Archive for November, 2011

FPS’ Friday Fiver

Happy weekend all! It’s been an incredibly busy week in our financial and professional services team this week, handling everything from the forthcoming surge in Christmas shopping, to understanding the world’s expats just a little bit more. Speaking of Christmas, it’s now just one month away – something our resident Christmas Enthusiast, Karen, reminds us of thanks to this handy iPhone app every single day.

Sadly, there isn’t actually a whole amount of Christmas cheer around at the moment, particularly not if you live in Europe, or indeed the US, as Ross blogged on yesterday. With that in mind this week’s Friday Fiver covers off the continuing economic situation, as well as changes for UK bank customers, and two of the biggest video games of all time. Enjoy, and happy weekend.

BYE BYE FREE MONEY…..When is a free bank account not free? Pretty much always in the opinion of the Financial Services Authority. According to this morning’s Financial Times, the financial regulator is of the belief that free current bank accounts have “distorted the landscape and led to damaging decisions about what products are available”. In other words, the costs of providing free current accounts have been made up elsewhere by retail banks charging higher fees for other services (and by selling occasionally dubious products such as PPI).

The result of all this? The FSA believes that customers should be charged for their current account to negate this problem. It may appear a controversial idea, but the UK is something of an anomaly on bank accounts in the West – lots of other countries charge for this service, albeit at a low level, so we shouldn’t really be surprised that charging may happen here too. That would certainly make starting a retail bank far easier, something Metro and Virgin would probably welcome. Any move is likely to require concerted action though – as the FT also noted, if one bank were to unilaterally start charging, customers would simply get up and walk down the road to a ‘free’ competitor.

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Politicians and the global economy – when will they learn?


Once again politicians seem hell-bent on short term political wins even if this has a direct negative impact on the global economy. This time however, it is back to America rather than the inept Europeans.

Following a political debacle in the summer when Republicans refused to agree to increase the US’s debt ceiling, the US lost its AAA credit rating from Standard & Poor’s. After this, a Joint Select Committee on Deficit Reduction, or super-committee as it is colloquially known, made up of six Republicans and six Democrats was tasked with the objective of finding $1.2 trillion (£767 billion) in cuts over the next ten years.  This was an opportunity for the US’s politicians to right their wrongs and show they can act responsibly and start putting the economic mess back in order.

Lots of talk, but sadly little action from the JSDRC in America (Image:Epoch Times)

With the announcement this week that the super-committee had officially failed to agree on these cuts, once again politicians have shown a miraculous ability to do more harm than good to the economy. Following the news global stock markets fell illustrating the direct impact politicians have on the markets.

In case we needed reminding, this is largely due to the fact there is a US election next year. Both Republicans and Democrats are determined not to budge on economic principles in order to enhance their 2012 election prospects, although this is questionable after many Americans were fed up with both sets of politicians over the debt ceiling shambles in July. The news this week continues a worrying trend of politicians favouring short term political point scoring to the detriment of long term economic stability.

Politicians need to stop treating their electorate as stupid and try to dupe them with short term fixes. It is time politicians spoke to their electorate like adults and outline the long term strategy needed to sort out the global economy – even if this requires some painful truths. On this point it will be interesting to see how our own Chancellor talks to us when he delivers his Autumn Statement next Tuesday.

For further comment on US politics and its ability to stifle sound economic policy, the wise Francis Fukuyama’s article in yesterday’s FT is well worth a read.

FPS’ Friday Fiver

The FPS team has once again prepared a news smorgasbord for your consumption. This week we’ve served up our thoughts on new prime ministers, unemployment, a bank sale, a possible change of heart and the ever present issue of sovereign debt.  Thanks to Ed and Dave for their contributions this week.

EUROPE’S TOP TABLE…Conspiracy theorists and to a lesser extent the mainstream media were left considering the consequences of three senior appointments within the Eurozone this week. Europe has two new prime minsters, Mario Monti in Italy and Lucas Papademos in Greece. The European Central Bank also has a new President, Mario Draghi.

These three men have something in common. They have all worked for Goldman Sachs. GS is known for its search for talented and driven individuals and in many ways it is not particularly surprising that the three men have found themselves dining at Europe’s top table.

