Crikey, the EU wants us to pay €100 billion to leave

The Financial Times reports, “Brussels hoists gross Brexit ‘bill’ to up to €100bn – France and Germany back tougher approach to Britain’s departure obligations”. [Click on image to expand].

The UK’s annual net contribution to the EU is around £10 billion. Asking us to pay €100 billion up front is optimistic. No, it’s downright bonkers. It’s naive of the EU to release their estimate of the UK’s debt of between €91bn-€113bn during a general election campaign, for surely it will strengthen Theresa May’s vote. Is that what they want? Goodness only knows.

This nonsensical number, of €100 billion, is bound to increase the clamour for a quick exit from the EU, which I’d be against. We must now learn to play hardball with the EU. I recommend we publish our proposals for citizen rights in fine detail, and be prepared for public negotiations. The EU will soon see the benefit of conducting confidential negotiations.

Here are a couple depressing of quotes from the FT’s article,

It also reflects the steadily hardening position of many EU member states, which have abandoned early reservations about the bill’s political risks to pile on demands that will help to plug a Brexit-related hole in the bloc’s common budget.

At the request of France, Germany and several other member states, the commission also abandoned its initial plans to offer the UK a share of assets, worth between €3bn and €9bn, depending on the definition used.

Interesting research: ‘The American Middle Class Is Losing Ground’

One of the Pew Research Center for social and demographic research reports is on how The American Middle Class Is Losing Ground. Their report’s opening paragraph states,

After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number by those in the economic tiers above and below it. In early 2015, 120.8 million adults were in middle-income households, compared with 121.3 million in lower- and upper-income households combined, a demographic shift that could signal a tipping point, according to a new Pew Research Center analysis of government data.

The Financial Times’ article on America’s Middle-class Meltdown has this helpful GIF which shows the change in middle incomes over time.


My admiration for the Financial Times’ Gillian Tett is boundless

Why do I admire Gillian Tett, assistant editor of the Financial times? Not only is she lucid and articulate, but she’s immensely knowledgeable about global economies, and can explain the arcane in a easy to understand way.

Gillian Tett

All this was demonstrated on Thursday’s edition of BBC Newsnight [worth a look on iPlayer from 30 minutes in]. Gillian Tett was on the programme to talk about business confidence, in light of the positive signs of growth in the UK economy. Newsnight’s economics editor, Paul Mason, preceded the discussion with a trailer about his ‘five random indicators of confidence’, which included one about when his twitter messages no longer claim that he’s a Cameron/Osbornist propagandist.

There followed a discussion between Kirsty Wark, Gillain Tett, and US Professor Jeffrey Sachs. Both of whom agreed that quantitative easing had mostly benefited the rich, and that both the young and those with low educational training were yet to feel any benefit from economic growth. Gillian Tett’s view that “the gap between the old and the young is perhaps one of the most important issues right now, because if you are old and have assets you’re benefiting…”

She continued, “….the Bank of England is suggesting that 40% of the gains from quantitative easing has gone to the wealthiest 5%”. Answering Kirsty Wark’s point about a potential bubble in the economy, she said, “Frankly, I don’t think we’re in bubble territory right now, nowhere near it.”

Newsnight discussion about Twitter IPO

Next, Gillian was involved in a discussion with Paul Mason about the announced stock market flotation of Twitter. While Paul was as excited as a small boy in a sweet shop, and about as articulate, Gillian gave a masterful briefing on the issues around Twitter’s flotation and possible profitability. Here’s what she said,

“Here’s an interesting factoid. Since Twitter’s been formed there’s been 430 billion tweets, in just 7 years. …. The big question now for Twitter is how you make money on the back of those tweets.

There’s two ways of doing it. One, they can put adverts on our tweets, and people don’t like that. The creepier way though is to start sorting people in social groups, and with algorithms to start monitoring their behaviour, and then use that to try to market and sell to things to people much more subtly….

What we’re seeing now is the same algorithmic geeks who were doing finance a decade ago, … now trying to use us to see the signals as to how we’re living. I suspect Twitter is trying to do both.

Those 430 billion tweets are currently sitting in databases. Who is going to use them? How are they going to use that information? and can that be moneatised? That’s the big question that matters not just to the economy but to issues around privacy ….”

Paywalls, success or failure?

Now that The Times and Sunday Times online content is behind a paywall, I no longer get access to their reporting, that’s unless I buy an inky newspaper. I’ll miss Matthew Parris’s articles – hugely, and Rachel Sylvester’s political insight, also Daniel Finklestein’s Comment Central blog [It’s been removed from my blog roll].

Am I persuaded to subscribe? No. I’m not convinced by the arguments that a news service should sit behind a paywall, specialist opinion and comment yes, news no. Two examples to note. The Metro is succeeding as a free sheet, as is the London Evening Standard. The Financial Times has two terrific blogs [see my blogroll] and allows a limited number of articles to be viewed per month. Not perfect, as I do like to read as much of Gillian Tett as I can, but I’m perfectly happy with the Financial Times charging model.

So, will pay walls succeed or fail? Obviously I can’t be certain either way. I think it’s a bit short-sighted to stick all your content behind a paywall. A better model might be, free online news, paid for opinion, and a weekly paid for online summary that includes video and other specialist features. In that way, you put you most valuable resource behind a paywall, but leave the cheap and cheerful news coverage as a taster to bring in more subscribers. But, hell what do I know, when Rupert Murdoch owns The Times. 

My solution, which I’ll pass on yo you, is to build up a list of indispensible blogs and online sources. Trouble is, it’ll take time, which means I might never complete it. Or, I could like Roy Greenslade try and find ways around paywalls.

