Sunny spells, icy showers and an inflationary wind blowing from America
Daffodils everywhere and the FTSE is back around 6,000. Builders are busy after the frozen winter, it’s ‘business as usual’ again in financial services, and although manufacturing lost momentum in March — exports remained strong, but nervous consumers depressed domestic demand — industry is generally perky. The British Chambers of Commerce expect first-quarter growth of 0.6 per cent or better, reversing the previous 0.5 per fall — and although recovery could be sluggish for the rest of the year, the trend will be in the right direction.
So there’s room for optimism, of a cautious kind. Like April’s weather, the forecast is mixed: sunny spells, icy showers, winds to blow your fence down. Shares have climbed back from a Libya-related dive on news suggesting America isn’t having the ‘jobless recovery’ that was feared: 470,000 private-sector jobs added in two months and official unemployment down a notch to 8.8 per cent.
But I refer you to analysis by US pundit Leo Hindery, who puts the ‘all-in real unemployment rate’ (including marginal categories such as those ‘discouraged’ from seeking work) at 17.7 per cent, leaving America 20 million jobs short of full employment and needing 150,000 new ones per month just to keep up with population growth.
That’s a mighty burden on the locomotive of the West. Observers agree that the measure which has made the most positive difference is quantitative easing (QE), the money-printing device that allowed US interest rates to stay low, depressed the dollar, boosted share prices, eased bank liquidity, helped Obama keep spending — and exported asset-price inflation to the emerging markets where we buy our imported goods. If the American recovery is not as robust as official data implies, there will be pressure for yet another giant round of QE when the current one ends in the summer. With oil already surging, an extended American money bubble can only mean rising prices, rising interest rates and slower growth over here. The threat of stagflation can’t be discounted.
System errors
The Treasury select committee, getting its two-penn’orth in ahead of the Independent Commission on Banking next week, is arguing for more competition between high-street banks. Meanwhile, the FSA has published its record of customer complaints against banks in the second half of last year. There were almost a million; Barclays topped the table, followed by Santander, Lloyds and Bank of Scotland. Interestingly, complaint levels were at their peak in the second half of 2009, when there were more than two million — mostly about charges at a time when banks were whacking higher margins and penalties on to hard-pressed business customers and mortgage borrowers. In the category of ‘general admin/ customer service’ complaints, the highest level was recorded in 2007, though for the past five years the number has never ranged far from 5,000 each working day.
That’s a big number: imagine the hoohah if there were 5,000 official complaints a day in, say, the takeaway kebab industry. But the flatness of the trend makes me wonder whether customers now have such low expectations that they simply can’t be bothered to go through the complaint procedure. Because if observation is anything to go by, there’s an all-time peak in irritation, driven largely by the contrast between the banks’ fat-cat corporate personae and their dehumanised, error-strewn customer interface.
In my role as an unofficial tribune for better banking, people tell me stories all the time: of a charity charged a £140 penalty for a one-day overdraft of less than £300; of a disabled woman in fear of having her phone cut off because a computer glitch has bounced her cheque to BT when she has thousands in her account; of people driven mad by inane ‘security questions’ before being told by script-reading call-centre operatives that nothing can be done to help. More competition will make little difference if it’s more of the same: what banking really needs is de-systematising and re-humanising.
An end to internment
Desperate times, desperate measures. On the day oil hit an all-time sterling high of almost £75 a barrel, the Deputy Prime Minister, Nick Clegg, was out there on breakfast television attacking that most monstrous of social evils, the unpaid work-experience placement. This device for getting teenagers out of bed during the holidays is now usually referred to as an ‘internship’, an Americanism that neatly expunges any suggestion that ‘work’ or ‘experience’ might be involved, unless you count the kind of experience acquired by the world’s most famous intern, Monica Lewinsky, in Bill Clinton’s bathroom.
Clegg was waffling earnestly about guidelines to make internships open to kids across the social spectrum. No longer should this elaborate form of babysitting be exclusively available to the offspring of the directors’ friends or — an example that seems to have caused special embarrassment — of the highest bidders at Conservative fundraisers such as the Black and White Party (formerly the ‘Winter Ball’, but that was deemed anti-egalitarian too). Some sort of blank application system must be introduced to hide details of candidates’ social background, so that ‘fairness’ can prevail.
Well, most teenagers would be comfortable completing forms that have to be left largely blank, since (as I understand it) that’s pretty much what they are required to do to get A-grade GCSEs. But employers may think external scrutiny of their internship programmes is a recipe for hassle far outweighing the modest quantum of goodwill it creates, and decide not to bother. The Spectator, as ever, led the way on this one by calling for the complete abolition of work experience as long ago as 2006, when Matthew Lynn wrote: ‘As for the teenagers, they could stop wrestling with long lists of orders from Starbucks and go back to getting drunk, listening to loud music and slamming their bedroom doors — the things they’re actually good at.’ It would be a relief to everyone concerned.
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