The Week 22Feb2020

52 CITY

THE WEEK 22 February 2020

Commentators

“Economics appearstobe inthegripofanexistential crisis,” says

PhilipAldrick.It’seasytoseewhy.Arecentaudit ofInternational

MonetaryFundforecasts isenoughto cast the professioninto

gloom.FathomConsultingexamined 469 recessionsin 19 4

nations since 1988 – and found thatthe IMF“foresawonlyfour

ayearinadvance,andnonewhenitcametorich nations”. The

fund’s economistsdidpredict47recessions –butnoneof them

actuallyhappened.Noweventheexpertshave“hadenoughof

experts”;economists are startingtoshow“alittlehumility”.

Inanew book,Radical Uncertainty,John KayandformerBoE

governorMervynKing writethat manyeconomicmodelsare

“asfragileasabalsawoodstructureinawind tunnel”.

Economics,theyargue, shouldbe“helpingpeople tothink more

clearlyaboutthe world”insteadof“usingpseudoscience”todo

it forthem.Ratherthanclaim omnipotence, economicsshould

advertiseits limits.The problem, as theauthors admit,isthatour

demand for forecasts–howeverunreliable–“is insatiable”.

Theraceison“totrouncethecoronavirus”,saysLex,and

ambitiousbiotechsarehopingtodoso“inrecordtime”.OneUS

company,Inovio,cameupwithapossiblevaccineagainstCovid-

19 injustthreehoursaftertrawlingthroughitsalgorithms.And

thesharesof“otherambitiousminnows”–NovavaxandVaxart

–“haverespectivelydoubledandtripledoverthepastmonth”.

Discoveryisonething;therealproblem,though,isgettingto

market.Smallbiotechsaren’tcapableofmanufacturingvaccines

atscale,andBigPharmahas beendraggingitsfeet.Theindustry

giantshaveevery reasontoholdback–theycanbeleftwith“big

sunkcosts”.Gettingavaccine tomarketusuallytakesyearsand,

bythattime,thediseasemayhavewaned,aswith Sars.There

are also reputationalrisks: aswine fluvaccine, rushedthrough

byBritain’sGSK,was laterlinkedto narcolepsy.Recognising

that“privatesectorincentivesaresometimesinadequate”,

governments aroundtheworld arerampingup “risk-sharing

partnerships”.Thereisat least now hopethatthe market’sfailure

“tocreatenew,necessaryvaccinescanand will beovercome”.

Britainishopingtohaveitscakeandeatitinnegotiationsover

thefuturerelationshipbetweentheCityandtheEU,saysJeremy

Warner:“itwantsbothaccessandfreedomtodiverge”.Michel

Barnier,theEU’stopnegotiator,“hastoldustostopkidding

ourselves”–hencethedrivetofind“somekindofhalfway

house”knownas“equivalence”.Sadly,evenifthisisachieved,

itwillbe“averypoorsubstituteforthelevelsofaccesscurrently

enjoyed”.Thismatters.“FinanceisfarandawayBritain’sbiggest

andmostimportantindustry”,earning£200bnannually.“Both

thepublicfinancesandthebalanceoftradewouldbeinserious

trouble”withoutit.AroundaquarterofallCityrevenueis

“directlydependentonEUmarketaccess”.AndwithoutLondon’s

markets-drivenapproachtofinance,theEUeconomy“risks

starvingitselfofthecapitalitneedstogrow,andstagnating”.We

musthopethatEUpolicymakersseethedangersofcuttingoff

theirnosestospitetheirfaces,andcometoappreciatethebenefits

ofunimpededcapitalmarkets.“Unwisetobankonit,though.”

Whenit comestodreamingaboutfuturecareers,“youth must be

allowedabit of hope”, says Bartleby. Which probablyexplains

why so many teenagers wanttobecome designers,actors and

musicians.But anew OECD studyindicatesthatevenmore

sober-sounding ambitionsare “unrealistic”. Four ofthefive most

popular career choices citedinasurvey of 15-year-olds across41

countrieswere “traditional professionalroles”:doctors,teachers,

business managersandlawyers. Bycontrast,someof“thefastest-

growingoccupations”,suchasITsupport,were rarelymentioned,

suggestinga“mismatch” betweenpreferences andprospects. Parts

of theOECD survey aredisturbing. Even though performance in

maths and scienceis evenly matchedbetween thesexes,“agender

gappersists in termsof aspiration”.Moreboysthangirlsstill

expect to work in scienceor engineering;thingsare evenworse

in technology.Still, “atleast teenagers whowant to tackle climate

change, as manyprofess to, are inluck”. US statisticians predict

that “the two fastest-growing occupations” in comingyearswill

be “solar-photovoltaicinstallers” and“wind-turbinetechnicians”.

JesStaley

“Barclaysisknownforits

corporatedramas,”says

TheSundayTimes.Butthis

onecouldbeparticularly

scandalous.Thebank’s

CEO,JesStaley,isbeing

investigatedbyUK

regulatorsoverhis

relationshipwiththesex

offenderJeffreyEpstein,

whowasfounddeadinhis

prisoncellwhileawaiting

triallastAugust.“It’swell

knownIhadaprofessional

relationshipwithEpstein,”

Staley,63,toldreporters,

soundingrattled.The

Americanbankersaid

therelationshipwas

“maintained”duringhis

previous34-yearstintat

JPMorgan,butthatit

had“taperedoffquite

significantly”whenheleft

–andhe’dhadnocontact

withEpsteinsincejoining

Barclaysin2015.Earlierthat

year,Staleyandhiswife

DeboravisitedEpsteinathis

VirginIslandshome.

Staleyhasalready

“survived”onebig

regulatoryinvestigationat

Barclays,saidNilsPratley

inTheGuardian.In2018,he

wasjudgedtobe“merely

incompetent”(ratherthan

lacking personal integrity)

while “trying to unmask an

internal whistle-blower”. But

the new investigation by the

Financial Conduct Authority

and the Bank of England is

different. “It’s about whether

Staley lied, or was less than

frank, when describing to

the Barclays board his

relationship with Epstein”.

Only “a finding of 100%

cleanliness will do”. In other

circumstances, Staley might

have expected applause –

Barclays’ 2019 numbers

showeda25% jump in

profits to £4.4bn. But if he is

“found to be even an inch

out of line” in his account of

his dealings with Epstein, he

will be dumped immediately.

Shutting the

City out of

Europe

JeremyWarner

TheSundayTelegraph

The race to

find ajab

for Covid-19

Lex

FinancialTimes

Aprofession

hooked on

pseudoscience

PhilipAldrick

TheTimes

Horses for

courses in the

job market?

Bartleby

The Economist

City profile