United Kingdom

Noyer’s ratings-rage is right for wrong reason

15 Dec 2011

The Bank of France chief is enraged by the prospective downgrade of his sovereign. The UK should get snipped first, he says. The fury is excessive, but not crazy. While Britain’s creditors may face a lower risk of nominal default, they’re in more danger of default-by-inflation.

EEA could be right place for UK in Europe

15 Dec 2011

After the Cameron veto, Britain’s status in the EU is precarious. It won’t move forward into the euro zone and cannot really turn its back on Europe. Some losses are inevitable, but the UK could gain by beefing up the European Economic Area – a fairly happy half-way zone.

Lloyds needs to do more to allay investor concerns

14 Dec 2011

The UK bank’s CEO Antonio Horta-Osorio will return to work in January after exhaustion led him to take two months off. If the group performs well, investors’ lingering doubts will subside. But they may require more visible evidence that Horta-Osorio now has a manageable workload.

Europe’s unemployed youth warn of trouble ahead

14 Dec 2011

Unemployment keeps rising in Europe, just as the euro zone and UK flirt with renewed recession. Talk of a lost generation is not overdone. Almost half of Greek and Spanish youth are unemployed. Profound reform is needed to prevent unrest and to protect the viability of the euro zone.

How a 1990s sterling currency area might now look

14 Dec 2011

In 1992, the UK abandoned plans to adopt the euro. Martin Hutchinson imagines what would have happened if Britain had used its economic strength in the mid-1990s to form its own alternative currency bloc. The sterling zone would at least be insulated from troubles elsewhere.

Two more black marks for James Murdoch

14 Dec 2011

The News Corp boss has just unearthed new email evidence in the phone-hacking enquiry. That’s blot one. The message doesn’t destroy his defence that he was unaware of bad practice in 2008. But it contains serious allegations and Murdoch says he didn’t read it. Another black mark.

Anglo-Saxon law rare winner from euro crisis

13 Dec 2011

Banks are worried that assets will be redenominated into less valuable new currencies if the euro implodes. There is little they can do to limit risks on existing bonds and loans. But they may resort to English and New York courts to protect themselves from future losses.

LSE pays high price for full control of FTSE

12 Dec 2011

The London Stock Exchange is paying a rich 450 mln stg to take full control of FTSE International, the index compiler it co-owns with publisher Pearson. It is betting that the boom in benchmark-based investment products such as exchange-traded funds will be sustained.

Hugo Dixon: UK’s self-immolation beggars belief

12 Dec 2011

The government’s clumsy attempt to extract concessions from euro zone countries in their time of need has set off a chain reaction which could undermine Britain’s interests and even drive it out of the EU. This vicious cycle must be stopped.

RBS shows watchdogs need power to stop bank M&A

12 Dec 2011

Flawed capital rules, reckless management, a risky takeover and supine supervision all contributed to the UK lender’s collapse, a probe has found. Many shortcomings have been fixed, but more changes are needed – such as giving regulators real power to block big bank deals.

UK’s euro isolation may backfire on City of London

9 Dec 2011

David Cameron says he was defending Britain’s financial industry when he opted out of the pan-European deal to save the euro zone. But the prime minister’s stand leaves the City exposed in Europe - and at home. And it further diminishes the UK influence over designing new rules.

UK banks need government to solve funding squeeze

6 Dec 2011

The Bank of England’s new 30-day facility should help keep lenders afloat if the euro crisis causes short-term liquidity to dry up. But banks also need help refinancing 140 billion pounds of term debt in 2012. For that, the state may need to guarantee their debt once more.

UK Investors’ bank bonus campaign needs teeth

6 Dec 2011

The Association of British Insurers has asked the UK’s five largest banks to cut compensation to the point where returns exceed the cost of equity. The request is reasonable. But it will only work if shareholders are also prepared to vote against directors who don’t respond.

The real UK plan B: protecting against euro chaos

1 Dec 2011

Pundits say Britain needs an alternative strategy to boost growth. What’s really needed is a contingency plan to handle a euro explosion. The central planks should be for the government to keep adequate fiscal firepower to handle a crisis and to recapitalise the country’s banks.

New London air hub plan needs public money to fly

1 Dec 2011

Heathrow is a jam-packed embarrassment for those who promote London as a global financial centre. A brand new four-runway hub in the Thames estuary is appealing but expensive. Even using rosy forecasts, it is hard to see an all-private enterprise earning a decent return.

Bagehot to cenbanks: liquidity needn’t be cheap

30 Nov 2011

The 19th-century British financier believed in lending freely during crises but at high rates. Wednesday’s coordinated action by the ECB, the Fed et al boosted liquidity and reduced its cost. That could worsen imbalances. A Bagehotian approach would be workable and less risky.

Team Rothschild can’t lose in Kurdish oil

30 Nov 2011

Shares in Nat Rothschild’s cash shell wilted on their re-listing after merging with Kurdish oil group Genel. This risky asset may yet pay off handsomely for Genel’s outside investors, politics permitting. But slick reward schemes mean Nat and his co-founders win either way.

Fiscal fear keeps UK clinging to plan triple-A

29 Nov 2011

George Osborne warns of a growth stall that will worsen deficit and debt. But he is doing little for growth. His fear: that straying from austerity plan A would deprive the government of its AAA rating. The result: a long wait for recovery that will test the UK.

UK’s bank levy hike is wrong on three counts

29 Nov 2011

Upping Britain’s balance sheet tax may look like a clever way of extracting cash from an unpopular sector. But the fiddling undermines confidence. It also gives banks another reason to shrink. If they do, there’s a third problem: Ministers may have to raise the rate even further.

James Murdoch no longer alone in BSkyB hot water

29 Nov 2011

The shareholder revolt against the satellite broadcaster’s chairman was no worse than he probably feared. But investor discontent is spreading. Other BSkyB directors are now also coming under fire for failing to represent the dissatisfaction of independent investors.