Shocks & Stares » George Osborne H&K\'s Financial & Professional Services Team Blog Tue, 19 Mar 2013 08:00:56 +0000 en hourly 1 Friday Fiver Fri, 01 Mar 2013 17:24:28 +0000 dannycalogero Wow, what a week it has been in the FPS team, we’ve barely had a chance to catch our breath! This week the news agenda has been much more serious – not like last week’s horsing around (sorry, couldn’t resist). Here are a couple of the things that have been keeping us busy and entertained over the past seven days

1. Rating GeorgeSo the UK lost its AAA credit rating last Friday, who cares? Well, not that many people apparently. After a brief wobble on Monday morning, the markets shrugged off the downgrade like a hangover from the night before. However, while the downgrade may not have had a major economic impact, its political impact remains to be seen. Rather than assessing the credit worthiness of the UK, it could turn out to be more of a rating on George.

2. Fear and loathing in the Eurozone – Speaking of politics, it has been a big week in Italy. As a result of the country’s inability to form a government, the Vix Index, or, to use my preferred name for it “the fear gauge” (say it in a Jack Bauer style voice), soared by 34%, its largest one-day gain for 18 months and its 10th largest spike since 1990. With this level of impact in the markets, you have to wonder how long it will be before the rest of Europe’s patience wears a bit thin with Italy.

3. Newcomer advantage - The days of long, peaceful reflection and idle doodling in the university library may be long gone, but every now and again you spot a little something which suggests you did indeed learn something from the dusty text books.

Today’s FT reports how Asian banks are turning retail banking business models on their head, skipping branch models and heading straight for new mobile banking services. Oliver Wyman are quoted in the article with research indicating China already accounts for more than 40% of online banking customers.

By skipping years of slow banking evolution, relatively new banks in Asia are establishing themselves as leaders in mobile banking services. In the late nineteenth century, German industries skipped past their more established UK rivals with new production techniques and more modern factories. Ah, Economic History 101…

4. Bonus points – The European Union announced details this week of its plan to cap bankers’ bonuses at twice their salary. Whilst David Cameron was opposed to this, the FT’s Lex Column clearly adopted the “don’t get mad, get round it” philosophy.

5. #Twésumé – But for any banker who is considering a career change, getting a Twésumé sorted will be perhaps be essential. This week The Evening Standard reported that Twitter is playing an increasing role in recruitment with employers ditching the traditional CV in favour of a candidate’s Twitter profile.  The Twésumé (as it has been so cleverly coined) appears two-fold:

  • The generous 140 character biography becomes your selling point. Writing “I love cats and beer” is unlikely to win you any fans (except of course other like-minded individuals)
  • Your Twitter feed must be regular, interesting and offer your opinions on topics rather than just pinching other people’s funnies

Unfortunately, in mine there is little room for anything else beyond Supercalifragilisticexpialidocious.

That’s all for this week folks. Thanks to Jonathan Henderson and Linzi Goldthorpe for their contributions. Have a great weekend!

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The Best of the Budget Fri, 23 Mar 2012 18:04:33 +0000 Edward Jones Rather than the usual Friday Fiver, this week we have decided to look at the Budget. Shock horror. Rather than add to the millions of words of analysis already published on that topic, we thought we’d make your lives easier and point you to the most memorable elements of this week’s main event.

Best Analysis

The IFS’ Budget 2012 briefing yesterday cut through the hyperbole to deliver a sober assessment of the red book. Their analysis of the implications of the 50p tax rate, suggested that contrary to the mooted 300,000 extra taxpayers roped into the lower 40p tax rate threshold, this figure could actually be closer to a million by 2014, adding fuel to the flames that were already raging, particularly among the usually supportive right wing media. 

A mention should also go to the Economist’s analysis. Highlighting Britain’s expertise in high-value services and the need to attract the world’s brightest, the Economist applauded Osbourne’s efforts to signal, “about as clearly as a man with no money to spare can, that Britain is open for business”.

