ANY OTHER BUSINESS| MARTIN VANDER WEYER
Should we be sad or happy
that the pound has buckled?
French companies — while Donald Trump
has threatened a retaliatory import tariff on
French wine. Meanwhile, back in Blighty,
the first indication of what a Trump- Johnson
‘special relationship’ might really look like
took the form of messages from the White
House that we can kiss goodbye to a US-UK
trade deal unless our new government
scraps Philip Hammond’s ‘digital services
tax’, due in force next April.
If the French insist on their digital tax
while Downing Street chickens out of ours,
we may inadvertently gain some minor
commercial advantage. But really what
these parallel developments signify is the
shameful failure of western governments to
agree on a co-ordinated way of diminishing
the colossal advantage that has accrued to
supranational tax avoiders over law-abiding
local competitors.... et non au Big Mac
The handy ‘Big Mac Index Converter’ says
a pound in France should be worth €1.32
in terms of burger purchasing power. But
we’re down to €1.09, and I hear of airport
bureaux de change offering as little as €0.91.
That won’t impede the weekly restaurant
tips that are this column’s summer tradition,
but it may stop me venturing into Michelin
rosette territory. Don’t despair, however:
I’m not going to start eating or writing about
Big Macs. Instead let me direct you to Diab-
olo Fraise at Nabirat (Dordogne), a middle-
of-nowhere fixed-menu eaterie owned by
its village commune, functioning partly as a
canteen for a nearby engineering works and
packed every day despite this year’s startl-
ingly low tourist numbers.
Four delicious courses, robust wine and
coffee, all for €14. Even if that’s 15 and a
half of your Heathrow pounds, it’s unbeata-
ble value — and in the sort of ambience that
sometimes makes me wish I’d been born a
Frenchman. As I struggle to explain what’s
going on in Westminster to neighbours here
of several nationalities, it’s becoming seri-
ously embarrassing to be an Englishman.A
wave to the FT team whose week-
end feature on how the pound has
been hit by fears of no deal began
with this arresting sentence: ‘Sterling has
finally buckled.’ I almost spilled my café
crème as I read that in a sunlit French square
and contemplated JP Morgan’s ‘conserva-
tive’ forecast of a $1.15 no-deal exchange
rate, with a possible further 10 per cent fall
beyond that, to compare with $1.50 before
the referendum and ‘purchasing power par-
ity’ (per UBS) of $1.57. As for the euro,
more in a moment — but we’re already only
a whisker from pound-euro parity.
Should we be upset by this decline of a
national symbol whose name, sterling, also
means ‘excellent or valuable’? Or should
we accept a slide to lows rarely seen since
the 1970s as a price worth paying to extract
ourselves from Europe’s grip? There is, after
all, an argument (advocated by the free-
thinking tycoon John Mills, for one) that a
radically devalued pound is the key to future
prosperity, because it will ‘unleash’ export
manufacturers and wipe out our longstand-
ing trade deficit; it might bring inflation too,
as import prices soar, but the Bank of Eng-
land has the tools to deal with that.
Or does it? Suppose the Bank feels the
need, in response to a no-deal shock, to cut
rates and even resort to quantitative easing
(both inflationary) rather than raising rates
to quell inflation? Suppose exporters are
so impeded by customs chaos that they can’t
sell more stuff abroad at any price? Suppose
all we get are waves of speculators thrash-
ing sterling and an invasion of bargain-
hunting US investors — as seems to have
begun with Advent’s bid for the Cobham
aerospace group?
Downing Street will no doubt tell us a
cheap-as-chips pound offers extra ‘turbo-
boost’ alongside Boris’s spending bonanza.
In truth it’s another unquantifiable risk in
a strategy of breathtakingly high-risk brink-
manship. Yes, it’s possible we’ll come out the
other side richer, happier and more admired
in the world, but would you bet big on it?
I’m praying for a deal and a sterling bounce.
HSBC firebreather
Chief executives are rarely fired in the
holiday season, so it must have been quite
a surprise for HSBC’s John Flint to find
the binbag and P45 on his desk after only
18 months in post and despite a 16 per cent
rise in half-year pre-tax profits to $12.4 bil-
lion. At a time of increasing tensions afflict-
ing Asian markets and HSBC’s share price,
Flint wasn’t forcing the pace sufficiently to
please Mark Tucker, the former Wolver-
hampton Wanderers player and Pru insur-
ance chief who was hired as HSBC chairman
in 2017. An ex-colleague described Tucker
to me at that time as ‘intense, hard-driving,
slightly oddball’ — the sort of hands-on
executive who does not easily transition to
chairmanship. Having breathed fire on the
20-year HSBC veteran Flint, I doubt Tucker
will stick to the bank’s tradition and appoint
another insider to follow him; indeed he may
regret not acting a month earlier, when he
might have bagged rugged Ross McEwan,
the Kiwi who’s leaving RBS and heading
south to take on the challenge of National
Australia Bank.Non au Franglais...
In France for August, I’m struck as ever by the
anti-Anglo-Saxon tone of public discourse:
even the village priest’s sermon begins with
a parable of the dangers of globalisation.
While the prospect of the UK’s ‘sortie bru-
tale’ is consigned with a Gallic shrug to an
inner page of Le Figaro, its headline sto-
ries are about the unwelcome advance of ‘le
franglais’— the incursion of ‘selfie’, ‘stand-
up’ and other Anglo- Americanisms despite
a 1994 law that banned such horrors from
official publications — and a proposed fiscal
attack on ‘Gafa’.
That’s an acronym for Google, Apple,
Facebook and Amazon, whose revenues
in France are shortly to be subjected to a
3 per cent levy. Amazon retorts that it will
simply pass the charge to consumers and
sellers — thereby disadvantaging small