Archive for May, 2011

FPS’ Friday Fiver

posted by Edward Jones

In case you missed it, President Obama was in the UK this week to talk essential relationships, cyber crime and have a barbeque in the Number 10 Rose Garden. In honour, of his visit this weeks’ fiver looks at the visit and the UK’s special essential relationship with the US.  Thanks to Dave, Clare, Rachel and Melanie for contributions.

Essentially …

Whilst Foreign Policy and the six point plan, were the main items on the agenda, surely the most interesting aspect of Obama’s visit was the upgrading of the UK’s ‘Special Relationship’ with America to an ‘Essential Relationship.’ Essential. Never mind our credit rating, we have an essential relationship with America! As Matthew D’Ancona pointed out earlier this week, it has a certain ring of indispensability to it. I’m less sure Obama’s deficit reduction plan can be described as Osbornian, as D’Ancona suggested, but you have to hand it to Cameron he pulled the rabbit out of the hat with that one.

Deficit indifference

Governments should “live within their means” but also sustain growth by investing in education, and the pace of deficit reduction “may end up being different”. Uncritical certainly from the President, but hardly the ringing endorsement David Cameron and George Osborne were hoping for with regards to their economic strategy.

They were probably also hoping for better revised Q1 GDP figures from the ONS than the ones that materialised this week at roughly the same time as the meat was cooking on the barbie. Traditionally, the revised figures show an increase in GDP for the quarter over the first, partial set of figures released. That didn’t happen this time, with growth remaining at 0.5%. More worryingly, household spending contracted 0.6% and business investment practically hid in the corner shivering, as it shrank 7.1%.

The Government remains committed to cutting hard and fast in order to shrink the deficit and get the country back on track without a large credit card bill hanging over it. Judging by the economic data and reaction to it, the jury is still out on whether this will work or not – which is perhaps why the President hedged his words to such effect.

Inspiring relationships

Michelle Obama re-affirmed her own ‘essential relationship’ with old friends during the visit when she was re-acquainted with girls from Elizabeth Garrett Anderson School. The EGA girls were visiting Oxford University as part of a programme to encourage them to aim high. Mrs Obama, herself a graduate of Princeton and Harvard, encouraged them to not “be afraid to take risks, ask questions, ask stupid questions, don’t be afraid to trip, fall and don’t be afraid to get back up.”

Wise words indeed from the First Lady and something all of us can take heart from. Media coverage of the meeting praised her as an inspiring role model for these young girls. But do our young people need to wait for a visit from a foreign leader’s wife to feel inspired? It strikes me that inspiration comes in all sorts of guises from dignitaries to teachers, to a school system and society that encourages successes achieved on merit. I cannot help thinking that more of our young girls would be inspired if the education system were fairer and society willed them on.

However, today’s announcement that under radical changes to admissions, some secondary schools will be able to select pupils on the basis of family income fills me with dread. If we want to inspire our young people, there has to be a better way than judging them on their parents’ finances.

Right all along?

Photo: Jacob Whittaker

There was a time when being British was all about keeping a stiff upper lip through adversity.  We were a bit stuffy, grumpy, and proud of it (with the exception of Ken Dodd). But if this week’s stats from the OECD are to be believed the old stereotype has been blown out of the water – we’re actually much happier than most of our European neighbours, including those where the weather is supposedly much nicer.

Of course our BFFs across the pond are way ahead, with the ‘pursuit of happiness’ in their constitution, but recent events have given them a run for their money (Will & Kate, less than a year to go to the Olympics, plus some cracking Aviva (client) sponsored ITV dramas on the telly).  Even Obama seemed to be using his visit to the UK to give a PR boost to the start of his election campaign, after all the yanks did seem to love the Royal Wedding more than we did.

Cheeriness is starting to look like part of a new national character, even a driver of government policy with the government launch of a new way of measuring it earlier this year.  Yet whilst the OECD’s figures do seem to suggest that money doesn’t necessarily make you happy, it will be interesting to see whether the next GDP figures show it can work the other way around.

Obama and the ostrich generation

When all the fanfare and noise from the military 41 gun salute to welcome Obama’s visit abates, we hope that the two leading western premiers might spare a thought for the lot of their respective domestic pensioners. They don’t need to look hard or delve deeply to find incontrovertible evidence of the pensions malaise and bleak future that faces many prospective pensioners in the UK and US and indeed across most Western economies.

The worrying statistics roll in on an almost daily basis. According to an international survey released by HSBC this week six in ten Britons have no financial plan for their retirement – due to a “cycle of dependency” and suffer from an equally self-deluded belief that they will enjoy a comfortable retirement.

