UK News
Insights from the UK and beyond
from Hugo Dixon:
Brexit could come before Grexit
Investors have been obsessed with the notion of “Grexit” - Greece’s exit from the euro. But “Brexit” - Britain’s exit from the European Union - is as likely if not more so. The country has never been at ease with its EU membership. It refused to join its predecessor, the European Economic Community, in 1957; it was then blocked twice from becoming a member by France’s Charles De Gaulle in 1960s; and shortly after it finally entered in 1973, it had a referendum on whether to stay.
The euro crisis has put further pressure on this difficult relationship. David Cameron’s Conservative Party, the governing coalition’s dominant group, delights in pointing out the flaws in the single currency. The party’s eurosceptics feel vindicated because they have long believed that monetary union was only possible with political union.
But “I told you so” is never a good way of endearing oneself to others. What’s more, the idea that greater integration in the euro zone has “remorseless logic” - as Britain’s finance minister, George Osborne, puts it - directly undercuts the country’s national interest. The more the 17 countries in the single currency club together, the more the UK will be left out on the fringe.
If the Tories weren’t so keen to prove the point about how right they had been, they would be able to articulate an alternative way of keeping the euro together based on two key principles: more flexibility at the level of both nation states and the single market so economies can weather shocks; and the use of market discipline rather than bureaucratic rules to prevent banks and governments borrowing too much money and hence requiring taxpayer bailouts.
from Lawrence Summers:
Why the UK must reverse its economic course
It is the mark of science and perhaps rational thought more generally to operate with a falsifiable understanding of how the world operates. And so it is fair to ask of the economists a fundamental question: What could happen going forward that would cause you to substantially revise your views of how the economy operates and to acknowledge that the model you had been using was substantially flawed? As a vigorous advocate of fiscal expansion as an appropriate response to a major economic slump in an economy with zero or near-zero interest rates, I have for the last several years suggested that if the British economy – with its major attempts at fiscal consolidation – were to enjoy a rapid recovery, it would force me to substantially revise my views about fiscal policy and the workings of the macroeconomy more generally.
Unfortunately for the British economy, nothing in the record of the last several years compels me to revise my views. British economic growth post-crisis has lagged substantially behind U.S. growth, and the gap is growing. British GDP has not yet returned to its pre-crisis level and is more than 10 percent below what would have been predicted on the basis of the pre-crisis trend. The cumulative output loss from this British downturn in its first five years exceeds even that experienced during the Depression of the 1930s. And forecasts continue to be revised downward, with a decade or more of Japan-style stagnation now emerging as a real possibility on the current course.
from Breakingviews:
Memo to UK’s new air strategists: let numbers talk
By Robert Cole
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
After years of make-do-and-mend, the UK is once again arguing about the London’s airport capacity, and the possibility of a third runway at Heathrow. Most people seem keen only to rubbish plans they dislike. The right approach is to give airtime to all ideas - and then make a firm decision.
from Jack Shafer:
The leadership lessons of Chairman Rupert
This piece originally appeared in Reuters Magazine.
Rupert Murdoch has endured more crises during his 80-plus years than Richard Nixon and Odysseus combined, so the CEO and chairman of News Corporation can be forgiven for seeming nonplussed by his current predicament. He took over the family newspaper business in Australia at 21, when his father died, and expanded it. He fought the British unions in 1986 and won. He repelled the bankers in 1990, when he was close to insolvency. He has survived two divorces, the purchase and sale of MySpace.com, a bunch of other digital disasters, and even the predations of John Malone, who threatens Murdoch family hegemony with his purchase of News Corp stock. And now, referencing his media empire’s latest fiasco, the British Parliament has deemed Murdoch “not a fit person” to run an international company.
If Murdoch were the sort of pompous captain of industry who collected leadership maxims, Look for Trouble would likely top his list. He craves competition, and has repeatedly bet his company on new ventures like 20th Century Fox, the Fox Network, NFL football and his satellite operations.
from John Lloyd:
Julian Assange’s fall from the heavens
Julian Assange, a fallen angel, remains, as of this writing, a guest of the Ecuadorian Embassy in London. There he has sought asylum to avoid extradition to Sweden, where he faces rape charges that he denies, and, he believes, possible extradition to the U.S., where he fears he may be tried and found guilty of espionage and sedition, for which death is still the extreme penalty.
