Katharine

Gemmell in the Financial Times. The

free-to-use Current Account Switching

Service (Cass) has completed close to a

million switches for Britons in the past

year. So “who is cashing out, and

where are they cashing in?”

WinnersDetaileddatafromthesecond

quarterof2019showsNationwide

BuildingSocietycameoutontop,with

anetgainof26,466newcustomers.It

wooedthemwithsavingsdeals,a

pledgetokeephighstreetbranches

open,anda£100“referafriend”

incentive.Anotherbigwinnerwas

Monzo,thedigitalchallengerbank,

whichpoached13,453newcustomers;

switchersrateditseasy-to-usedigital

toolsandfee-freeoverseascardtrans-

actions.StarlingBank,anotherdigital

challenger,alsomadegains,thanksto

itsbespokeeuroandteenaccounts.

LosersLargerbanksweretheworsthit.

Halifaxlost12,058customers;Barclays

andRBSweren’tfarbehind,chalking

upaworseperformancethanTSB,

whichlost8,110customers,butatleast

hadtheexcuseof“fallout”fromits

disastrousITfailurelastyear.

Best switching offerHSBC’sAdvance

currentaccounthasanupfrontpayment

of£175.Butforcustomerservice,

MoneySavingExpert.comrecommends

FirstDirect,“whichconsistentlyranks

nearthetop”ofitspolls.

ElectionlimboaheadofaDecemberpollhasleftBritaineconomicallyrudderless.Isthereworsetocome?