Shocks & Stares » Angela Merkel http://blogs.hillandknowlton.com/shocksandstares H&K\'s Financial & Professional Services Team Blog Tue, 19 Mar 2013 08:00:56 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/11/fps-friday-fiver-28/ http://blogs.hillandknowlton.com/shocksandstares/2011/11/fps-friday-fiver-28/#comments Fri, 25 Nov 2011 17:24:44 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=436 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.

IS THE UK REALLY A SAFE HAVEN?…..This week, Germany failed to sell all €6 billion worth of ten year bonds, which came as a bit of a shock to many. Then again, it also provided evidence of what we perhaps should already know by now: even Germany may not prove immine from the unfolding Eurozone crisis. The lacklustre auction may be an indicator that investors and banks are spooked by Germany’s exposure to the Eurozone crisis and the fact they are intrinsically linked to the future success or failure of the Euro currency. Remember it is the bond markets that have wreaked havoc for many of the Eurozone’s failing economies, so this week’s bund auction which only raised €3.6 billion, little over half of the full allocation, is an ominous sign.

It may be Germany's turn to sweat next

Following the under-subscribed auction Germany may have lost some of its image as the safe haven of Europe. This was further compounded by the fact that charges for UK 10 year gilts dropped below the same cost of borrowing for 10 year German bunds – 2.18% and 2.26% respectively – which is the first time this has happened since 2009. This evidence points to the fact markets view the UK as a safer option than Germany right now, a point you can bet Chancellor George Osborne mentions in his Autumn Statement on Tuesday. As Osborne will inevitably say, the low gilt charges are evidence that the Coalition Government’s economic policy is working to the extent that it is repelling contagion from our numerous struggling European counterparts.

Does all this point to the fact the UK is now the European safe haven of choice? We’re not convinced. With youth unemployment now over 1 million and forecasted economic growth of no more than 1% in 2012, the UK is teetering on the edge of slipping back into recession. Whilst the Government should be applauded for appeasing the markets to date, we are no-where near out of the woods yet and certainly can’t consider ourselves a safe haven as suggested by Osborne earlier this year.

GRAPH OF THE WEEK – PROPERTY…..We always enjoy the Business Dashboard graphics created by The Times’ business team, and Tuesday’s was no exception, highlighting the internationalisation of the City’s commercial property.

The City's property by nationality of ownership (Image: The Times)

LOBBYING AND THE BANKS…..With all the threats of regulation and counter threats by financial services companies of ‘we’ll leave the country if you regulate us’, it was refreshing this week to see the mud-slinging continue, this time on the subject of lobbying. The mud in question came from Robert Jenkins, newly appointed to the Financial Policy Committee – the body responsible for spotting risks to financial stability and ways of containing them. Jenkins adopted an aggressive approach, arguing that “A profession which should stand for integrity and prudence now supports a lobbying strategy that exploits misunderstanding and fear”. Though the FT pointed out that the most interesting dynamic in this is whether this rhetoric translates into FPC recommendations, we can’t help but think we could do with less of the rhetoric and more, well,  stability, though the two aren’t apparently (we hope) mutually exclusive.

GOOD WEEK/BAD WEEK…..In the Good corner this week, it’s Infinity Ward. Never heard of them? They’re the guys behind the Call of Duty video game, which along with our client Bethesda’s Elder Scrolls V, is currently outselling Hollywood blockbusters at a rapid rate. Video games are big, big business these days, enjoying huge marketing campaigns and massive airtime. It’s all a far cry from Pong in the 70s that’s for sure. Call of Duty isn’t without its detractors though – a group of MPs this week started a petition against the game in Parliament. As The Independent noted though, support hasn’t exactly been overwhelming for the cause, while Murdoch-scourge Tom Watson MP appears to be something of a fan – probably no select committee hearing just yet then.

In a rare appearance in the Bad corner, it’s the usually all-conquering Sir Philip Green, owner of the Arcadia Group which counts Topshop and Miss Selfridge among its raft of retail businesses. Green was forced to announce a hefty plan to axe over 200 stores this week following a large drop in profits. Arcadia has been a strong retail pillar in recent times, with Topshop leading the way on the high street. With consumer spending tightening each day in the UK, it could be a bumpy ride for Green ahead.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/09/fps-friday-fiver-18/ http://blogs.hillandknowlton.com/shocksandstares/2011/09/fps-friday-fiver-18/#comments Fri, 02 Sep 2011 17:32:25 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=267 Hello All! A little late this week, and we apologise for that, but as it’s now officially the end of summer that means it’s the start of the business season and we’ve all been a little flat out here at H&K Towers. Still, we wouldn’t want to miss out on reporting another busy week in the world of financial and professional services. And what a week it’s been. Thanks to our contributors this week: Ed, Ross, Clare and Rachel.

Turn that frown upside down…At the end of a pretty crazy August, there have been some fairly gut-wrenching figures this week from the Markit/CIPS Purchasing Managers Index (one of our clients). Declines in manufacturing output prompted fresh talk of double-dip recession, construction continued to be weighed down by weak confidence in the housing market, and all eyes are now on the all-important Services PMI which comes out on Monday.