Best gag

Sending the Government bench into raptures and consequently, Lindsay Hoyle, the Deputy Speaker, into apoplexy, Osbourne, when announcing tax breaks for the animation and video game industry in reference to this well know cartoon sketch said: “It is this Government’s determined policy that we keep Wallace and Gromit exactly where they are“. BOOM!

Best Headline

The Sun could’ve won this thrice with some absolute beauties including: “HE’S TAKING US FOR FUELS” and “GRAN THEFT OSBO.” The best ones are captured in this image courtesy of Conservative Home’s @TimMontgomerie

Best Post Budget Admission

‘We hid the papers.’ The Prime Minister’s aide unveils to the Times, Number 10’s response to the negative headlines on Thursday.

Best Punch

Miliband’s 50p tax gibe at the Government. With one question – ‘Who on the front bench would benefit personally from the 50p tax cut?’ Ed stunned the Cabinet and made his point effortlessly; we are no longer all in this together. Very clever.  

Best PR

The anti-war protesters – who employed a very, very long handle on their ‘stop the killing in Iraq and Afghanistan’ sign, which meant every interview Jon Sopel gave on College Green featured that banner in the background.

Best ‘_______ tax’ name

Whilst the half-baked pasty tax made a valiant effort, the Granny tax is set to be the classic. As a closing gambit, we quite like this spin on the Granny tax from the daily mash.

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Rating Rhetoric Tue, 14 Feb 2012 14:02:22 +0000 David Chambers This post is by Marie Cairney, an Associate Director in our Financial and Professional Services team:

Only a few years ago rating agencies were being lambasted by investors, financial institutions and governments alike for their role in the unholy financial mess of 2007-2009. Prior to the crisis, trust in the Big Three agencies ratings on corporates, financial institutions and mortgage-related securities was high. This created a world where investment decisions were more or less made based on a couple of letters of the alphabet. Credit crunch finger-pointing blamed institutionalised ‘bad calls’ on the part of rating agencies as a major factor precipitating the crash. Blaming someone else for allowing you to do something that you knew was inherently stupid never looks good but a lack of transparency and competition in the ratings industry made the agencies a valuable commodity in the scapegoat market and let’s face it, they did get it wrong even if it was along with everybody else.

Ratings agencies assigned 'AAA' designations to exotic securities pre-2007, which led to a bubble of investor confidence in these products (Image: CNBC)

Fast forward five years and rating agencies are still here and still apparently creating mayhem; this time in the sovereign debt markets. Perhaps determined not to get it wrong again, they are all over Eurozone and US deficits and debt. Instead of building faux-investor confidence though, they are, according to beleaguered country governments, wrecking it. Damned if you do, damned if you don’t one might think.  “It wasn’t me, it was them” seems to have been replaced by “It’s not fair” as the key criticism of rating agencies in the global financial playground, with successive Prime Ministers, Presidents, and Chancellors publicly livid with their new grades.

Apart from the UK that is – we by comparison seem to be delighted. For political propagandists a downgrade to negative seems to have been manna from heaven. Akin to a hypochondriac saying to his doctor, “I told you I was dying”, George Osborne is positioning Moody’s downgrade as a renewed wake-up call which is doing us all a favour and further supporting the now pervasive gloom and his proposed cure. Meanwhile Ed Balls also jumps on the downgrade as an “I told you so” opportunity; but chooses to ignore the detail of Moody’s prognosis and instead concentrates on the visible symptoms; i.e. a lack of growth. Knowing that he doesn’t have an alternative cure for the disease, Balls seems to be saying that if had we applied the financial stimulus equivalent of Savlon a couple of years back, we might not be so itchy today. Still on our deathbeds, but not quite so itchy.

