The Week UK - 14.03.2020

50 CITY

THEWEEK 14March2020

Commentators

Thecasefor“levellingup”theeconomyisbasedonthefactthat

Britainhasthegreatestinequalityinregionalprosperityofany

largewealthynation,saysTheObserver.Yetgovernmentefforts

toredressthebalancewillcometonoughtifthelargestemployers

don’tplaytheirpart.And,forthemostpart,theyshunthe

regions.“Underpressurefromshareholders”,banksandotherbig

firmshaveoffshoredregionalBritishjobstoeasternEurope,India

andelsewhere,attheexpenseoflocalcommunities.Andthey’re

stillbusysacrificinglocaljobs“onthealtarofshareholdervalue”.

LloydsBankingGroup,thecountry’sbiggestmortgagelender,has

announcedplanstoaxe56branches–partofalong-running

processthathasseen“thousandsofregionalroles”vanish.

BarclaysistocloseamajorofficeinLeeds.VirginMoneyplans

tocull52branches.Allthis“exacerbatesdivisionsbetweensmall

townsandbigcities”andhighlightstheevermorelopsidednature

ofth eUKe conomy.Levellingups houldbea boutmoreth anjust

thepublicsector:privateenterprisemust playit spart.

“Theworldhashadmorethanadecadesincethe 2008 financial

crisistoprepareforanotherglobaldownturn,”saysRobin

Harding.“Ithasnotusedthetimewell.”Thecoronavirus

hasarrivedatapointwhen“theworld’slargesteconomiesare

dividedbytradedisputes”,andshouldtheeconomicweaknessbe

prolonged,there’sarealdangeritcouldtriggeranewroundof

“currencywars”.Inanidealworld,everycentralbankwouldbe

tacklingCovid-19with“ahealthylevelofinflationandinterest

ratesabove5%”.Yetinmuchoftherichworld,ratesarebelow

zero–andintheUSonlyjustaboveit.Meanwhile,countrieslike

MexicoandRussiaarerunningratesof7%and6% respectively.

This“asymmetry”isarecipefor“sha rpforeignexchange

movements”andthreatsofretaliationbythosewholoseout.The

crucialquestionishowDonaldTrumpwillrespondinanelection

year.IfhebelievesUStradingpartnersaregaininganadvantage,

hecouldwellresorttocurrencyinterventionorpunitivetariffs.

“Globaleconomiccooperationisalreadyfragile;eitherofthose

twomoveswouldfractureitaltogether.”

AheadoftheBudget,theBankofEnglandannouncedan

emergencycutininterestrates(from0.75%to0.25%)totackle

thecoronavirus,takingBritishborrowingcoststotheirlowest

levelinhistory.Itmarkedquiteafanfareforincominggovernor

AndrewBailey–anditlookslikehe’llneedallthehelphecanget,

saysNilsPratley.“Itwasneverindoubt”thattheTreasuryselect

committeewouldbackBailey’sappointment,buthe“willhave

hopedformoreenthusiasm”thanthe“yes,but...”verdicthegot

fromMPsonthecommitteewhovoiced“seriousconcerns”(an

uglyphrase)abouthisrecentstewardshipoftheFinancial

ConductAuthority.ThecaseforBailey’sdefenceisthatnoboss

oftheFCA,oranyofitsregulatorypredecessors,has“ever

emergedwithapristinerecord”.Evenso,“alothappenedonhis

watch”:fromthegatingofNeilWoodford’sfunds,tothecollapse

ofmini-bondissuerLondonCapital&Finance.“Itwouldbe

wrongtosaythatBaileyisreturningtotheBankwithlessthan

fullauthority.Buthecoulddowithgettingofftoaflyer.”

TheGovernmenthastoldusnottopanicbuyhouseholdessentials,

saysClareSibthorpe,butlotsofusar eignoringtha tadvic e.

What’s behindthe urgetostockpile?Andwhytheobsessio nwith

looroll s?Itturn soutthesciencebehinditisfascinating,notlea st

becaus estockpilingtendstovarywiththenatureofthethre at.

Thekeydistinction,accordingtoDrDimitriosTsivrikos,anexpert

inconsumerandbehaviouralscienceatUCL,isbetwee n“disaster

panic”–reactingtoacrisiswherewehavereasonablyprecise

informationastoits timingandintensity–and“generalpanic”,

wherewedon’t.Naturaldisastersliketorn adoesareacaseofthe

former;publichealthwarnings ,aso verCovid-19,ofth elatter.

Whenwe’reunsurewhenandwheredisasterwillstrike,panic

buyingis“ouronlytoolofcontrol”.Butwhystockuponafirst-

worldcomfortlikelo opaperinsteadofe ssentialslikefood?It’sa

psychologicalthing,saysTsivrikos:packagesarelargeinsizeand

“prominentlyfeaturedinaisles”, sowemorereadilynotice

shortages.Iftherewas“aninternationalsignforpanic,itwould

beatrafficwarning signwith atoiletpap errollinth emiddle”.

RishiSunak

TheChancellor’srapidpoliti

calrise–firstatGoldman

Sachs,thenathedgefunds

TCIandThelemePartners–

mirrorshistimeintheCity.

Andthathasbeendulynoted

by“alliesandopponents

alike”,saidtheFT.Inaletter

toSunaklastmonth,shadow

chancellorJohnMcDonnell

raisedquestionsabouthis

timeatTCI–“famedforits

aggressiveandcontroversial

campaign”againstABN

Amroin2007.TheDutch

bank’ssubsequentsaleto

RBSwasseenasa“key

factor”behindthelatter’s

downfall.But,according

toTCIfounder,ChrisHohn,

Sunakhadnothingtodo

withanyofthat.Sunakis

sometimespresentedas“a

graspingkidwhoworkedfor

evilhedgefunds”,saysone

Citycolleague.ButHohn,at

least,praisestheyouthful

Chancellor’s“strong

analyticalskills,high

integrityandlowego”.

JackDorsey

“SiliconValleyhasbeenona

deathwatchforJackDorsey’s

CEO-ship at Twitter,” said

Steven Levy on Wired. It was

thought he couldn’t survive

the rapacious hedge fund

Elliott Management, which

has builta4%stake,

“vo wing to kick Dorsey all

the way to Africa”. Still,

Dorsey–who co-founded

Twitter in 2006–has won “a

last-minute reprieve”. He’ll

be allowed to stay on,

though the deal struck with

Elliott “has more strings than

azith er”intermsof revenue

goals and performance. “The

fight some of us expected...

did not materialise,” said

Casey Newton on The Verge:

“Twitter folded likeacard

table.” Dorsey remains in

place “for now”. But “the

barbarians once at the gate

are now in the boardroom”,

and “it may not be long

before they’re running it”.

Baptismbyfire

forthenew

Bankguvnor

NilsPratley

TheGuardian

Howthevirus

couldstimulate

currencywars

RobinHarding

FinancialTimes

Bigbusinessis

failingBritain’s

regions

Editorial

TheObserver

Loorollsand

thescienceof

stockpiling

Clare Sibthorpe

Sky News

City profiles