Happy faces are hard to come by in the UK at the moment. But are we talking ourselves down too much?

Worrying indeed, but could it be that the UK economy is going through stage four of what could be termed ‘post financial crisis bereavement’ (PFCB)? According to one description, this involves ‘a feeling of listlessness and tiredness’ and possibly ‘wandering around in a daze.’

Well it certainly does feel like that sometimes but if the theory holds at least this is the final stage before acceptance sets in and the economy ‘regains its energy and goals for the future.’  It may just be the time for a bit of Vince Cable style positive thinking.

Breaking News – Football clubs spend less…The last minute wheeler-dealing of transfer deadline day was interesting for many reasons. But it’s the debate it has started about financial fair play which poses the biggest question for the future of the beautiful game. We’ve commented before on the ownership of football clubs, particularly in the immediate future. The onset of the Financial Fair Play from UEFA, requiring elite clubs to record a maximum debt of £39.5m over a three year period, may also have implications.

Fernando Torres may be the last £50m player we see for a while

Michel Platini, champion of these new regulations, would argue otherwise, but the financial future of football could go one of two ways. Clubs will either find loopholes in the rules and splash out enormous sums of money for overpriced talent. Or the rules will re-establish a sense of financial realism and build a future for football based on financial sustainability. The more prudent approach from England’s top clubs in the latest transfer window is a hopeful start. Ultimately however, the path football decides to take will come down to UEFA’s refereeing of the clubs who fall foul.

Women and Pay – the fight goes on…All things being well, Clare’s imaginary great granddaughter will be assured a pay packet that is on a par with her male counterparts, according to research published by the Chartered Management Institute this week. Some might call that progress. But we don’t.

There still aren't enough women in boardrooms (Image: Able & How)

It is forty one years since the Equal Pay Act. The Act prohibits employers from favouring one sex over the other in terms of pay and conditions. Whilst some things have improved in the past four decades, many others have not. Men still earn, on average, nearly a third more than women doing the same job. This, quite frankly, is ridiculous.

Over the past couple of months, the issue of women in the workplace has been an ongoing topic, particularly following Lord Davies’ inquiry into the dominance of men in company boardrooms. Whilst we think it is great this topic is being addressed, why is it employers still think that they can treat 50% of their workforce in such a manner? And the conclusion Clare has come to is this: they can, because they can get away with it. Is there another Act in British history that has been allowed to be so flagrantly ignored?

What then is the answer? Implementation! Transparency! Mobilisation! Anyone want to join the revolution? Please note – it might take us another 98 years to get anywhere near what we want…

Britain’s place in Europe…Ross wrote two weeks ago about the detrimental impact politics and politicians are having on the global economy and investor confidence. He was particularly critical of Angela Merkel as she seemed to be avoiding the glaringly obvious: Germany has to underwrite the debts of those struggling in the Eurozone and be prepared to commit much more to the European Financial Stability Facility (EFSF) for it to be taken seriously.

Credit where credit is due, Chancellor Merkel seems to be winning over enough parliamentarians in order to squeeze a bill through the Bundestag that will give German parliamentarians more of a say on the EFSF. By giving the Bundestag more of a say on future aid packages Ms Merkel is hoping to bridge the domestic and international problem she faces by merging the two. She is currently having to overcome domestic political pressures as the German electorate resent the fact that they should have to pay for the problems of others in distance places like Greece.

Should the Bundestag gain these powers, Germany’s economic dominance in Europe is likely to sore further. On the one hand, this may finally be the security the Eurozone needs, but on the other it may push the UK even further to the periphery. So far the UK Prime Minister David Cameron has kept the UK out of the Eurozone crisis, but by doing so Germany may be able to cement its position as the true leader of Europe.

Good Week/Bad Week…Two sides of the banking coin this week. For Vince Cable, champion bank-basher, scorned scourge of Rupert Murdoch, and Parliamentary stand-up it wasn’t a particularly good week. He’s been banging the drum on banking reform for several months now, but it seems as though the Independent Banking Commission’s recommendations are firmly on route to the long grass.

On the flip side, for bankers, and particularly those with both retail and investment arms, it was a relatively good week for the very same reason. Their lobbying effort has been long, hard and expensive, but with the likes of the CBI and BCC now on-board, it looks like it might be paying off. It wasn’t all good for the banks this week though – Alastair Darling’s forthcoming book launch looks set to drag them through the muddy playing fields again in a few weeks time.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/08/fps-friday-fiver-16/ http://blogs.hillandknowlton.com/shocksandstares/2011/08/fps-friday-fiver-16/#comments Fri, 19 Aug 2011 15:39:30 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=256 Hello All! August really isn’t showing any sign of slowing down is it? At the start of the week there was a collective pause for breath, but since Wednesday it’s been a case of deja vu with the world’s markets continuing to do their best impression of the Pepsi Max Big One. The focus of the Friday Fiver this week is understandably on these events, but we also find time for a bit of sporting action too. Thanks to Ed, Ross, Jonathan and new writer Helen this week.

