Thursday, 2 February 2017


2017. Charles Stanley is a respected firm of stockbrokers. Its analysts have provided several forecasts for managers of commercial businesses. These are: (1) companies whose shares are quoted on the UK’s blue-chip list (FTSE) will reach a series of all-time highs; (2) the United States’ Russell 2000 is the index to back; (3) but defensive shares (proxies for bonds) could remain weak. Interest rates are likely to rise; (4) fears of inflation in the UK are overdone; (5) the price of oil will not plunge again; (6) emergent markets will shake-off gloom.

Debt. Danger? The Government’s and its agencies’ obsession with public finance seems to have moved emphasis from private indebtedness, which is arguably more dangerous for a country’s economic stability. The Office for National Statistics’ figures show that the total of unsecured debt reached an all-time high at £349 billion last September. The Trades Union Congress (TUC) says the rise in borrowing has been caused by stagnated wages. Unsecured financial liabilities have grown to 27.4% of household income, the highest level in eight years. This situation must be in the minds of the Monetary Policy Committee when they consider any proposal to raise interest rates. Some of them will be concerned that a new economic shock or slower growth in wages could make it more difficult for earners to meet their commitments. Additional defaults would have severe implications for the financial system.

What needs to be done? Jeremy Hunt MP, Secretary of State for Health, has called for ‘an honest discussion with the public’ about the purpose of Accident and Emergency departments in this country’s general hospitals. The debate needs to be wider. Leading clinicians for the Royal College of Physicians have written to the Prime Minister setting out their concerns. Others have asked her to convene COBRA-style meetings to address the situation. The Chairpersons of three Select Committees from the House of Commons have urged the Prime Minister to seek cross-party consensus of health and social care. The evidence indicates a need for urgent action.

Comparison. ‘It’s obvious that women are smarter than men. Think about it – diamonds are a girl’s best friend; man’s best friend is a dog.’ Joan Rivers (1933-2014); American writer, actor and producer. Quoted in The Wall Street Journal and The Week.

Excuses. ‘What good are laurels if you can’t rest on them?’ Tom Lehrer (1928 -); retired American singer and songwriter. Quoted in The Observer.

Tuesday, 17 January 2017


Avoid setbacks for your business.  Management Today suggested several ‘rules’ a long time ago. Beware of success, it stimulates laziness.  Never do things because that’s how you do them.  Invite frank criticism from customers and staff.  Fear every new entrant to your market.  Allow time to reheal before another upheaval. State the destination often. Be afraid, but don’t show it. Face the truth, and share it. If times change, change leaders.

From tenth to fifth.  The UK rose from tenth to fifth place in the Forbes annual list of the best countries for business.  Kurt Badenhausen, Forbes’ senior editor, said this was due to ‘improved scores on corruption, tax burden and monetary freedom, as well as a stronger stock market.’  Separately, Bloomberg reports that Lloyds Bank’s December business confidence index has rallied to reach its highest level since March.  Meanwhile, James Sproule, Institute of Directors’ (IoD) chief economist, said, ‘London will remain Europe’s financial centre,’ adding, ‘UK employment law is undoubtedly more amenable to the rapid hiring and shedding of labour . . .’.  He also said that the English language and legal system are generally an important part of the UK’s attractiveness . . . .

2017 and government.  The signs are that distrust of politicians and the ‘elite’ will continue to increase. The newly-elected mayors and local politics in this country offer opportunities for national political parties to connect with the electorate. For the Conservatives, there is a chance to show their relevance and value to urban voters, such as the West Midlands.  Labour’s mayors can demonstrate delivery of reorganisation grounded in local priorities, rather than political ideology. Throughout this year, the nature of work will continue to change. This will impact upon people and places in many ways.

By standing still?  The Resolution Foundation says its research reveals the average earnings for self-employed workers in 2014/15 were lower than twenty years ago.  It adds that although this group of workers grew by 45% between 1994/95 and 2015, weekly average payments have fallen by £60.  The Foundation claims the financial crisis which started in 2008 and the amended nature of self-employment has led to the lower rewards.

More shifts. This country decided in a referendum to leave the European Union. This came as a surprise, even to some people who voted for the exit. Elections in France, Germany and Italy will either emphasise or contradict the rising tide of populism and shape the future of Western Europe.

Sounds right.  ‘The war against intelligence is always waged in the name of common sense.’  Roland Barthes, (1915 – 1980).  French philosopher, linguist and critic.

Hope it’s sooner.  ‘I don’t know how long a child will remain utterly static in front of the television, but my guess is that it could be well into their 30s.’  A A Gill, (1954 – 2016).  British writer and columnist.