Across the Atlantic, prospects are equally stark in the US. New findings from the American Association of Retired Persons (AARP) latest public policy institute report reveals that many older Americans, employed and unemployed, may never recover financially from this latest recession, although here, half of them do actually realise that they won’t have enough money to live on in retirement.

This dearth of planning contrasts with upcoming economies in the East, where a class of “prosperous pensioners” is merging. The respective expectations on annual growth showing  further downward revision for the UK economy (now a paltry 1.4%, with the US at only 2.6), is in stark contrast to buoyant growth rates in Asia’s flagship economies – China 9.2%, India 8.5%.

Worrying indeed.

Superinjunctions – good for PR?

posted by Edward Jones

In healthcare parlance, the condition of the superinjunction would now be best described as ‘critical’ – beaten and bloodied by the blows of parliamentary privilege and press freedom. Surely, the kryptonite to the judiciary’s comic book gagging order. What, however, does this mean for public relations’ standing in the defence of corporate and individual reputations – if anything?

The injunction applicants in question have, we can only assume, weighed up their chosen course of action and opted for the legal route. Oh, for the delight of hindsight. Standing poorer and undoubtedly regretful of their decision making, those who now face the ignominy of full-scale public ridicule, must wonder why they didn’t take the PR alternative – a carefully controlled interview piece with a suitable outlet, or some such tactic.

I’m not inclined to ponder on what may have been done in public relations terms at this time, but to question what these developments have done for PROs in the broader ‘pecking order’. Will we now see a greater say for the profession at the ‘top table’? Will the seeming dominance of our legal counterparts in crisis situations be undermined by the continued fallout?  I hasten to add that the lawyer’s role in such situations is an important one and I’m not here to suggest that we can do it without them. However, the executive boardroom has a decidedly lofty barrier-to-entry and it’s up to the profession to continue to reiterate what we as professionals can do to earn our rightful place as trusted advisors.

Please note: This post was originally posted by Peter Roberts

FPS’ Friday Fiver

After last Friday’s company Charity Day, the Fiver is back. This week we tour the globe and the news agenda with comment on time zones, tweets, trades and the thorny issues surrounding the state-owned banks. Thanks to Clare Coffey, David Chambers, Ross Gillam and Nick Woods for their contributions.

Time warp

Economists often watch German manufacturing exports or Saudi Arabian oil production for signs about the health and direction of trends taking place in the global economy. The small island nation of Samoa is not well known for its economic significance but last week the country announced a move which says a lot about the global economy.

The Samoans have decided to move the zigzagging International Date Line to their east. The move which will take place later this year will bring the country a day closer to Asia and Australasia.  

As a nation, the Samoan’s seem happy with change. In 2009 they decided to switch sides and start driving on the left of the road. The rationale for this latest decision is to put them in closer sync with the East. The FT described this as a “clear vote of confidence for the Asian century.” 

The old adage that time is money seems appropriate.

 Shares for everyone?

The British public should all receive a portion of the shares the government owns in RBS and Lloyds Banking Group when the time comes to sell them back to the private market. That was the view this week of the Centre for Policy Studies, which published a paper outlining the idea. The media inevitably picked up on the fact that doing this would also cause the City to lose out on around £1bn of fees for underwriting and processing the share sale.

So is it a good idea? Anthony Hilton in the Standard was broadly supportive, though he had reservations about whether the idea could actually work. From our point of view, anything that reintroduces consumers to the notion of share ownership, dividends and the wider sphere of personal finance has to be a good thing.

 Clear as Westminster mud

Today’s report on injunctions by a committee of top judges has questioned the boundaries of reporting on statements made in the House of Commons and Lords. Committee chairman Lord Neuberger criticises MPs using parliamentary privilege to simply “flout” rules, supporting the report’s comments that reporting in the Lords or Commons can only be protected by parliamentary privilege where ‘summary is published in good faith and without malice’. This last comment challenges the free reign of journalists to report what they like, something many have argued is unfair and equates to a gagging order. Rather than drawing clarity on the issue, the report seems to highlight the just how blurry the current law is.

However, what is even less clear is what the rules should be on those who use social media to openly discuss injunctions. Journalists and the general public are just as likely, if not more, to search Twitter for the latest gossip and news rather than listen to statements in the Commons and Lords. With this in mind, businesses who want to bury bad news need to pay just as much attention to conversations online as they do at the despatch box.  

 Inflation targets – what is the point?

Official figures released this week announced that CPI has hit the heady heights of 4.5%, more than double the Bank of England’s target level. The Bank concedes it expects inflation to continue to grow this year, even hitting 5%.

