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01/12/2016

Weekly News Bites: Treacle down

Our top picks from this week's Morning Chat

Treacle down: In October, UK consumers borrowed 10.5% more versus the previous year via credit cards and similar financing. This is the strongest annual growth rate in well over a decade, and in part reflects higher expected wages. Consumers borrowing to spend in the real economy has been a major goal of the Bank of England’s quantitative easing programme. It will hope they do not get derailed by inflation – which eats into real wage gains – in 2017. (30/12)

A Royal pain: If house prices in the UK fell by one-third, unemployment doubled, global GDP growth fell off a cliff and oil prices fell to $20 a barrel, the Royal Bank of Scotland would fail. That is what the latest stress tests conducted by the Bank of England would suggest anyway. Eight years on from the financial crisis, taxpayer-owned RBS is still shaky, and the least sturdy UK bank in the face of a crisis. (31/12)

Field questions: European Central Bank President Mario Draghi warned Britain will “first and foremost” feel the pain of Brexit. However, at least some in the corridors of British power appear to be increasingly sanguine on the whole thing. After a meeting at the Department for Exiting the European Union, notes from an aide to Conservative vice-chair Mark Field could be seen to say: “What’s the model? Have your cake and eat it.” Complacency, some might say. (29/12)

Beyond Pay: UK Prime Minister Theresa May is becoming the standard bearer of a new corporate governance paradigm. She will float recommendations shortly which include forcing companies to publish pay differentials between the chief executive and average employees. Earlier this year, 59% of BP shareholders sent a stern rebuke to their board by rejecting the proposed £14 million pay package for chief executive Bob Dudley. In hindsight, it may have been a watershed moment for UK corporate governance, and even a harbinger of populism. (29/12)

Come what May: The former French Prime Minister Francois Fillion has beaten another ex-PM, Alain Juppe, for the right to lead the Republican Party in April 2017's national election. Mr. Fillon is rather right-wing by French standards, and has called for slashing 500,000 public sector jobs, a radical overhaul of that most sacred of French cows. This makes him somewhat unpalatable for much of the “left-of-centre” French electorate, who will likely have to choose between him and arch-nationalist Marie Le Pen in a second round run-off in May. (28/12)

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