When we talk of fallen angels, we invoke the original fallen angel, Satan or Lucifer, once beloved of God, the highest in his closest council, whose pride impelled him to challenge for heaven’s rule – and came before his fall to Hell. Assange was an angel of a sort, at least to many. They saw his role as founder of WikiLeaks and leaker of thousands of pages of cables on Iraq and Afghanistan, and then from U.S. embassies all over the world, as the act of a liberator, a rebel with a cause, one who could poke the U.S. in the eye in a new way, with only a laptop at his disposal.
from The Great Debate:
Britain’s Liberals flex their muscles, a little
Every marriage goes through its bumpy patches. Just ask British Conservative Prime Minister David Cameron and his Liberal Democratic coalition partner, Nick Clegg. They have just gone through the most serious spat since they cobbled together their civil union two years ago, when British voters removed Gordon Brown’s Labour government but didn’t give the Tories a clear mandate. The coalition is a marriage of convenience, a dynastic coupling where neither side is under any illusion that love or affection is involved.
The pretext for the current very public disagreement was a Labour motion in the House of Commons demanding an investigation into whether the minister responsible for deciding whether Rupert Murdoch could buy the 58 percent of broadcaster Sky he does not already own broke the government’s own strict code of conduct. Jeremy Hunt, the man at the center of the fight, has been shown to have made up his mind in favor before being given the job of impartially adjudicating and to have been ultra-cozy with the Murdochs, sending Rupert’s son James a high-five text suggesting that the deal was a fait-accompli. The Murdochs admit bombarding Hunt with no fewer than 788 exculpatory emails. Despite this, Cameron saw no problem with Hunt’s lack of objectivity, and Hunt has defied endless Labour calls to resign.
from John Lloyd:
Not all are jubilant about the Queen’s Jubilee
The last few days of Queen Elizabeth’s Diamond Jubilee celebration have prompted the outpouring of patriotism and affection. But it did not faze Britain’s most determined protester. Peter Tatchell generally campaigns against homophobia and for gay rights: In one of his many (and one of his best) public projects, he tried to make a citizen’s arrest of Zimbabwe President Robert Mugabe when the latter came shopping in London in 1999, drawing attention to the president having called gays “pigs and dogs”. (London’s finest arrested Tatchell, not the dictator, for that episode.)
He was out again this weekend, on a wet, cool and blustery day as a flotilla of boats sailed down the Thames to salute the monarch. Just by Westminster Bridge, he and fellow leaders of the British republican party rallied a crowd of like-minded folk and some hecklers, who heard him say that though he thought the queen was personally quite nice, she was at the pinnacle of a pernicious class system, possessed hundreds of flunkeys and hundreds of millions of pounds, and must now stand aside to let the British people elect their head of state, as people should in a democratic country.
Press round-up – April 11
ABI warns over Barclay’s pay deal
Shareholder unease about the pay deals granted to bosses at Barclays intensified on Tuesday as a leading group of big UK institutional investors flagged its concerns about the bank’s pay policy ahead of its annual meeting in a fortnight. (FT)
UK back on track, OECD claims
Britain is on the brink of a lasting recovery, according to the Organisation for Economic Co-operation and Development (OECD), as momentum builds in the global economy. (Telegraph)
Unilever end stand-off over pensions
Unilever has struck a deal with two of the biggest unions representing its employees to cut pension benefits after a seven-month stand-off with workers that saw the Anglo-Dutch multinational suffer its first nationwide strikes. (FT)
Goldman’s co-head of M&A retires
Yoel Zaoui, one of Goldman Sachs’ most senior dealmakers, is leaving the bank after a 24-year career advising on some of the biggest deals in global mergers and acquisitions.
Press Round-up – April 10
Facebook to buy instagram for $1 billion
Facebook is paying $1 billion to buy Instagram, a fast-growing online photo-sharing site, in its largest acquisition to date. (FT)
Spectrum sale in UK fans 4G hopes
Everything Everywhere, the UK’s largest mobile operator by customer numbers, has appointed Morgan Stanley to sell spectrum that could be used to roll out 4G mobile broadband services in the UK ahead of other operators. (FT)
Press Round-up – April 5
Rothschild eye cross-channel unity
The Rothschild family plans to secure “long-term control” over its international banking empire by merging its French and British assets into a single entity and implementing a new form of governance that provides immunity from hostile takeover. (FT)
Amazon probed over corporation tax payment
Amazon.co.uk, Britain’s biggest online retailer, generated sales of more than 3.3 billion pounds in the country last year but paid no corporation tax on any of the profits from that income – and is under investigation by the UK tax authorities. (Guardian)
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The Wall