Moody's threatened to downgrade the UK's debt last night, though politicians seem to have taken the news rather well (Image:

What can we conclude from all this? Well, one sovereign’s financial ruin seems to be another’s call to action. But love them or hate them, right or wrong; rating agencies appear to be here to stay, here to influence and here to be heard. But only if we listen to them…now there’s a thought; collective deafness…

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Friday Fiver Fri, 09 Dec 2011 18:32:35 +0000 Edward Jones For this week’s festive fill of Friday fun from the FPS team, sorry, I’ll stop with the Fs now. This week’s 5r below…

UK goes alone over Europe

Picture: BBC

It looks like the Prime Minister, David Cameron, has bowed to domestic pressure at the expense of international, or at least European influence. The history of Europe and the Conservative party looms large over his decision, but it does appear to represent an element of weakness in his leadership which wasn’t there before. The PM’s detractors are getting increasingly confident, backbench MPs were particularly vocal in PMQs this week, and one commentator even questioned what the odds might be on all party leaders being in present position by the time of the next election; at the moment it feels like an appealing bet. At least Cameron can take heart in Labour’s travails which it seems, according to the latest opinion polls, are getting worse.   

Christmas on the High Street

Every year it seems to get later. Logically you’d think that the busiest day on the high street would be mid-December, to allow time to wrap gifts and because people are keen to avoid the last minute dash.

Guess the road...

In reality, the busiest shopping periods over the past few years have been shifting towards the 22nd, 23rd or even 24th Dec as our client Visa showed last year, with 23 December being the peak. Christmas arouses the best of our consumerism, but even that has finally been dampened by high inflation and low or no wage growth. Why is this? Firstly, there’s the economic situation. Secondly, is the knock on effect of this dampening – retailers have to work extra hard to get us into shops. Discounting is the most effective way to do this but this presents a problem – discount too soon and your margins shrink. With big stock bills and rent to pay, its hard to afford that for long. So begins a game of poker between retailer and customer – the retailer always blinks first, it’s just a question of when.

It can’t be! Some good news…

In a rebuff to Dr Doom, the UK’s export market is apparently staging a come back. According to ONS statistics published today the value of UK’s exports have hit a record high and we’ve been importing less, meaning a narrowing trade deficit. Chemicals, medical products, and telecoms equipment performed particularly strongly in what will be seen as a boost to the Government, UKTI and the Department for Business who are banging the drum on this increasingly loudly. In last week’s Autumn statement the Government allocated £10 million to help mid-size British businesses export and £35 million to double, from 25,000 to 50,000, the number of SMEs that UKTI supports each year.  Analysts have cautiously welcomed the news, but the Government will be delighted.

There’s an app for that

You may have noticed, but the Fiver team are rather fond of the FT. On Tuesday everybody’s favourite pink paper launched an app for Android, which will replace the slightly clunky web browser version. We’ll await the Apple version with anticipation. If anyone has got round to downloading the new app, we’d be interested to hear what you think.

Osborne and Balls get in the Festive spirit

George Osborne and Ed Balls

Enough said.

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FPS’ Friday Fiver Fri, 04 Nov 2011 18:07:33 +0000 David Chambers 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.

Disappointingly, the on-going crisis has meant that Italian Prime Minister Silvio Berlusconi has been forced to delay the release of his latest CD of love songs. On first inspection, readers would be forgiven for mistaking the article as an April Fool.

It’s good to see the City is keeping itself busy and Alphaville was the recipient of a cleverly penned version of Queen’s Bohemian Rhapsody set against the backdrop of recent events. Click and enjoy!

MORTGAGE DÉJÀ VU…..In 2006/07, people in America stopped paying their monthly mortgage bills. Many of them simply got up, left their houses and never came back (due to a wonderful quirk in US rules on home ownership they had very little obligation to stick around). Once enough people had walked away, banks realised that they were sitting on a pile of worthless housing stock that they couldn’t sell. Once that happened, banks who had bought mortgage loans off of other banks (neatly packaged up like a mince pie in lovable ‘CDOs’) realised they too were sitting on potentially worthless debt. Panic ensued, and we’ve been struggling to recover ever since.