[Image from The Independent]

However, given the interconnected nature of debt markets, European politics and Goldman’s business, the appointments have left a number of commentators wondering what the situation says about the state of European democracy.

I know little about the men in question, but I suspect they will all have been shaped by their former employer’s organisational culture to some extent.

Organisational culture defined – “A pattern of shared basic assumptions invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration”

CAMERON LOOKING FOR AN ANGELA OVER EUROPE…Four weeks ago, Cameron witnessed over 80 Conservative MPs defy him on Europe. This was the biggest Conservative revolt against Europe. EVER.

[Picture from The Guardian]

Fast forward to this week and the PM’s annual speech at the Lord Mayor’s banquet on foreign policy and you will notice a stark shift in his approach to Europe. His language was sharp: “We sceptics have a vital point. We should look sceptically at grand plans and utopian visions,” playing up to the wailing of the backbenchers. “We’ve a right to ask what the European Union should and shouldn’t do and change it accordingly…, in Britain’s case, for powers to ebb back instead of flow away.” Sounding remarkably like an effort to repatriate powers from the EU, precisely what his backbenchers wanted a few weeks ago. Whether this is just positioning from our premier will be revealed after his showdown with Angela Merkel today, we’re watching it closely.  

OLDER WORKERS – HANGING ON IN THERE…This week’s UK unemployment figures were a little grim. In fact, for many in the media, they were very grim. The main focus of attention fell on the number of young people now lacking a job topping the 1m mark. David Miliband added his thoughts on the issue as well, labelling it a “tragedy” and an economic “timebomb”.


[Picture from The Daily Telegraph]

Public sector job cuts and a lack of new private sector jobs are undoubtedly a central cause of youth unemployment, but is it the only one? It wasn’t explored this week, but the issue of increasing life expectancy may well be another cause. People are living longer, and increasingly therefore looking to work longer. The Government has indicated its comfort with this, recently abolishing the default retirement age and giving the green light for people to work as long as they like. And why shouldn’t the Government do so? After all, the alternative to paying young people jobseekers allowance is paying older people state benefits if they don’t have sufficient income to live off in retirement. The question for the Chancellor is which one is more expensive now, and in the longer term.   

The BBC’s informative infographic on the subject of unemployment can be found here.

GOOD WEEK/BAD WEEK…A good week for consumers looking for a bank account this week. The sale of Northern Rock to Virgin Money should in theory increase competition on the high street for current accounts, thereby leading to better rates for customers. As we noted last week though, start-up banks are finding it tough.


[Picture from The Evening Standard]

On the flip side, a bad week for consumers in their role as taxpayers following the sale of the Rock. With the bank being sold for £747m, taxpayers are theoretically sitting on a £650m loss – the Government has injected around £1.4bn into the bank since taking the decision to nationalise it. The maths may not be quite that simple, as Robert Peston pointed out, but even so, it doesn’t bode particularly well for the eventual sale of the Government’s share in RBS and Lloyds.

I.O.U €10.9 trillion…We’ll leave you with another visual feast in the form of an I.O.U infograpic, yet again from the Beeb. It’s a handy guide to sovereign debt and the scale of debts relative to population size and economic muscle. 

The infographic can be found here.   

FPS’ Friday Fiver

posted by Edward Jones

Well hello there!

So it’s been a while since I penned anything on here and Dave Chambers the man who is not afraid to request a ‘Sav and a wedge’ should he feel the need, has MANFULLY held the fort. It has been a monumental week to say the least. As ever, we try not to focus on the obvious, but sometimes, particularly at the moment, there’s just no getting away from the travails of the modern economy and what Dr Doom would never call the ‘current economic climate.’ So here it is, our take on the week’s events, in 5 bite size chunks. Bon appetit!


Everything that could go wrong in the Eurozone pretty much has. It seems that since the first falling domino of Greece announcing it needed to be bailed out back in April 2010 through to Italy teetering on the edge this week there has been an air of predictability and certainty about which domino will topple next. So why is it that this destructive process has been seemingly allowed to go on when pretty much every falling domino has been widely predicted? In Ross’ view the primary reason has been short sighted politicians.

Naturally, politicians want to hold on to power once they have been granted it. Given that politicians are subject to frequent votes every few years in order to grant them a continued mandate they often fail to think more long term and strategically. Instead they look for quick wins. This breeds a culture of politicians not telling their electorate what they don’t want to hear which leads to many difficult decisions being overlooked. The Eurozone crisis being no exception.

