UK News

Insights from the UK and beyond

from The Great Debate UK:

Budget background: Dark with light patches

--Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own.--

Spring has sprung.

The grass has riz.

I wonder when the Budget is….

On 19th March actually or, more importantly in this age of nonstop campaigning, six weeks before the European elections and barely a year away from the general election. Since the 2015 Budget will be too late to affect our wallets before we go to the polls, this is George Osborne’s last chance to reassure us that the economic situation is under control. Will he be able to resist the temptation to give us a reward for our patience through four years of austerity and to reassure us that the misery is nearly over?

If he does, it will be a statement as dishonest as Gordon Brown’s annual hymn to prudence in his Budget sermons, because the truth is that we are only halfway along the road to fiscal probity. In fact, according to the autumn statement, government borrowing will be about £110 billion this year, adding well over 6% to a national debt now approaching 90% of GDP.

Now some folk may be inclined to take comfort from the fact that those figures are more or less the norm in the industrialised world – the debt-to-GDP ratio for France is about 90%, for example, and even for Germany, it is 80%. Then, of course, there is Japan, with 250%. The problem with such comparisons, however, is that none of these countries has levels of household debt comparable to our own, which peaked at 160% of income in 2008 and has now come down only to 135%. In case you’re thinking it’s a miracle that households have reduced their debts even as much as this, given the squeeze on living standards in the last five years, you also have to bear in mind that rock-bottom interest rates made paying off debt easier than ever before.

from John Lloyd:

Even a billionaire cannot save the EU from itself

The world’s richest hedge fund manager, George Soros, says Europe’s great project, the European Union, is at risk. Even if it survives it is doomed, he says, to a period of stagnation and fragility, rendering it powerless on a world scene dominated by powerful blocs.

At 83 and insisting that he has retired, Soros still commands attention. He appeared at the European Council on Foreign Relations in London on Wednesday (he is a main funder) where he offered an off-the-cuff judgment that a central bank in an independent Scotland would be a risky endeavor. He generated headlines in a country that is nervous of a breakup of the Union. He dominated the morning’s BBC Today program, required listening for all public figures. He addressed a packed lecture hall at his alma mater, the London School of Economics and attended a meeting at the House of Commons.

from Nicholas Wapshott:

European leaders show their weakness

 

The European Union, at the forefront of the hostilities between Russia and the West, is in a bind.

It has belatedly adopted Ukraine as one of its own. Yet the EU economy is so frail,  thanks to its beggar-thy-neighbor economic policies, that it is reluctant to use financial and trade sanctions to punish Russia for occupying Crimea and threatening to occupy the eastern part of Ukraine.

from Hugo Dixon:

Independent Scotland won’t keep the pound

An independent Scotland will not keep the pound. That’s despite this being the express wish of the Scottish government, which is campaigning for independence in September’s referendum. The reason is that it’s hard to see the rest of the UK agreeing to such a deal – except on terms that would affront Scotland’s amour propre.

One can understand why Edinburgh is keen not to change its monetary arrangements. If Scotland had its own free-floating currency, it would be less economically integrated with the rest of the UK. Given that 60 percent of its exports and 70 percent of its imports are with the rest of the UK, such a separation would hit hard.

from Photographers' Blog:

Morning Glory

London, Britain

By Andrew Winning

Morning Glory is the antidote to a room full of rowdy, drunken party-animals lurching out of step to booming dance music. Here, sleepy-eyed clubbers queue up quietly in the early morning, some still in their pyjamas and dressing gowns, before filing into the venue.

Others wearing fancy dress stretch and warm up as they try to generate some enthusiasm in the pre-dawn gloom. Once inside the venue, patrons pick up a coffee or a smoothie, maybe do a little yoga or have a massage before the music draws them onto the dance floor.

from The Great Debate UK:

Was Nigel Farage right about mothers in the City?

And the award for foot in mouth this week goes to… UKIP, again. This time it was leader Nigel Farage, who said that women who take time off to have children are worth less to their employer. He said this to an audience of (presumably) men in the City and rounded it off by saying there is no sexism in financial services and that childless women are more than a match for their male counterparts.

While I am not normally in the position of defending Nigel Farage, or any other politician for that matter, I think his comments deserve our attention and women should use them to trigger an important debate about mothers and the work place.

from Anatole Kaletsky:

Will Britain really leave the European Union?

Is it conceivable that Britain will leave the European Union? A few years ago this question would hardly have been worth asking.  In the past 12 months, however, the issue of EU withdrawal has shot into the British political headlines.

The latest, and apparently most authoritative, such headlines appeared this week, after a pugnacious speech by George Osborne, the Chancellor of the Exchequer and second most powerful figure in the British government. Reuters headlined the Chancellor’s comments like this: “Reform or lose us as a member, Osborne tells the EU.” The Daily Telegraph highlighted the same message: “Osborne warns Britain may leave EU over reform failure.” The BBC headline concurred: “Osborne – Don’t force UK choice between euro and EU exit.”

from The Great Debate:

Where does Britain stand in the global economic race?

Following the international financial crisis of the late 2000s, the world’s financial leaders have been working towards a standardized banking system that will strengthen banks at an individual level, and thus improve the banking sector’s ability to survive stress when it occurs.

In 2010 the Basel Committee produced a third accord outlining a set of regulations, with the goal of solving the banking system's ongoing problems. Since then the conversation has yet to cease over whether enough has been done, since the peak of the crisis in 2008, to ensure a stable financial environment that supports growth on an international scale.

from John Lloyd:

‘My people throughout the world’

This week Queen Elizabeth the Second, now 87, will give her customary Christmas broadcast. Every year she tells most Britons what they want to hear: that they are still great. And she is given much love for that.

That love is said to have been hard won. A few of the books written about Queen Elizabeth’s reign detail a marriage that went sour, at least for some years, because of her husband Prince Philip’s adultery. Nearly all books point to a disciplined life of unremitting travel, briefings, lengthy state occasions and unfailing courtesy. They also mention the constant explosions of sexual waywardness of nearly all of her four children and her (temporary) drop in popularity when, after Princess Diana’s death in 1987, she appeared to insufficiently grieve.

from Breakingviews:

Why the UK is growing and the euro zone isn’t

By Ian Campbell

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

British growth is forging ahead of the euro zone’s. UK austerity has been more effective, the pound is cheap, the housing market suddenly all too lively. But British simplicity also helps. A Germanically strong euro weighs heavily on a still systemically challenged zone.

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