Old news by now isn’t it? Probably not worth noting then that today’s FT reported that US state-backed mortgage company Freddie Mac has requested an extra $6bn from taxpayers because “homeowners were falling behind on their obligations and it could not count on mortgage insurers to reimburse the company for losses”. Or that US house “sales are down, delinquencies are rising and the pipeline of seized homes due to flood the market is growing ever larger”. Nope, not worth noting at all.

SLEB WATCH…..One for our celebrity interested readers at the request of our resident pop-culture queen, Helen Searle. Yes, in case you weren’t convinced, HuffPo’s title is eager to underline this IS an INFOGRAPHIC of the shortest celebrity marriages in homage to Kim Kardashian’s filing for divorce this week (your author this week isn’t sure who that is either). Although it could also be described as a bar chart, either way, our sleb watchers rather like it.

GOOD WEEK/BAD WEEK…..Whisper it, but it’s been a relatively good week for Barclays boss, Bob Diamond. His company’s results were better than most of its peers (though again the use of some accounting wizardry perhaps hid the true picture), and Diamond also faired rather better in media interviews than he did last time he mentioned the word ‘remorse’.

On the flip side, his banking compatriot at Lloyds, Antonio Horta-Osorio, faired far worse. No one should ever work so hard or endure such stress that they have to take a leave of absence to recover. Not ever. We hope he gets well soon.

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FPS’ Friday Fiver Fri, 21 Oct 2011 13:22:39 +0000 David Chambers Hello All! We seem to say this every week, but yet again it’s been a very busy and news heavy 7 days in the world of professional and financial services. This week’s Friday Fiver has a distinct air of gloom about it I’m afraid, though we do find room for a spot or two of humour as always. Thanks as ever to Ed, and Jonathan for their contributions.

CHART OF THE WEEK – GREECE: IN A NUTSHELL…..Stephen Hawking’s follow-up to his immensely successful 1988 book on the cosmos was labelled ‘The Universe in a Nutshell‘. As anyone with a passing interest in physics knows, it would take a forest of nutshells to even begin explaining the wonders of our universe. At times, the complex, ever-changing state of the Greek and wider eurozone crisis can feel pretty similar.

Help is at hand though, thanks to a handy chart unveiled by The Spectator this week. Sadly, upon reviewing it, only the most optimistic person would conclude that the eurozone is heading for anything other than very troubled waters.

The options (or not) for Greece (Chart: The Spectator)

THE DEVIL OF THE DETAIL – BANKING RESULTS…..Hot on the heels of Goldman Sach’s results this week came Morgan Stanley’s trading update. Unlike their rivals, MS were able to report a large profit for the quarter of $2.2bn.

Or were they? As some media outlets quickly noted, the majority of MS’ profits for the quarter were a result of the company reducing the value of the debt it holds. Once the benefits of this accounting manoeuvre were removed, the results looked far less impressive - Iain Dey at the Sunday Times provided one of the best summaries of the ‘revised’ picture.

He wasn’t the only journalist somewhat peeved at the sleight of hand either:

BEHIND CLOSED DOORS…..A “dark pool” may sound like a feature of an exotic health spa and for all we know, it could well be. The increasing importance of dark pools in financial markets however was apparent this week.

In simple terms these are markets behind closed doors that allow institutional investors to trade with one another outside public exchanges like the London Stock Exchange. This week we heard that investors are increasingly using dark pools to access and trade privately owned stock in companies like Facebook before they float.

The emergence of dark pools was one consequence of the European Commission’s MiFID regulation which was in part designed to break up the monopoly of public exchanges. Now however the Commission is looking to take back control of its creation amid concerns about their lack of transparency. Complicated stuff, but as always, the FT [article here] explains developments in simple terms and their graphic below illustrates the overarching trend.

