Martin Vander Weyer Martin Vander Weyer

Any other business: Not so negative outlook as trade picks up and protestors pack their tents

issue 18 February 2012

Time for one of my periodic round-ups of relatively good news, as the last of the snow melts and confused bluebell and daffodil shoots that appeared in mild December begin to raise their heads once more. On Tuesday morning you could almost hear them squeaking, ‘Look out, here comes Ed Balls again’, as the shadow chancellor ranted about the ‘negative outlook’ warning that Moody’s has issued against its triple-A rating for UK public debt.

But Balls said nothing in his Today interview about two other forecasts. The CBI is now predicting growth of 0.2 per cent in this quarter and the next, following a dismal minus 0.2 per cent in October to December — which means we’re still ‘flatlining’, to use Balls’s favourite word, but we should avoid the consecutive negative quarters that would constitute the double-dip recession on which he has pinned his career prospects. CBI chief John Cridland thinks the low point of the cycle might have been last October, and that data from manufacturers and exporters show ‘very tentative signs of a pick-up’ since December. And the OECD — generally inclined to gloom — endorsed the CBI view by including a minor upgrade of UK prospects in a global survey which pointed to a  ‘positive change in momentum’ at the end of last year.

Another fall in inflation, to 3.6 per cent, is also a useful boost. So take your pick, but remember that ratings agencies like Moody’s, having disgraced themselves by awarding triple-As to all manner of toxic garbage during the subprime boom, are these days big in the pessimism business. Meanwhile, the global uptick is being driven by undeniable signs of recovery in the US. Almost a quarter of million new American jobs were added in January, positive retail sales figures were expected this week, and manufacturing output has been improving. At the same time, the pace of Chinese industrial growth has slowed as rising wage costs squeeze China’s competitive advantage — which suggests a rebalancing of global trade. The new buzzword is ‘reshoring’, meaning bringing capacity back onshore that had previously been outsourced to somewhere cheaper. And the owner of the world’s biggest fleet of oil tankers, the Norwegian-born billionaire John Fredriksen, revealed this week that he’s about to order a new generation of vessels to take advantage of rock-bottom shipyard prices ahead of a market upturn. You don’t have to be an insane optimist to see a pattern emerging.

Business as usual

In the City, the FTSE 100 index has risen by 800 points since December, and one of the effects of the new round of quantitative easing, injecting new-minted liquidity into the markets, should be to buoy the prices of blue-chip shares. The fact that investors across Europe have chosen to see the latest developments in Greece in a positive light, despite chaos on the streets and the possibilities of a bond default in March and an unravelling of the new austerity pact after a general election in April, is itself an indicator of the change of mood.

And City professionals at least have one mega-merger in hand to milk for fees and take their minds off a round of reduced bonuses, in the form of the £53 billion marriage of the secretive commodity trader Glencore and the coal miner Xstrata. It will create the world’s fourth largest natural-resources group, and efforts have been made to paint it as a sinister alliance; but the deal comes as no surprise. The respective bosses of the two companies, Ivan Glasenberg and Mick Davis, are close neighbours in Switzerland and long-time allies, Davis having once taught Glasenberg accountancy in their native South Africa. Indeed, part of the rationale for Glencore’s flotation last year was to create a share currency in which to price this very merger. Some of Xstrata’s shareholders are holding out for a richer offer of Glencore shares, but no white knights are expected and the deal looks set to happen. After a difficult winter, the City sees it as a return to business as usual.

No manifesto

That feeling will be reinforced shortly by the disbandment of the Occupy London camp outside St Paul’s cathedral. The end may come at the hands of the City Corporation’s bailiffs when appeal court judges have finished deliberating, or it may happen naturally, for lack of energy or coherent purpose. Many grown-ups felt an initial twinge of sympathy for a spontaneous youthful protest against greed and unfairness, but this one rapidly turned into an eyesore, a loose ragbag of complaints against cuts and student fee increases as well as City misbehaviour, and a clerical farce. Unable to reach its real target, the offices of the London Stock Exchange, it disrupted the life of St Paul’s for four months instead, provoking civil war among the dean and chapter as well as copycat camps on cathedral greens in such capitalist Sodoms as Sheffield and Norwich.

At one stage the Occupy movement made its presence felt in 800 cities around the world, and bien pensant commentators were comparing it to the Arab Spring as an example of the new power of informal, leaderless networks, connected only by Facebook and Twitter, to confront established hierarchies. But I can’t help thinking the comparison insults the courage of Egyptian, Bahraini and Syrian demonstrators, while what Occupy really shows is that mass protest is ineffectual without a clear manifesto. One camper claimed credit for fuelling the political pressure on Stephen Hester of RBS to give up his bonus — but actually I thought I did that myself, in this column, and without any collateral damage to canons.

No room this week for readers’ nominations of interesting new ventures, but they’ve been flooding in — notably from universities up and down the country eager to tell me that their own spin-out companies, many of them in the medical field, are at least as exciting as the three I highlighted last week. The enthusiastic response to my New Year appeal is, I hope, another sign that spring is on its way. More next week.

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