It’s been a big ol’ week in the land of FPS, what with the Autumn Statement, Public Sector strikes, another round of downgrades for Europe’s banks and the beginning of Yuletide. Here’s our take on the week that was.
The Autumn Statement
After declaring the Pre-Budget Report dead, the Government this week delivered their Pre-Budget Report Autumn Statement. It was depressing news, but we all knew it was going to be and it looks set to continue for the foreseeable future. The headlines are lower growth, increased borrowing, a squeezed public sector and more measures to help small businesses, a 0.088% increase in the bank levy and a promise to further reduce corporation tax.
What really caught our eye(s) however, were the measures to help mid-size businesses; a theme championed by John Cridland at the CBI, the forgotten army of mid-size businesses have suddenly been remembered. In an attempt to create the UK equivalent of Germany’s Mittelstand, tucked away on page 64 of the Autumn Statement are a host of measures to help mid-size firms achieve their potential and export more proactively. After all, where else is growth going to come from?
Going down, down, down…..
There’s been so much grim news on the economic front this week that it’s a little hard to pick out the ‘highlights’. To recap quickly – China’s domestic consumption appears to be slowing, as does its manufacturing production; the UK is going to grow very little in 2011, and even less in 2012; Italy continues to have to pay a fortune to borrow money; business confidence that the eurozone will survive is ebbing away; and several stars of The Only Way is Essex are about to be booted off.
Amongst the carnage, two (possibly linked) events stood out. On Tuesday evening, the ratings agency Standard & Poor’s downgraded its investment rating on a string of high-profile banks including HSBC, Barclays and Goldman Sachs. The markets, predictably, took a grim view as the FTSE and other indices headed south yet again. It’s possible, though unproven, that regulators took a grim view as well. On Wednesday afternoon, as most of the UK’s economic journalists were huddling down for some post-Autumn statement analysis at the IFS, the Bank of England and several other central banks released a statement detailing co-ordinated action to lower the cost of borrowing in dollars for banks and other financial institutions. The markets, predictably, took a decidedly less grim view of this and promptly shot up north, yet again. Conclusions? That the global forces buffeting the global economy have become so strong that every announcement either way is now being leapt upon like a cure for cancer – stand by for next week…
Happiness is… a cigar called Hamlet
Who would believe it? Despite being in the depths of one of the worst economic cycles in recent history, the people of Britain consider themselves, for the most part, to be pretty damn happy! In a survey commissioned by David Cameron to gauge how happy the UK is, three quarters of us place ourselves at seven out of ten or higher on a scale of wellbeing.
With unemployment scaling 8% and inflation pushing 5%, you would be forgiven for thinking that the good people of Britain would be pretty miserable. But that good old stiff upper lip and Blitz spirit appears to be in abundance. People claim that their children’s well-being, personal relationships and mental well–being are the things they are most satisfied with. Which basically means that those things that money can’t buy, make us happy and we value them most.
Now isn’t that something to smile about?
The ultimate compliment
Whilst reading the FT’s report on the subject, we were struck by a realisation of profound significance. Warren Buffett is the spitting image of Carl Fredricksen from Disney/Pixar’s 2009 film Up.
The Fiver team were dissapointed to subsequently find via Google that others have spotted the resemblance but we are still claiming this one for industry event small talk.
Good Week/Bad Week…..
Leaping up the charts this week, it’s tall, thin and very clever economist, Robert Chote, head of the Office for Budget Responsibility. As we noted above, the OBR released decidedly grim numbers on the future of the UK economy on Tuesday, so you might not think Mr Chote would be a particularly happy bunny. He picks up our award however, because as one media commentator put it, Mr Chote is now effectively chief policy officer for the UK economy – based on his numbers, the Chancellor (and probably the Bank of England) have to react.
Hurtling down the charts sadly is former Italian footballer, Damiano Tommasi. The follically-blessed former Roma man came up with a novel solution to Italy’s debt problems this week when he called on his fellow footballers to use their sizeable wage packets to buy Italian bonds at a discounted rate – hence saving the government from having to agree to interest rates of over 7% every time they were looking to top-up the cash register. Sadly, the idea bombed, seemingly never to return.
So there you have it. Thanks to Clare Coffey, Jonathan Henderson and Dave Chambers for their contributions.