 

In a speech last night, the Bank’s deputy governor for monetary policy, Charlie Bean (yes, Mr. Bean is a deputy governor!), admitted that the Bank had taken the decision to “accept a temporary period of above target inflation”. This therefore begs three questions: how long does a ‘temporary period’ last, on what criteria was this deemed ‘acceptable’ when there are millions of households struggling to make ends meet, and what is the point of a target if it is acceptable to fall flagrantly short of it?

Clearly Mr Bean and his colleagues are struggling to do their jobs. Is this because though the target is simple, they do not have the means to get there? Is their inaction, action? Do they have the requisite insight and tools to enable them to do their jobs? They say a bad workman blames his tools – and maybe our leading economic brains can justifiably say that the tools at their disposal have proven to be inadequate (hence the regulatory infrastructure changes to come) and therefore they are hamstrung as a result. However, the millions of households across the country can ill afford the wait or the expense of a ‘temporary’ period of crushing inflation.  

Glencore – The saga continues

So the long wait may finally be over but the speculation remains as Glencore this week made its much anticipated IPO. Whilst much of the hype had centred on rumours of oversubscription, shares in the Swiss-based commodities trading company traded on a “conditional basis” between a high of 553.17p an increase of 4.4 per cent from the offer price – and a low of 530p.

 

With many investors hoping for an opening day rally of between 5-10% many were left feeling somewhat underwhelmed. Whilst many commentators may argue that the trading activity marks a normal stabilisation procedure, the debate around the wider issue of the somewhat sluggish European IPO market looks set to continue.

With this in mind it seems Glencore will continue to be under the spotlight until next Tuesday as the business moves to unconditional trading with the most positive projections suggesting the company will go straight into the FTSE 100, only the third time this has been achieved.

Either way with 5 of its executives set to become billionaires, perhaps it’s not all doom and gloom!

Corporate Tax Avoidance – How to tackle the PR challenge

posted by Edward Jones

How should companies deal with direct action and online activism in light of accusations of corporate tax avoidance? That was the question that was posed by Communicate magazine last week.

In response, recession has, unsurprisingly, led to a greater level of awareness among consumers regarding how businesses behave. Subsequently, I would suggest that there’s renewed justification to put the company accounts to the same scrutiny and rigour that apply to other aspects of the organisation when it comes to issue preparedness.

Corporation Tax has become a lightning rod for large companies

In short, if there appears to be a problem with the numbers, engage the communications professionals in the same way you would when it comes to other operational matters.

The stance taken by those who have been brave enough to defend their positions thus far has talked of wider corporate contribution, including employment numbers and payroll.  This is not wrong. However, I do believe there’s a need to move the debate on, as was tried by the Treasury’ s David Gauke recently who argued that Corporation Tax fundamentally affects employees, who have to foot the bill. A debateable point, but worth voicing.

I’m not kidding myself, the subject of tax is a difficult one to reframe as we’re all familiar with and contribute to the system. However, in light of the fact that the UK public largely supports the capitalist system that’s in place, I believe there’s the scope to evolve the arguments.

Please note: This post was originally posted by Peter Roberts

FPS’ Friday Fiver

Yes, it’s back. After a break for the Easter holiday, some glorious weather and that dress, we return with the Financial and Professional Services team’s Friday Fiver. We also have a fresh contributor this week, our new regulatory and government expert, Melanie Worthy. Other pieces this week come from regulars Ed Jones, Ross G, Karen and myself.

Crunch time for RBS and the FSA…The Treasury Select Committee and the FSA announced this week that they’ve asked City heavyweight Sir David Walker and lawyer Bill Knight to conduct an independent review of the report the FSA is producing into the failure of RBS. They will examine whether the report fairly reflects the findings of the FSA’s investigation of RBS, as well as analysis of its own regulatory activities.

Sir David Walker - charged with reviewing the demise of RBS (image from guardian.co.uk)

Walker’s unique attributes of being both a credible City figure plus a trusted Government adviser make him an obvious choice for the role. His track record helps too – he has headed Government enquiries, such as in 2009 when he examined governance at the big UK banks.

Just as well then, as he’s going to have his work cut out. However “complex” the issues were, as the FSA cites somewhat reluctantly, there will be strong media interest and expectation for answers as to the causes of RBS’ demise; the excessive cost to the public purse from bailout; and the wider malaise that played out across the banking sector as the financial crisis ensued.  Whilst Walker and Knight tread through a minefield to avoid the legal conflicts to RBS employees, they’ll be mindful of the need to show teeth and forensic review on both sides of the regulatory fence.

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