The Week UK – 23 August 2019

48 CITY

THE WEEK 24 August 2019

Commentators

In May, Indian bankers, investors and industrialists celebrated the

re-election of Narendra Modi and his Hindu nationalist BJP. Yet

two months on, “the elation is gone”, says The Economist. The

Sensex stock index is under siege–inJuly, foreigners pulled out

more money than they put in–and criticism of the government

is mounting in business and financial circles, reflecting growing

“disenchantment” withaman once regarded as their champion.

What’s gone wrong? The immediate cause of “the mood swing”

was July’s punitive budget. Business folk tuned in expecting news

of less red tape, fewer tariffs and lower taxes–and got the

opposite. “One banker recounts listening to the speech from the

shower, the last vestige of optimism washing down the drain.”

The final straw for some high earners was an amendment to the

Companies Act obliging them to spend part of their companies’

profits on corporate social responsibility, on pain ofapossible

jail term. Indian tycoons are wondering “if it’s time to decamp

to more functional, business-friendlier Dubai or Singapore”.

Given the record number of scams being perpetrated against the

British public, it is “deeply dispiriting” that we’re so bad at

policing online fraud, says Jim Armitage. An undercover

investigation by The Times has revealed that fraud victims who

ring up the UK’s national fraud reporting centre have been treated

appallingly: mocked by managers, and misled into thinking they

were talking to police and that their cases would be investigated.

In fact, all but the easiest to solve are “filed away, never to be

looked at again”. The call centre, Action Fraud, was set up by

City of London police, but has been outsourced to Concentrix–a

US firm that boasts that it is “in our DNA” to manage costs, and

pays its “barely trained” operators £8.50 an hour. This is policing

“at its very worst, done at its very cheapest”, and the upshot is

that just 3% of complaints result in charges. MPs have argued

that those who’d benefit from better fraud policing–banks,

insurance companies, etc.–should help pay for it, and that

Facebook, which is often used to market scams, should cough

up too. “It’s hard to disagree.”

You don’t have to haveatrade deal with another country to have

“a successful trading relationship”, says Roger Bootle–but it can

be useful. In the post-Brexit world, the most important deal the

UK strikes will be with the US (our largestsingleexport market).

But critics say that if we do get suchadeal, it is bound to beabad

one. They point out that the US economy is far larger than ours,

and argue that our negotiating hand is liable to be very weak post-

Brexit. Yet several countries with smaller economies than ours

(including Canada) have benefited from their US deals. More

importantly, this negativity rests onafalse premise–that giving

another party access to your market isakind of defeat. This line

of thinking assumes that the gains from trade mainly accrue to

producers, and overlooks the huge benefits derived from having

cheaper imports: better deals for consumers, and local producers

upping their productivity in order to compete. Of course, our

negotiators should aim for reciprocity in any US deal, but what

people fear as the problem is in fact “a large part of the solution”.

Could avocados and comfier chairs save Carluccio’s? That’s the

general idea ofanew £10m plan for the troubled Italian food

chain, but it’s doubtful ifafew hipster ingredients andaquick

spruce-up will be enough to rescue it or other similarly ailing

chains, says Sabah Meddings. The number of chain restaurants

has “exploded” in the past few years, but the casual dining boom

is long over. Having over-expanded too rapidly, many chains are

now restructuring as customers desert them. And with economic

growth slipping into negative territory in the last quarter, there’s

not much chance ofareversal. Figures from Kantar reveal that

“full service” restaurants sawa6%fall in sales in the year to

March, as diners opted for cheaper eateries. “Turnaround funds

are runningarule over the sector, seeking ways to extract

profits”, with Prezzo and Pizza Express among the strugglers in

their sights. “You could aggregate six of these brands and keep

15 or 20 sites for each,” says one private equity executive.

Doubtless someone will eventually makealot of money doing just

that. Meanwhile, “the casual dining crunch” continues.

Melanie Goldsmith

and Emile Bernard

The duo behind confectioner

Smith&Sinclair started out

selling “edible cocktails” –

sweets infused with daiquiris

or whisky sours–fromastall

in London’s Soho, said The

Sunday Times. They made

headlines two years ago with

acheeky range of “Trump

Sucks” alcoholic lollipops,

and have since pushed

annual sales to £2m. Now a

new future beckons for the

start-up. It has been bought

by Tilray, the Canadian

cannabis business, which

has big plans for European

expansion and has asked the

pair to come up witharange

of weed-infused sweets.

Although “recreational

cannabis” is illegal in the

UK, products made with

CBD,anon-psychoactive

compound, are not. The

confections will hit America

and Canada first, and land in

Britain sometime soon after.

Worthapotshot.

Li Ka-shing

The Chinese developed a

taste for Greene King IPA

in 2015, when President Xi

enjoyedapint at David

Cameron’s local. Sales

have since soared 1,600% –

prompting Hong Kong’s

richest man to pounce, said

The Times. Li Ka-shing is

paying £4.6bn for the Suffolk

brewer behind Old Speckled

Hen–adding to “a

burgeoning slate of British

assets” including Superdrug

and the Three network. The

low pound made Greene

King particularly attractive to

Li, akeen bargain-hunter and

arguably Hong Kong’s “most

influential” tycoon. Last

week, he urged protesters to

“love China, love Hong Kong

and love yourself”. But at

91, “he doesn’t have to

worry too much about

2047”, when Hong Kong

loses its “one country,

two systems” status.

Alopsided

trade deal is

not adisaster

Roger Bootle

The Daily Telegraph

Why scammers

are getting

away with it

Jim Armitage

London Evening Standard

Indian tycoons

are feeling the

“Modi Blues”

Editorial

The Economist

The casual

dining crunch

continues

Sabah Meddings

The Sunday Times

City profiles