PROOF THAT PLAN A COULD BE OK?…..In amongst the growing concern about the eurozone, and increasing focus on the OccupyLondon movement, the ONS announced on Friday that public borrowing for September was below expectations. In addition, borrowing in August was actually lower than first thought.

Does this mean that the Chancellor’s refusal to adopt anything less his Plan A might be starting to bear fruit? Quite possibly, though as the BBC’s Hugh Pym pointed out, much depends on UK growth in the next few months. The Chancellor hasn’t been proved right yet by any means, but at least he now has a proof point to attack his critics with.

GOOD WEEK/BAD WEEK…..Leaving aside the obvious winners and losers over the last 7 days, it was a good week for the economist and Sunday Times columnist, Irwin Stelzer, who picked up the ‘economics commentator of the year’ award at the media industry’s Editorial Intelligence awards on Thursday.

Or at least he would have picked it up if not for a small error by the normally unflappable Robert Peston who is this week’s ‘bad week’ winner. Regrettably for the BBC’s Business Editor, he fluffed his lines on stage by announcing the wrong winner. And thus, the FT’s Martin Wolf walked on stage to collect the prize, only to have it quietly taken away from him 10 minutes later. If you want to read more on this little tale, Roy Greenslade provides a full commentary here. Mr Peston’s stablemate, Rory Cellan-Jones also clearly enjoyed the incident, as well as his colleague’s fashion sense.

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Same inflation, different growth – China vs the UK Tue, 18 Oct 2011 13:39:25 +0000 David Chambers It’s been an exceptionally busy morning of news today. Not withstanding Goldman Sach’s widely predicted poor Q3 results (which we discussed last week alongside many others), two key stories stand out today.

Firstly, China reported another slowdown in its growth. This is likely to send shivers down chief executives’ spines, as the global economy continues to cling onto China as its last great hope for growth. Then again, the word ’slowdown’ still masks the impressive statistic that China continues to grow at nearly 10% a year.  Inflation is coming down too, and a ’soft landing’ seems more likely than a hard bump.

Over in the UK meanwhile, George Osborne would likely kill for even a tenth of the 9.1% growth China reported. Instead, he has to grapple with another round of uncomfortable economic headlines, this time regarding inflation, which soared to 5.2% in September (or 5.6% if you prefer the old measure).

The news is particularly grim on the energy and food bills front, according to the ONS. It’s equally desperate for savers – as one of our clients pointed out today, savers are seeing a £10,000 pot in a savings account depreciate in value by around £500 a year, thanks to the combination of high inflation and low interest rates.

High Inflation + large budget deficit + stagnant growth + interest rates that can’t go much lower.

That’s the uncomfortable equation again confronting the Chancellor today.

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FPS’ Friday Fiver Fri, 12 Aug 2011 13:36:06 +0000 David Chambers Another week and one in which unsurprisingly, UK media attention focused primarily on the England riots (Peter Oborne’s piece today captured the wider issue rather well I believe). That’s not to say things haven’t been happening elsewhere though, particularly in the financial world.

With that in mind, here’s a round-up of the key stories from all aspects of this week. Thanks to Jonathan, Ross, new writer Claire Scott, and also our MD, Ben – his article is second up and attempts to add some perspective to events.

Zut alors…..Another week, another country but the issue, namely financial stability, remains the same. Early in the week one of the world’s best known fund managers, Bill Miller, published a response to S&P’s downgrade of US government debt. The articleA precipitate, wrong and dangerous decision ran in the FT and is well worth a read.

There was a lot of this going on this week, as markets behaved in wild fashion

By Wednesday however, the bottle had stopped spinning yet again and this time it was the turn of France and its credit worthiness to come under scrutiny. With speculation about the health of some of the country’s largest banks and the ability of the nation to underwrite possible further bailouts in southern Europe giving investors sweaty palms.

Sovereign debt has become synonymous with Western governments but in today’s FT, Jamil Anderlini provides an alternative perspective arguing that the disparity between China’s official and actual debt levels deserve further scrutiny.