Look at Angela Merkel. Unwilling to take the required step of committing Germany to underwrite Eurozone debt through fear of alienating voters who don’t want to support distant countries like Greece. George Papendreou’s craving for short term political support when calling for a referendum shattered any illusion that Merkozy had solved the Eurozone’s woes. The EU’s politicians need to address the bigger long term picture of Europe rather than bowing to domestic politics. Failure to do so will certainly result in more dominos falling.

Whilst the UK is surely towards the end of the domino line up, the fact those ahead of it keep falling should serve as a stark warning. We certainly won’t be able to say we didn’t see it coming.

How the Bond market works

This excellent graphic featured in the Times is not only a marvellous demonstration of what Ross was going on about above, it also does exactly what it says on the tin (click on it to see a larger version) and is well worth a read.  

via @SamCoatesTimes

Life on the slow (Metro) train

Last year Metro Bank launched to something of a fanfare. They proudly proclaimed they would take on the big traditional high street banks and lure customers into their doors with the promise of consumer-friendly opening hours, smiling staff, instant setup accounts and a personalised touch. The PR they got was very good in most cases, and the bank has continued with its branch opening programme to the extent that the blue and red branding is now a common theme on London’s streets.

The Guardian

All very well and good. But only if you then proceed to sell something, and as the FT reports today, this is proving tricky – there is a startling lack of mortgage sales going on, primarily because Metro can’t offer competitive rates owing to its small size and the cost of all those customer extras it offers. On a more positive note, the paper also revealed that Metro has signed up over 40,000 current and saving account holders. The message is clear then – when it comes to everyday money, many consumers will go for the brand. When it comes to big money however, a percentage figure still rules.

Good Week/Bad Week

It seems apt on today of all days to recognise the good week that the poppy campaign has enjoyed. Thanks to concerted pressure from the FA and others, England will tomorrow be allowed to wear their poppies with pride as they take on Spain at football. The poppy campaign has also enjoyed the debut of designer editions on the X Factor and Strictly Come Dancing, and continued coverage on the front of every national newspaper.

It also wouldn’t be right if as Poms we couldn’t have a little dig at the absolute stinker the Australian cricket team have endured. We know there’s very little finance related about them or cricket, but we simply couldn’t resist. At 21 for 9 it could have been even more dyer but for some heroic last wicket hitting by their tail-enders. I think we liked it best the way the BBC’s Hugh Pym summed things up.

Sorry - we just couldn't resist

Financial & Professional Services meets Alexandra Burke…

And in other news, one of our highlights this week was working with Alexandra Burke to launch the Street Dance for Change campaign with our client Aviva and Railway Children. The team delivered some outstanding results and our colleague Sam Lythgoe has written up a lovely little synopsis here.

FPS’ Friday Fiver

Happy Friday afternoon everyone. The clocks have gone back, it’s dark outside, and the eurozone still doesn’t look any closer to salvation. Light relief does at least come however with the prospect of a good fireworks show this weekend. Before you get out the sparklers though, take a look at the Financial and Professional Services Friday Fiver below, which this week takes in a wide range of topics on everything from Bob Diamond to celebrity marriages. We hope you enjoy!

WE’RE GROWING!!! SORT OF…..Finally, some good news this week as the UK economy grew 0.5% in the third quarter of 2011. Compared to recent efforts, that’s practically a meteoric rise, and was ahead of City expectations.

But here’s the bad news though – the effect may not last for two reasons. Firstly, some of the rebound in growth is being attributed to the disruption in Q2 owing to that dress and the ensuing two week holiday that most people took to get over it. And secondly, the forecast ahead looks dire – the latest purchasing manager indices, released by our client, CIPS, nosedived this week, suggesting order books are drying up. Still, let’s enjoy a bit of growth while we can shall we?

SING SONG TO AN ATHENIAN RHAPSODY…..We’re viewing Europe’s sovereign debt issues through a musical prism this week. The debt odyssey has taken a number of twists and turns, the most unexpected of which was Greek Prime Minister George Papandreou’s call for a referendum on the latest bailout package. The brinksmanship proved a step too far and was quickly called off.

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