Business vote

Jim Pickard

We spotted the rapidly rising cost of insuring UK gilts against default in this blog on November 24.

Today the Tories pointed out that the relevant figure (credit default swaps) is now twice the cost of insuring the debt of McDonald’s, the fast food chain. Read more

Jim Pickard

Peter Mandelson said at the weekend that there would be “no blank cheque” for industries suffering from the credit crunch.

But he sounded a little disingenuous when he claimed: “I don’t expect such a queue to form and one will not be welcomed.” Read more

Jim Pickard

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This Bloomberg chart tells a striking tale. Credit default swaps are a form of insurance on gilts. People buying UK government debt acquire CDS’s to protect themselves against the risk of the country becoming bankrupt. Read more

Jim Pickard

The Conservatives have proposed a VAT holiday for struggling small businesses.

A six-month deferment would prevent some companies “going to the wall,” according to George Osborne. Read more

Jim Pickard

Gordon Brown has just told the UN that the “age of irresponsibility” is now close to its end.

Raising the obvious question: if everyone was so irresponsible, why did the Chancellor of the Exchequer (G.Brown, 1997-2007) do so little about it? The silliness in the banking world was not confined to the US, whatever the prime minister might claim. Read more

Jim Pickard

It’s a serious question. We are set to hear a lot of words on this as Gordon Brown jets to New York tomorrow to discuss international financial regulation. “Supervision can no longer be national, it has to be global,” he has just said in his speech.

But how will a global regulatory monolith – based in Tokyo, or Wall Street for example – be able to monitor financial services more effectively than a national one? Read more

Jim Pickard

“Now is the winter of our discontent made glorious summer”. Or something like that.

Ministers/MPs/activists up here in Manchester seem to be basking in the fact that Gordon Brown has at last done something tangible to tackle the credit crisis. At last there is a script! Read more

Jim Pickard

There was an unmissable letter in this morning’s FT:

Mr McCain also promises a ‘fix’. What does that mean? Deleveraging? Unwinding? All those using these scholarly-sounding phrases should take a cup of tea, stir a spoon of milk into it for several seconds, and then try to regain the pure milk…If they succeed, maybe they have found the trick for unwinding.” (Wolfgang Sendler, Trier University) Read more

Jim Pickard

John Prescott claimed this morning on Today that the chancellor had been “vindicated” for warning last month that the UK was facing – arguably - the toughest economic headwinds for 60 years.

This blog said at the time that Alistair Darling’s honest should be welcomed. If anything he took too long to admit the severity of the situation. Read more

Jim Pickard

Energy companies will pass on the cost of the £910m home improvement package announced yesterday. That much is clear from the comments of David Porter, chief executive of the Association of Electricity Producers, who said: “Whenever people impose costs on an industry, the bill to some extent always ends up with the customer.”

The new twist to this story is that the companies will be able to offset some of the expenditure against their tax bills. With corporation tax at 28 per cent, that means an effective bill of £655m rather than £910m. Read more

Jim Pickard

Readers of this blog will have seen my doubts on Tuesday (here and here) about the real size of the stamp duty holiday. This morning we confirmed that it’s probably more like £240m than the £615m claimed by the government.

There are only two possible explanations for this that I can see. Read more

Jim Pickard

We couldn’t work out why the share prices of major housebuilders leapt yesterday (some by as much as 10 per cent) on the back of the housing package.

My theory was that some stocks are already priced for collapse – or at least for breaching their banking covenants – and are now so low that any glimmer of good news can shift the price upwards. Others thought that the stamp duty holiday and other measures could genuinely make a difference; helping the housebuilders shift their backlog of unwanted homes to some extent.

Jim Pickard

So, the stamp duty holiday for first-time buyers will happen. On homes up to £175,000. And for one year only.

The figure of £615m sounds reasonably generous…until you consider that the housing market is worth over £5 trillion. Read more

Jim Pickard

Alistair Darling may or may not be correct to say that economic times are “arguably the worst they’ve been in 60 years”. The UK may be facing recession but is not quite there yet. I’ll leave that debate to economic historians.

More depressing is that his honesty has been met with such an over-wrought media furore. Those damning the Chancellor for his “gaffe” are no doubt the same ones who accuse politicians of being mendacious and dishonest. Read more

Jim Pickard

Leave aside the question of whether energy companies are charging too much for power. There is the separate question of the European emissions trading scheme (ETS) windfall, addressed elsewhere on this blog.

Earlier this year, Ofgem said power companies had ended up with a £9bn windfall because of a quirk in the scheme. In its second phase polluting companies must buy on average 7 per cent of the permits they need to pollute. For power companies it’s about 30 per cent. Read more

Jim Pickard

Vince Cable held a press conference this morning to outline various ways to ease the pain in the housing market. I’m not sure any of his suggestions will make a massive difference (they include letting housing associations borrow more to buy up empty homes***).

But credit to the Lib Dem Treasury spokesman, who has long been alert on this issue. As he reminds us, Labour MPs were literally laughing at the idea of an imminent housing crash – as recently as the spring. Read more

Jim Pickard

You may or may not have noticed the Conservative silence during the ongoing debate about a windfall tax on energy companies. It’s not hard to imagine the internal debate at the top of the party on this one.

Attacking the idea would be sensible and confirm the party’s pro-business credentials. But supporting it could play well in Lower Middle England.  Saying nothing would give the Tories the benefit of the doubt either way. Read more

Jim Pickard

Rob Marris MP* has just denied that he will quit if the government doesn’t bring in a windfall tax.  

Here are his comments to me over the phone just now: Read more

Jim Pickard

The scene: A newsroom. The date: September 2008

 Read more

Jim Pickard

The typical household in the UK has seen disposable income drop by 15 per cent in the last year as food prices and utility bills soar.

Disposable income now represents 28 per cent of average household income, down from 35 per cent a year ago, according to a survey published on Monday by uSwitch.com, the price comparison website. This is the equivalent of £14,520, down from £17,102. Read more