Putting perspective on this week…..The riots captured the UK media’s attention, and were clearly unacceptable. They raise all sorts of questions about society, as well as being highly damaging for London and the UK’s image with the Olympics round the corner. At the same time though, there are bigger and potentially more threatening global economic issues at play at the moment. While you can understand the rolling news channels’ focus on the riots, with all due respect they are a catastrophe on a much smaller scale than what is going on in Europe and the financial markets.

That’s not to downplay the riots in anyway but if things go the way they look they might (and I know of European bankers who fear the worst), and in the continued absence of any discernible leadership from Europe, frankly, a minority bent on destroying the businesses that support their communities, could, disturbingly, have far less long term impact on the wider UK population that what is happening on the continent.

The domino effect of Eurozone countries coming under immense market pressure shows no sign of slowing, market sentiment has gone haywire, and growth prospects across the West are tumbling. It’s time to wake up, smell the coffee and look beyond our own borders for signs of an even greater potential trouble.

Sound advice from Twitter given events this week

Boris rising, Dave declining…..The Blair/Brown tussle is one of negative memories from Labour’s 13 years in power. Blair admitted in his memoirs that Brown’s constant hounding for a stand down date and need for backing caused distraction and hindered progress. Jonathan Powell, Blair’s Chief of Staff, is even more damning of Brown in his recent book The New Machiavelli. If David Cameron thought his Premiership was to be without such challenges and unwanted burdens, surely he must now think again.

Boris Johnson is becoming a thorn in Cameron’s side. With speculation already rising that the future of the Conservative Party lies with either George Osborne or Johnson, it’s the latter that is fighting his corner more rigorously. This was evident this week when Johnson went against the Party line stating that budget cuts for the Met were wrong – swiftly rebuffed by Cameron yesterday when he said police budget cuts were non-negotiable.

How much of an eye does Boris have on the PM's job? (Image:

Johnson has also openly challenged Osborne as well – he recently called for a cut in taxes to boost economic recovery and entrepreneurship. This was delivered at a time of sensitivity for the Chancellor after the recent less than stellar GDP figures were announced and when he faced similar attacks from his nemesis, Ed Balls. Boris’ willingness to openly challenge the Party leaders must be taken seriously, even if he is not. At a time when the Government faces colossal challenges, such distractions are doubly unwelcome. It is up to Cameron to nip this in the bud and not let the future of the Party overrun the present.

It was Sarko's turn to feel the pressure of the markets this week

Good Week/Bad Week…..A tale of three men with O’s in their names this week. For Silvio Berlusconi, it was pretty much as expected – another tough week spent herding away the hounds at the door as investors continued to murmur about Italy being on the verge of downgrade/default/bailout (delete as appropriate, or not perhaps). Some relief for Silvio came on Thursday though, as the focus shifted to the hitherto tranquil setting of France, giving Mr Berlusconi’s neighbour, Nicolas Sarkozy, a rude awakening.

Sitting pretty watching all of this was our own ‘O’, George Osborne, who had a comparatively good week. Gilt yields are at rock-bottom, which the Chancellor swiftly proclaimed as proof of the UK’s position as a “safe haven” for investors, and an endorsement of his deficit reduction plans. Not everyone’s convinced though, and he also had to contend with the Bank of England downgrading growth forecasts – again. Still, compared to others, a relatively good week for George.

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FPS’ Friday Fiver Fri, 29 Jul 2011 17:27:30 +0000 David Chambers We’re back, providing another round-up of some of the big stories from the world of financial services, the economy and Westminster this week. Contributors this week include Clare, Linzi, Jo and Ed, who bring us an overview of banking, pensions, retailers, and our new feature – Good Week/Bad Week.

Banking – fundamental flaws and failed customers…On Tuesday, Vince Cable held court at the Which? Banking Reform – An Agenda for Competition and Growth discussion at the Commonwealth Club, where he re-iterated his opinion that “banking is a structurally flawed industry that has fundamentally failed customers”.