Wither Angela, Woe Nicolas…..Tuesday’s summit between Angela Merkel and Nicolas Sarkozy was their latest attempt to tackle the Eurozone’s woes. However, no matter what they do to try and convince markets otherwise, politicians both sides of the Atlantic are still failing to win over investors’ confidence.

It's not all hugs and smiles in the Eurozone anymore - another tough week for Merkel & Sarkozy

Does democracy have any culpability for this? Well yes, it does. Merkel is finding it increasingly difficult to win domestic support for the continued underwriting of Eurozone debt – Germany’s latest growth figures won’t help her cause here either. She knows that the electorate are less likely to vote for a Chancellor who uses German money to bail out other nations, than one who does not. Despite this, the Eurozone’s survival largely depends on German financial commitment.

The recent debacle in the US over their debt ceiling and subsequent ratings downgrade was another prime example of politics trumping the good of the nation. Make no mistake, this episode was driven primarily by party political point scoring with the Presidential election around the corner – the Republican’s are already calling it the ‘Obama downgrade’.

With politicians at the helm the economic situation seems to be worsening. However, what they seem to ignore is that voters often reward politicians who show strong leadership and make bold decisions that solve difficult problems. The current status quo – a lack of leadership and an unwillingness to meet the problem head on – means that no-one wins, including politicians seeking re-election and investors craving market stability.

Big retailers in small communities…..According to the BRC, over the past week in particular we’ve seen how closely retailers are connected to their neighbourhoods. Really? This seems a curious statement given it was precisely those in the neighbourhood who smashed in their windows. For Ed, the lasting image of the riots were people walking out of JD Sports with a new pair of trainers. This is a nationwide retail outfit with a turnover of £770m. That’s a different proposition to an independent butchers or clothes store, which we’d associate much more with community.

Independent retailers face a tough task rebuilding from the riots

As neatly summarised in the Independent on Sunday: “Supermarkets are cheap and efficient. They stabilise quality and increase choice. They have transformed shopping, but this comes at a cost…The counterpoint to this has been the drastic decline of neighbourhood shops. We have reached a tipping point where the increased expansion of supermarkets will do more harm than good.”

Most agree that our high street retailers need as much help and support as they can get, especially after the riots. They are fundamental to the economy – which is why David Cameron has asked Mary Portas to lead a review into how to revive the high street. But let’s not kid ourselves about the role the big boys play in the local community. Rather, celebrate and revive the independent stores that do.

There’s more than one Olympic Games next Summer…..Awe-inspiring to spend time this week with Paralympics legends past, present and future just ahead of one year to go to the London 2012 Paralympic Games. We were lucky enough to pop into the Paralympic simulation training camp at Bath University with an eager group of national media all clamouring for a word with 11-times Paralympic gold medal winner Tanni Grey-Thompson and other assembled Paralympic royalty, including the inimitable 9 times gold medal-decorated Lee Pearson.

Humbled doesn’t really cover it when you hear stories of bright young talent including Will Bayley, current world number two table tennis player who trains for six hours a day, every day and gave a up a promising acting career after time at the Brit School for his sport; or the Paralympic swimmer Kate Grey who told her story of meeting another athlete with one arm who taught her a great lesson in life: how to put your earrings in one-handed. Helen for one will be among the first in line to bid for tickets come the start of the process on September 9th.

Good Week/Bad Week…..A bad week for US/China relations as chaos erupted in a supposedly friendly basketball match between Georgetown University and the Bayi Rockets. The contest, which was organised to coincide with Vice President Biden’s visit to China saw players brawling on scratchy camcorder replays of the scene.

It would be an inappropriate stretch to link the on-pitch animosity to the tension between the two nations. However, it’s the latest in a string of public spats between the two superpowers. Friction between the two countries is predominantly a result of economic realities – Jonathan insists you click HERE for a better explanation by dancing pandas. Let’s hope they keep the squabbles on the sports field.

No, the Chinese player's foot didn't slip in this picture, he really is going straight for the American's 'in-goal' area (Image: Interbasket.net)

Our good week award goes to tech entrepreneurs and their shareholders. In a deal likely to have significant repercussions for the mobile industry, cash rich Google snapped up Motorola for $12.5bn in the company’s quest for patents and an edge in mobile. It’s been a busy week and today we have seen one of Britain’s most successful start-ups, Autonomy, acquired by HP in a takeover worth £6.7bn.

And finally, the field of dreams…..or rather, the plastic, indoor sweaty sports hall of dreams. Last night the Financial & Professional Services team took on our arch H&K rivals, the Sports team in a winner takes all 5-a-side match at London Bridge’s T47. The result was convincing – a 13-6 win for us moneyheads. Sitting just round the corner from them today has been an unrivalled joy it has to be said.

On a more serious note, T47 is due to close soon which is a great shame. Finding a good football pitch for hire in central London is already difficult. It just got even harder.

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