Bank of England chief economist Huw Pill had an unusually hard act to follow when he was appointed – after stints at Goldman Sachs, the European Central Bank and Harvard – to succeed the free-thinking Andy Haldane in 2021. Pill’s face is still not one most of us recognise, but he’s an interesting speechmaker and his latest, delivered in New York, is worth reading for its analysis of the UK’s labour market problem and its potential to prolong the current inflation.
In essence, he observed, the US has a tight labour market because its economy has surpassed pre-pandemic levels and may even be ‘overheating’. But the UK has not reached that benchmark and is afflicted (as indeed The Spectator was early to point out) by an unforeseen decline in participation rates among the working-age population, particularly 50- to 65-year-olds, either from choice or for long-term health reasons – exacerbated, though Pill does not say so, by extended NHS waiting lists.
It’s also worth quoting Pill on Brexit’s contribution to the labour problem, not least because Brexiteers so avidly play it down: ‘While aggregate levels of immigration… remain elevated, the loss of flexibility associated with the end to free movement of EU workers into the UK [means that] post-Brexit immigration has proved less effective in addressing labour market mismatches and more costly for employers.’
One way or another, if we have relatively fewer workers willing or well enough to fill vacancies, then – even as unemployment rises in recession – we’ll have more wage pressure, more inflation and slower recovery than rival economies with keener, healthier workforces. The Sunak solution of teaching teenagers more maths is comically irrelevant. But you, Mr and Mrs Early-Retired Spectator Reader, hold the key. Forget new year resolutions about drinking less or taking up crochet. Just get back to work, flexible as you like, paid or voluntary, doesn’t matter so long as you’re economically active rather than slumped in your armchair. Seriously, folks, your country needs you.
Tesla’s fate foretold
A trillion here, a trillion there: recent falls in the value of leading US tech stocks have been colossal. Do they foretell the fate of the underlying businesses? Or do they merely reveal the irrationality of the tech market surge that coincided with the pandemic?
This time last year, Apple became the first company to hit a $3 trillion valuation. Now it’s back to $2 trillion, after supply problems in China and warnings of weaker demand from inflation-squeezed consumers. Amazon, also down a trillion, is cutting 18,000 jobs as the pandemic spike in online shopping tails off – while some pundits feel the mighty retailer is a diminished force without founder Jeff Bezos at the executive helm. Microsoft shares are off by a third too, for no better reason than, as Damon Runyon put it, that’s the way to bet.
And then there’s Tesla, Elon Musk’s electric car venture, which I suspect is the only one of this quartet that really is approaching an industrial turning point. At $120, Tesla’s shares are back to where they were in August 2020, having peaked above $400. That’s partly in response to the distraction of Musk’s takeover of Twitter – but it also reflects slower growth in new vehicle deliveries, problems in its important Chinese market and a reduction of Tesla’s market share for electric vehicles in the US.
The short version is that having set a phenomenal pace of EV development, Tesla is now being caught up by the tortoises of the auto industry, from Volkswagen and Hyundai to Ford and General Motors. Tesla is still worth four times Ford and GM combined but the rationale for that premium is evaporating, because investors are beginning to see that within this decade Musk’s company could be reduced to a run-of-the-mill competitor in an all-electric marketplace. Some tipsters see recent falls as an opportunity to buy more Tesla shares. I’d say Apple the great innovator and Amazon the unstoppable quasi-monopolist have much stronger chances of staying ahead of their game.
Big Bang visionary
A farewell salute to my former City boss Lord Camoys, who has died aged 82. BZW, the investment bank he built for Barclays in the Big Bang revolution of the mid-1980s, was the boldest of several ultimately ill-fated British-owned challengers to the giants of Wall Street – and Tom Camoys’s ambition for the project was as expansive as his modus operandi was pugnacious.
The effort of hammering together a fractious triple merger of big-ego brokers, jobbers and bankers drove him to a stroke at 46 – from which happily he recovered to take other roles, including Lord Chamberlain, deputy chairman of Sotheby’s and (as a senior Roman Catholic) ‘Consultor to the Patrimony of the Holy See’.
In the latter role, he once told me, he fought a more polite battle to persuade the Vatican not to do business with the wrong sort of banks. With his charisma, vision and appetite for infighting, Camoys in another life might have made a good Pope.
In praise of clubs
Your suggestions for businesses that deserve praise for maintaining good service through the disrupted festive season were, as ever, eclectic, ranging from an online knitwear seller called WoolOvers to the Wine Society at Stevenage and the remote Mainsgill farm shop on the trans-Pennine A66. I’m assuming the reader who claimed to have sourced last-minute presents from a Windsor-based supplier of Harry’n’Meghan-themed dartboards was being facetious.
But let me say a final word in favour of an entire mini-sector that I know gives constant pleasure to the Spectator-reading classes: London’s clubland, from the aristocratic mansions of St James’s Street to the lowest dives of Soho, all plagued by staff shortages, stinging business rates and soaring energy costs made worse by this week’s subsidy cuts, but still battling to offer value-for-money conviviality. Pip-pip, time for lunch!
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