Wednesday, 4 January 2017


A lesson from 2016.  Most people did not expect Brexit to happen.  It did.  A majority was confident that Trump would not win the presidential election in America.  He did.  There was a strong assumption that this would cause a crash on the stock market.  Shares ended 2016 at around their highest level ever.  There’s nothing wrong with distrusting ‘experts.’

Promises to boardrooms.  Theresa May said in July, ‘If I’m prime minister . . . we’re going to have not just consumers represented on company boards, but employees as well.’  This was a big shift in policy and a test of determination.  She emphasised in late November that there will not be a mandatory requirement for staff to have a place in the boardroom.  This sounds like a dramatic change of mind.  Last year’s green paper on reform of corporate governance sets out a range of options for extended scrutiny of executives’ pay and responsibilities.  There must have been a lot of influential lobbying.  The proposals for reform create the challenge for our prime minister of whether government can simultaneously maintain a pro-business and anti-interventionist stance while disrupting the status quo.

Confidence of workers.  The Press Association points to a new research report conducted by jobs site Glassdoor, which has found that less than a third of workers are confident in the Government’s ability to negotiate Brexit.  Confidence was found to be especially low in regions where strong majorities voted to leave, including the Midlands and the North East.  London also appeared particularly doubtful, with over one in four admitting they would consider leaving the UK to work in another European country after Britain withdraws from the EU, compared to a national average of one in seven.

Cash on its way out?  Cash has been around for 3,000 years. There is a lot of talk from experts that it will cease over the next few years. The Week took a close look at this topic on 17 December. Cash is no longer the main form of money. In the UK, there are 3.4 billion notes in circulation, worth around £68 billion. Yet as a proportion of the total sum held by households and corporate bodies, cash is only 3% - 97% is in bank accounts. Paradoxically, despite all the talk about the end of cash, demand has soared in recent years. The Bank of England has been printing more and more. Law abiding citizens and criminals have a common interest in the preservation of cash – convenience and anonymity. Moreover, a cashless society would give much more power to governments to track the minutiae of our lives and to police all those small transactions – such as paying babysitters and buying cannabis for personal use. It would mark an erosion of our civil liberties. There are a lot of good reasons to hang on to your cash.

Where we live.  In September 2016, there were 3.91 million 16-to-24-year-olds with jobs in the UK. 591,000 were unemployed and 2.06 million were fulltime students. The average age of retirement is 64.7 for men and 63.1 for women. The average age of managers is 45, of whom 7.6% are under 30. Most enter management in their early 30s. The average Briton will be employed by six companies and be made redundant twice during her/his career. 46% of employees in the UK will at some point completely change career.

Don’t worry.  ‘Have no fear of perfection – you’ll never reach it.’ Salvador Dali, (1904-89). Spanish artist.

Keep common. ‘The war against intelligence is always waged in the name of common sense.’ Roland Barthes (1915-80). French writer, critic and teacher.

Monday, 19 December 2016


Attempts to control executives’ pay.  Prime Minister Theresa May has made tackling corporate excess one of her priorities in government.  This is not a new focus of attention, we’ve been there before.  It will not work.  Concentration is on rules.  It is the system that is broken.  We must admit that self-regulation is dead, along with the assumptions we have attached to the ownership of businesses.  Sir Ferdinand Mount is a former adviser to David Cameron as prime minister.  He wrote: ‘We pretend that the shareholders possess powers that they effectively lost long ago, and we imagine that the behaviour of the corporation is disciplined by an array of checks and balances that are often no more than decorative today.’  The Office of National Statistics (ONS) reported in 2012 that nearly 60% of shares in the UK were held in nominee accounts and 10% were registered to private individuals.  This means that most beneficial owners are not permitted to vote directly on matters such as pay.  Maybe now is the time for radical changes?

Self-employment increases.   David Smith, The Sunday Times, points out that there are 4.8 million self-employed people in Britain.  This compares to 3.8 million in 2008, when the financial crisis hit our economy. 3.4 million are fulltime and 1.4 million work part-time. The strongest increase has been self-employed part-timers, up 88% over fifteen years. As well as increasing in absolute terms, the self-employed population has been getting older at a faster rate than the workforce as a whole. Flexible routes into retirement – people winding down gradually – were subjects for speakers at conferences not so long ago.  This seems to be happening by choice rather than by legislation.  Changes of this kind have critics. Some suggest they are exploitation of those who have a shaky position in the labour market. Others are sure ‘involuntary’ self-employment is disguised unemployment. The evidence is that most people who make the move to self-employment earn above the average. Of course, this piece of information does not deal with the overall situation. Prime Minister, Theresa May, has commissioned Matthew Taylor, chief executive of the Royal Society of Arts, to review working practices across the economy.

