ANY OTHER BUSINESS| MARTIN VANDER WEYER
A rate rise in November? After years
of dithering, don’t bet on it
handsomely for the benefit of its looseness
with the truth all these years having stam-
peded for the exit.
This week’s Ryanair news story, howev-
er, almost certainly isn’t a Ratner moment
in the making. The cancellation of 50 flights
per day — 2 per cent of a daily schedule of
2,500 low-cost flights — in order to fulfil
pilots’ holiday entitlements without spoiling
the airline’s punctuality record, threatens to
leave 250,000 customers uncompensated
and has also wiped £500 million off the air-
line’s stock market value. But Ryanair boss
Michael O’Leary built his business on the
principle that passengers can ‘bugger off’ if
they don’t like it, and says he doesn’t ‘give
a rat’s arse’ about the share price. On that
basis I suspect he’ll fly through this turbu-
lence unscathed, chiefly because passengers
on the uncancelled 2,450 daily flights will
continue, grudgingly, to admire the cost-
crushing operational ruthlessness that has
transformed air travel to their benefit, how-
ever rudely they are sometimes treated.Dangerous automata
Likewise, I predict one-click shoppers will
not shun Amazon, despite the revelation by
Channel 4 News that if you use the online
retailer to buy a combination of household
chemicals that could create a homemade
bomb, the algorithm informs you that ‘cus-
tomers who bought this’ also bought anoth-
er lethal component, ball bearings. Like the
promulgation of jihadist material through
Google, Facebook and Twitter, this raises a
whole other debate about the impossibility
of effective surveillance, and the absence of
any moral compass within internet automa-
ta that grow far beyond human scale.
But businesses like these that are highly
efficient can, it seems, get away with amoral
and uncaring attitudes because consumers
still value them for what they offer, espe-
cially when it’s cheap or free. Only when the
wider world has already recognised a brand
to be a con trick at heart does that Ratner
moment await.I
t is more than three years since Bank
of England governor Mark Carney was
accused by Labour MP and Treasury
Select Committee member Pat McFadden
of behaving like ‘an unreliable boyfriend,
one day hot, one day cold’ in his hints about
forthcoming interest-rate rises. And it’s more
than a decade since the last time the offi-
cial UK bank rate actually moved upwards:
the only shift since McFadden’s remark has
been a cut from 0.5 per cent to 0.25 per cent
in August last year. In fact there’s a palpable
sense that the Bank, in common with other
central banks, has all but lost the power to
deploy interest rates as a monetary tool, hav-
ing left them so low for so long.
So we wait to see whether this week’s
round of rate-rise signals lead to action at the
Monetary Policy Committee’s next meet-
ing on 2 November, or fades into the new
year. The flurry began when MPC member
Gertjan Vlieghe, previously labelled as the
panel’s ‘über dove’, said, ‘We are approach-
ing the moment when the bank rate may
need to rise’ in response to inflation close to
3 per cent and ‘a modest rise in wage pres-
sure’. Carney echoed that view in a speech
in Washington, cautiously adding ‘over the
coming months’.
Their remarks pushed the pound above
$1.35 (its post-referendum low was $1.20)
and to €1.14 from an August low of €1.07
and tourist-rate parity. A stronger pound
is itself anti-inflationary, since it reduces
import prices; and if inflation thereby ticks
down again, the urgency of a rate rise will
begin to evaporate. Hence the Bank may be
trying temporarily to deploy the exchange-
rate tool, at the expense of UK exporters,
in the hope of being able to leave the inter-
est rate tool in the box. Why? Because there
are also fears — expressed by Carney to
the irritation of Brexiteers who still regard
him as a mouthpiece of Project Fear —
that Brexit uncertainty is contributing to a
slowing of growth and business investment,
which won’t be helped by higher rates.
Nor will the housing market, which is
now in a doldrums of stagnant prices and
low turnover. Then there’s the looming con-
sumer debt crisis, which gets worse month
by month so long as disposable incomes
fail to keep pace with inflation and credit is
readily available. Would it be better to prick
that bubble sooner or later?
The last quarter-point rise in bank rate,
in July 2007, was the 35th rate change of the
decade that preceded it. In those days, the
mechanism was well oiled and well under-
stood by markets — even if hindsight tells
us the cheap-money era of the early 2000s
laid the foundations for the financial crisis
that followed. Now, central bankers are not
so much unreliable boyfriends as petrified
ones in a perpetual dither. The more finely
balanced and scrutinised their decisions, the
more potential negatives that might follow
from a single move, the greater the tempta-
tion to do nothing until it’s too late. I’m not
betting on a rate rise in November.Those Ratner moments
I was intrigued to read that Moira Ratner,
wife of former chain-store jeweller Gerald,
urged her husband not to use the notori-
ous passage of his speech to the Institute of
Directors at the Royal Albert Hall in April
1991, in which he joked about earrings in his
shops being ‘cheaper than an M&S prawn
sandwich but [they] probably won’t last as
long’, and about being able to offer a sher-
ry decanter at such a low price ‘because
it’s total crap’. His business promptly shed
£500 million in market value and was gone
by the following year, along with his fortune.
The ‘Ratner moment’ entered the lan-
guage of business — and we witnessed a
classic example in Lord (Tim) Bell’s sham-
bolic Newsnight interview earlier this
month, in which the once-invincible veteran
of spin tried to declare himself innocent of
Bell Pottinger’s association with the Gupta
family in South Africa while Kirsty Wark
read out an internal email from him claim-
ing credit for winning the account. The PR
firm he co-founded went into administration
eight days later, the clients who had paid so