Vince Cable - on the attack on banking once again (Image:

That the current system of banking is flawed is a no-brainer, but the harder question to answer is where exactly do the flaws lie? The conversation on Tuesday spanned the topics of increased competition, universal banking, ring-fencing, culture and behaviour along with new entrants into the banking market, but it seems that, nearly three years since the start of the global financial crisis, more questions continue to be posed than answered.

Is universal banking really the root of all banking evil? Do customers really feel their banks have failed them given so few of us have switched? With the array of initiatives, commissions, inquiries, and comite des sages taking place at the national, European and international levels, one has to hope that between them they will be able to identify and remedy the flaws that exist. However, there is the potential for all of these to come up with different flaws and different answers which complicate and confuse structures and customers alike!

Paying more for retirement…The spotlight returned to public sector pensions this week as figures leaked to The Daily Telegraph revealed exactly how much workers in the public sector will pay extra each month for their pensions.

Danny Alexander was asked how much more he personally would have to pay towards his pension this week (Image:

As expected, higher earners will take the brunt of the increases and the lowest paid workers, earning less than £15,000, will escape any increases at all.

Here are some of the figures from the proposals:

  • Those earning over £100,000 will pay £284 a month (£3,400 a year) more
  • Public sector workers in the £50,000 bracket will pay between £684 – £768  more
  • Those on a £35,000 salary face paying an extra £516 a year more

Despite the backlash, which was always going to happen, you can’t escape the welcome news that low paid public sector workers, some 750,000 people, will be exempt from any increase in contributions and those earning £21,000 will be out of pocket £108 a year, or just £9 a month. The fact remains that even with these increases, public sector pensions are still a valuable benefit.

We still aren’t buying much on the high street…Another worrying week for retailers as figures on Thursday showed that sales fell at their fastest pace for a year as consumers become increasingly reluctant to spend. This is brutal news for the already struggling retailers and may be a sign of further deterioration and shop closures to come.

Only one in three retailers claimed their sales volumes were up on a year ago, with food retailers being particularly hard hit – either we’ve all been hit by the rise in food costs and are watching the pennies like hawks or the nation is on a collective pre-holiday diet.

However, one retailer that isn’t afraid of the UK high street (or shall we say Oxford Street) is cut-price U.S. brand Forever 21, which opened its doors for us on Wednesday. Some critics state that we are not ready for ‘cheap, fast, American’ fashion’ but with the way things are going on the high street we may not have a choice.

George Soros - the latest financial veteran to retire

Good week/Bad week – George Soros & George Osborne…A tale of two George’s this week. For the first (the man who ‘broke the Bank of England’), the effective end of a remarkable 40 year investment career. While the manner of his retirement was a little sour, blaming US regulations, you can’t argue with his success over the years. He will likely be missed.

On the flip side, it was a less than stellar week for the younger George, who, as yet more vanilla growth figures rolled in, suddenly found himself the victim of attacks from several fronts. How he must be wishing for the summer break to roll around quickly.

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FPS’ Friday Fiver Fri, 22 Jul 2011 14:08:08 +0000 David Chambers Hello All! It’s been another very heavy week of news, and equally heavy rain here in London – will summer ever raise its head again? Given the weather is playing havoc with any outdoor plans for the next few hours, we’ve put together another series of five key stories of the week from the world of financial and professional services. Thanks as ever to Ed, Mel and Jo for their contributions.

When is a default not a default?…Here are two rather intriguing and perhaps contradictory headlines for you from the same news website today: ‘Greece deal sparks bank-led European share rally‘, and ‘Fitch declares Greece default‘.

Greece - lives to fight another day

So which is it? The answer, rather confusingly, is both, depending on who you listen to. What isn’t in doubt is that eurozone countries have agreed another bailout package for Greece (though some have their doubts as to whether it’s big enough). This in turn, has sparked a market rally.