Oh, the tortured calculations

Well, you could’ve knocked me down with a feather. I never expected that the Financial Times would declare for the Conservatives in this election. Seems they have in the editorial in Tuesday’s paper.

The FT’s Westminster blog is on my blog roll, specifically because its take on the political scene has a unique finance and City perspective. It’s two main writers, Frank Jim Pickard and Alex Barker, have, it seems to me, a strong leftish agenda, never seeking an opportunity to find the positive in Conservative policy.

Oh, how tortured must have been the discussions and calculations to come out for the Tories. I listened to the paper’s editor, Lionel Barber, being interviewed by Jeff Randall, on Randall and Boulton Unleashed. His endorsement of the Conservatives was offered on the basis that they would be best at reducing the size of the state, and be best for and enterprise and wealth creating culture. His words in the editorial were,

“They [the Conservatives] are not a perfect fit, but their instincts are sound. Their fiscal plans, while vague, suggest they would do most to reduce the size of the state – cutting more and taxing less than their opponents. They would create the best environment for enterprise and wealth creation.”

Spot on Lionel.

UPDATE: Oops, penalty of late night blogging, I called the estimable Jim Pickard, Frank. Apologies offered.

Is there a hidden deal with Tony Blair?

Slippery Tony Blair has surfaced from his money-making adventures around the world to pop up in his old constituency to offer support to Gordon Brown.

I wonder what the deal is with Tony Blair and Gordon Brown. Support me and I’ll keep the investigators away from prying into how you make your multi-millions. It wouldn’t surprise me.

David Cameron’s reaction, as reported by Conservative Home, is “Nice to see him make a speech that nobody’s paying for.” Well, that’s the question, isn’t it. If everything you do on leaving office is to do it for money, direct or through your own charity, then people will rightly conclude that there may be a deal behind his support.

It demeans the office of Prime Minister, to have a past one so keen to hide his income from public view. Tony Blair may have currency and status elsewhere in the world. He has none here in the UK. I’m somewhat surprised that he has homes here. That his children have Irish passports doesn’t speak of a commitment to this country.

If Labour want to use him in the election campaign, fine. But, for me he’s a lightening rod for negativity with Labour.

Others are quizzical about his reappearance too. Guido Fawkes, naturally. Peter Hoskin in the Spectator. Although the Jim Pickard in the Financial Times still sees traces of stardust around Blair.

Conservatives crowdsource the Budget

Just opened up a little email billet-doux from my chum Eric Pickles. In which he says the Conservatives will crowdsource tommorrow’s Budget.

“This year we’ve decided to do something a bit different – we’re going to crowdsource our response to the Budget. Once the Budget’s out, we’ll publish it in a simple format as soon as possible so you can have a good dig into it. The Treasury has hundreds of civil servants working on all this and there’s no way we can match their resources – so it’s important for as many of you as possible to lend a hand in analysing the detail.”

“All you have to do is log on to tomorrow afternoon, have a look, and start picking out anything that might be misleading or hidden away. Together, we can make sure we hold this Government to account over its economic incompetence.”

Jim Pickard in Financial Times is sceptical about it’s value – as ever with the FT. Sky News’ Boulton & Co blog is more positive.

Of course, Labour’s attack dog, Liam Byrne, dismisses the idea. Wrong again Liam. It’s a good idea.  Helping the public to look deeply into government figures and policy – what’s wrong with that.

UPDATE: How could I have failed to post the link to Dizzy Thinks perceptive piece on crowdsourcing the Budget. Done now.

The bond market gives us a stark warning

I suggest that you have a stiff drink at the ready after reading Bill Gross’s February investment outlook. For a shorter synopsis, you can read Paul Murphy on the FT’s Alphaville blog. 

Bill Gross’s investment outlook on the bond market begins amusingly, reflecting on his age and status as a leading bond investment analyst. Then he’s quickly into the ‘red meat’ of market analysis and investment strategy. Before reaching this conclusion, which he presents with a Ring of Fire chart:

“The most vulnerable countries in 2010 are shown in PIMCO’s chart “The Ring of Fire.” These red zone countries are ones with the potential for public debt to exceed 90% of GDP within a few years’ time, which would slow GDP by 1% or more. The yellow and green areas are considered to be the most conservative and potentially most solvent, with the potential for higher growth.”


Then looking at the major economy’s bond markets suggests the ‘interesting aspect to watch’ with the UK is:

“… the UK, with the highest debt levels and a finance-oriented economy – exposed like London to the cold dark winter nights of deleveraging.”

Finally observing that [note that it’s his underlining, not mine]:

“… the UK is a must to avoid. Its Gilts are resting on a bed of nitroglycerine. High debt with the potential to devalue its currency present high risks for bond investors. In addition, its interest rates are already artificially influenced by accounting standards that at one point last year produced long-term real interest rates of 1/2 % and lower.”

What does all this tell us politically? Simply that George Osborne and the Conservatives are correct in saying that the deficit should be tackled now. Otherwise, waiting will stifle future growth and risk a bond crisis. Labour are on the wrong side of this argument. Whomever it is, the incoming Chancellor’s job will be tough, tough, tough.

No ‘dead cat bounce’ detected

The FT’s Alphaville blog is in my blogroll, as I’ve noted before. Here’s a beauty of a chart from their blog – Dead cat splat? UK GDP edition.

It’s the best description of the UK’s limp exit from recession of all the other economics commentators that I’ve seen. A great headline, as an alternative to ‘dead cat bounce’. Click on graph to enlarge.