Shocks & Stares » Vince Cable 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/2011/09/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/2011/07/fps-friday-fiver-13/ http://blogs.hillandknowlton.com/shocksandstares/2011/07/fps-friday-fiver-13/#comments Fri, 29 Jul 2011 17:27:30 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=226 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: Which.co.uk)

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: Thesun.co.uk)

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 http://blogs.hillandknowlton.com/shocksandstares/2011/06/166/ http://blogs.hillandknowlton.com/shocksandstares/2011/06/166/#comments Fri, 10 Jun 2011 17:34:24 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=166 Hello All, and apologies for a slightly late Financial & Professional Services Friday Fiver this week, but we’ve all been a little hectic. To round out the week we bring you banking, more banking, an Archbishop and Blackpool football club. Happy weekend all!

The Big Four Banks feel the heat….The big four revealed deep divisions on restructuring at Wednesday’s treasury select committee appearance as their CEOs jockeyed for position with the powers that be. Stark divisions were revealed on the Independent Banking Commission proposed scope for ring fencing core retail banking functions. RBS’ Stephen Hester alluded to the “moral hazard” problem if government effectively insulated the market, which could perversely encourage excessive risk taking, a view supported by Barclays.

In contrast, HSBC and Lloyds support a broader separation and more diverse mix to encourage the much needed supply of credit to the market – note the Q1 figures which reveal banks failed to stay on track with “Project Merlin” pledges.

Vince Cable - back on the banker bashing trail this week (image from Telegraph.co.uk)

Finally, Vince Cable rattled the sabre again, unveiling a not so “veiled threat” to link bank bonuses to SME lending! Will this create the required traction on this fragile detente between the City and the Government? Watch this space, but maybe don’t hold your breath.

Anthony Hilton digs in his heel as well…At the same time as surviving a tough session in Westminster, Barclays came under fire from the Evening Standard’s Tony Hilton. While CEO Bob Diamond was claiming to Parliament that his bank had been a “stabilising force” in the crisis (though some might argue the Middle East was the real ‘stabiliser’), Hilton was taking aim at his finance director for something called ‘Project Protium’.

Barclays and the Cayman Islands - source of Anthony Hilton's wrath this week

This essentially involved hiving off some of the bank’s toxic assets to a Cayman Islands registered company in a neat little trick to reduce losses on the company’s profit and loss account when the assets turned sour. It’s fair to say Hilton really went for the jugular on this one. The moral of the story? If he writes something once and you don’t like it, be prepared to read it all again two days later if you complain about it.

The Archbishop caused a stir too…Rowan Williams stole Prince Phillip’s thunder whilst acting as guest editor of New Statesman this week, using an article to heavily criticise the Coalition and its policies. He argued that ‘we are being committed to radical, long-term policies for which no one voted’ thereby questioning the Government’s mandate to govern.

Was he right? Probably not. As Defence Secretary Liam Fox pointed out, ‘the Government has legitimacy because it has a majority in the House of Commons.’ Whilst some policies have undoubtedly been rushed, a Government is elected to make decisions and lead a country, and it’s fair to say the Coalition is certainly doing that – despite clamours for the Chancellor to adopt a plan B, he presses on resolutely.

As businesses need strong leadership and clear direction, we need our politicians to show equal virtues. Questioning the Coalition’s mandate is much like Donald Trump and others questioning Barack Obama’s place of birth place and therefore his right to be President; an unnecessary distraction from a much more important job at hand.

Boom, Bust or Blackpool…Is it us or is the world of football slowly going mad? We say this having recently read an article on Deloitte’s annual Football Money League. We’re no experts on the ins and outs of running a football club, but GCSE maths and a pinch of common sense tells us that paying your staff more than 70% of your total revenue in any industry is a bit iffy – as our colleague Nick puts it, the desire for a couple of extra places up the league table “seems to me a bit like financial Russian roulette”.

Blackpool gambled and won promotion - others have been less fortunate

We’ve already seen Portsmouth fall spectacularly from FA Cup winning glory to administrative collapse. With wages still increasing it may not be long before other Premiership clubs follow suit. One could argue Uefa’s Financial Fair Play Initiative is a step in the right direction but for us the danger lies in clubs trying to establish themselves as a prominent Premiership force.

Football governance should improve and a lot of lessons can be learned from the world of business. Just as CEO’s have a responsibility to their shareholders; boards, managers and players have a responsibility to fans. I’m sure if you ask most Bolton fans whether they’d rather finish 10th and risk financial meltdown or 14th and still be here in twenty years most would take the latter. We know Nick would!

Demystifying Digital…Finally, H&K this week held one of our regular ‘D2′ events aimed at tackling and understanding the digital world. Our very own Nick Woods presented on how financial services brands can engage in this sphere, highlighting the work we do with HSBC International Bank. We’ll have more on this next week for you, as will the main HanK blog but in the meantime congrats to Nick on a cracking presentation.

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