A mistake.  The Office for National Statistics (ONS) has admitted a big and very embarrassing ‘processing error’ that led it to underestimate by £6 billion Britain’s trade deficit with the rest of the world. The correct figure is £17 billion, the highest since 1955.

Things in the way.  Mahatma Gandhi was the determined, legendary and successful leader of the movement for independence of India. He once said, ‘First they ignore you, then they laugh at you, then they fight you, then you win’. Rhymer Rigby wonders in the magazine Work if there is a similarity to Donald Trump.  He was ignored or laughed at.  The Republican Party in America did not take him seriously until he was its candidate. The Democrats thought they had been handed a gift until he beat Hillary Clinton. Mr Rigby concludes, ‘It is never the risks you worry about that undo you, it’s the ones you don’t worry about’.

Just a thought.  ‘All decent people live beyond their incomes nowadays, and those who aren’t respectable live beyond other people’s.  A few gifted individuals manage to do both.’  Saki (Hector Hugh Munro) (1870 – 1916).  English novelist and short story writer.

Convenient vengeance. ‘Autobiography is an unrivalled vehicle for telling the truth about other people.’  Philip Guedalla (1889 – 1944).  English writer.

Tuesday, 6 December 2016


Stress for lenders. Six of the largest banks and one building society have been assessed on whether they would be able to withstand an economic crisis. This process asks if they would survive oil falling to $20 a barrel, prices of houses going down by 31% and a 4.3% drop in economic output.  One failed to prove it would overcome such an unthinkable combination of financial shocks. Analysts pointed to Standard Chartered as having the most difficulty.  Barclays, HSBC, Lloyds, Nationwide, Royal Bank of Scotland were tested also. The examination is the first pressure from information made publicly available.

Back to Brexit.  One of the important factors in the debate is the way in which opinions of experts were sidelined in favour of more emotive arguments. This has caused objections from academics. Maybe there is a core fault-line which is the start of a redefinition of the future of social sciences in the UK? Not only has the Leave campaign been founded on explicit rejection of advice from sages, but it also exposed a gap between academics and the broader public. Recent surveys have suggested falling public trust in ‘academics’ as a professional group and an increasing sense that they are part of ‘the elite’.

Productivity is a constant concern for managers.  A relatively small percentage increase could add more than £200 billion to the economy.  The Confederation of British Industry (CBI) has highlighted potential gains if local businesses could match those in the best performing regions.  It says jobs would be created and living standards improved.

Second estimate.  The Office of National Statistics (ONS) published recently its new reckoning of growth in the economy (GDP) for the third quarter. This was confirmed at 2.3%. Services moved upwards by 3%, driven by a rise of 5% in expenditure on leisure and 4% expansion of transport and telecommunications. Manufacturing and construction continued to disappoint. Household spending increased by 2.6%. Investment went up by a modest 1.2%. The Government’s outgoings rose by less than 1%. Exports appear to have climbed by 4% and imports remained subdued at just 2.6%. There is no reason for a major slowdown in 2017. The negotiations on Brexit will take some years. We all assume that the starting gun (Article 50) will be fired in March.

Theodore Roosevelt celebrated America’s new commercial power during a speech in Osawatomie, Kansas.  Also, he warned that America’s industrial economy had been taken over by a handful of corporate giants.  They were generating unparalleled wealth for a small number of people and exercising growing control in American politics.  The Economist (17 September) points to Roosevelt’s caution that a country founded on the principle of equal opportunity was in danger of becoming a land of corporate privilege. This was on 31 August 1910. Does it have a familiar ring?

On Trump.  MoneyWeek says most observers find it hard to disagree with the view that Donald Trump spends little time in self-examination.  In the Sunday Telegraph, Bruce Anderson quotes a banker who knows Mr Trump well:  ‘It is impossible to know what he thinks or what he is going to say.  How could it be otherwise?  He has no idea what he will say - until he opens his mouth.’

Just think.  ‘You can tell the ideals of a nation by its advertisements.’  Norman Douglas, quoted on and in TheWeek.

The vanishing act.  ‘Public money is like holy water; everyone helps himself.’  Italian proverb.

Making things work.  Bad administration, to be sure, can destroy good policy; but good administration can never save bad policy.’ Adlai Stevenson (1900-68).  American politician and statesman.