What also isn’t in doubt though, is that ratings agency Fitch have declared that because the deal involves private lenders ‘taking a haircut‘ on some of their debt, Greece has undergone a ‘restricted default’. At least in part. Confused? Quite possibly. What does it mean? That Greece continues to rage against the dieing of the light for a little longer, and that the other PIGS get some brief respite as well.

UPDATE – It seems we may have spoken too soon. According to Channel 4’s Economics Editor, Faisal Islam, Fitch is now not declaring Greece to be in restricted default.

Britain’s economy 2011 – what might we think in 2021?…What will be made of the Government’s economic policy in years to come? Will George Osborne’s approach be heralded as a masterstroke which got the nation back on its feet or criticised for paralysing the economy, engendering neither deficit reduction nor economic growth?

It’s a particularly intriguing question, given broad public support for the Government’s economic programme, both by economists and a significant proportion of the public. Are tough decisions being made now in the knowledge of public empathy undermining future economic growth? Ed pondered this issue in light of public sector borrowing figures rising last month, the corollary of this being missed borrowing targets set by the OBR, and subdued growth figures, emphasised by the depressing weather and decline in food sales.

The Chancellor has rebutted calls for a ‘plan b’ and there is little indication of a shift in his strategy. To be fair his hands are tied with the ever present threat of a downgrade in the UK’s credit rating. But it is continued suppression of growth that is alarming and the reluctance to use the domestic tools which are available, most notably VAT, to alleviate matters (something that some are pressing hard for).

George Osborne - hanging tough, but the pressure is growing (Image:

Of course, by the time the General Election comes round the issue of growth may be redundant as the economic cycle picks up and returns a Conservative led Government. The alternative of a Japanese style decade of slow growth is put forward by David Miliband in the Huffington Post and an assessment Ed’s more inclined to agree with.

Whilst he hopes it is the former which comes true, the analysis closest to reality will no doubt be the subject of textbooks for years to come. The added dynamic of a supportive public and the impact this has on political economic decisions will be a particularly fascinating area of study.

A right royal row over the retail review…The first rule Mel learned as a young diplomat is that you don’t launder your dirty policy in public, as witnessed by the unedifying swift exchange of “in the public domain” letters between the Treasury Select Committee (TSC) and the FSA this week, following the former’s recommendation to a one year delay in introducing the Retail Distribution Review (RDR). But relations, of course, deteriorated there a long time ago.

The fact that the FSA, as the TSC put it so bluntly, made a “precipitate” move to circulate an embargoed response to their report does look clearly premeditated and indeed “pre-emptory” and an act the TSC “deprecates”. This is regulatory blue language…

Not so, cried the FSA – apparently misunderstood – and planning to submit a considered response to TSC by the end of September. Meanwhile, other regulatory heavyweights waded in – predictably the Association of Independent Financial Advisers quickly offered its firm support for the TSC’s calls for delay. Against this were Which? and the Financial Services Consumer Panel, urging no delay from the timetable.

At stake, a regulatory bun-fight around the pace of reform to introduce higher professional standards in the advisory community. The TSC feels that the current timetable will – needlessly – put a large number of experienced financial advisers out of business.

A lasting regulatory peace around this issue remains elusive. The question is, where does this leave the consumer in the brave new regulatory era to come?

Andy Hornby - new CEO at Coral

Good week/bad week – Andy Hornby…Perhaps we should make this a new feature of the Friday Fiver with a different candidate each week? If so, then Mr Hornby is a good contender for the first slot. Having left Alliance Boots in March saying he ‘needed a break’ from the corporate world, the increasingly Lazarus-like Hornby surfaced again in his new role as CEO of Coral on Monday.

Timing is everything though, and scarcely had the champagne been poured, then it may have turned a little flat in the former HBOS man’s glass as the FSA announced an enquiry into the former bank’s collapse.

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