Breakingviews

UK housing crisis jars with builders’ fat returns

August 24, 2016

In a normal market, Persimmon’s 36 pct return on capital would get competed away. Instead, sclerotic planning and smaller rivals’ limited access to finance act as barriers to entry. Builders’ fat returns could be vulnerable if the new UK government decides to take bold action.

Fund managers take long view by scrapping bonuses

August 23, 2016

Star investor Neil Woodford is paying his staff fixed salaries, while former trade body head Daniel Godfrey is launching a trust on the same principle. Fund costs won't necessarily fall. But a bonus system can prompt unhelpful short-termism while ratcheting up overheads.

Britain’s haul: 27 gold medals and a wooden spoon

August 22, 2016

China underwhelmed in the Olympic medals table, while the tiny UK excelled. That’s a poor guide to more important competitions. Though Britain still has soft power, its value as a role model is on the wane. China no longer needs gold medals to secure its place on the podium.

Post-Brexit UK consumers are oddly rational

August 18, 2016

Flagging confidence didn’t stop Britons from spending a month after their vote to leave the EU. Consumers may be blind to the recession threat. Or they may be anticipating that a slumping pound will push up the price of imported goods, and pre-empting higher inflation.

Contrary smoke signals bedevil Brexit firefighting

August 17, 2016

An unexpected drop in the number of people claiming jobless benefit jars with other, grimmer survey data. Monetary policy has already been eased to manage any post-vote slowdown and a fiscal stimulus is likely. Clashing signals make it harder for policymakers to target such help.

BHP Billiton reaches earnings nadir

August 16, 2016

A ray of light is appearing for the mining giant. Weak global demand and a Brazilian dam disaster were partly to blame for a record $6.4 bln full-year net loss but the worst has passed. As long as prices stabilise, cost-cutting will allow BHP to return more cash to shareholders.

UK fracking revolution calls for national thinking

August 12, 2016

Handouts to disgruntled communities and tax breaks are unlikely to make shale gas extraction more appealing for investors, given the shaky outlook for prices. A better strategy could be to create a national drilling titan in the mould of Norway's Statoil to get Britain fracking.

M&A activist twist suits almost everyone

August 11, 2016

Activist hedge fund Elliott won a bump in value on two agreed deals - for brewer SABMiller and UK retailer Poundland. Both results are good for shareholders in the targets, and not too bad for the bidders. It should, though, provoke a subtle shift in how deals get done.

Big banks’ stranglehold on UK loosened by a finger

August 9, 2016

British lenders give customers poor service, but a two-year competition probe has offered few remedies. Caps on overdraft charges could cost the largest banks 1.2 bln pounds a year. But trustbusters have done little to improve all-important small business lending.

Cheap wind energy can deal final blow to Hinkley

August 8, 2016

Electricity from offshore wind farms costs a third less than in 2013. It now undercuts power costs at the two new nuclear reactors planned in the UK. With prices falling further and low project risk, the case for pulling the plug on the Hinkley Point plant is building.