Martin Vander Weyer’s Any other business
In the spirit of Richard Ingrams, who as our television critic many years ago reviewed a programme he had not seen but had heard through a hotel-room wall, I felt moved to write about Ireland on the strength of perusing a discarded copy of the Irish Times at a petrol station en route to Manchester for a day at the Tory conference. That tells you how dull I find party conferences, but there are also lessons to be drawn for the UK from the experience of a neighbouring economy whose crisis is both more profound and chronologically more advanced than our own.
It is commonly said that when Greece defaults, Ireland will go down next — but I can report from my pit-stop research and further enquiries that this is by no means the current view from Dublin. A rise in bank deposits in August, the first reversal of a massive outflow of funds that began last autumn, has been hailed by finance minister Michael Noonan as a sign of ‘growing national and international confidence in the Irish banking system’. A €75 million investment by Google in a new computer centre and the enlargement of a €340 million Microsoft data centre opened two years ago are described as ‘a virtual building boom’, fuelled by the special qualities of Irish air, which cools computers without the need for expensive chillers. Balancing this cheerfulness was a feature headed ‘How low can house prices go?’ — having quadrupled in the decade to 2007, they have fallen 43 per cent so far (compared with 11 per cent in Britain) and are expected to go on falling at least for another year.
But the overall Irish mood is remarkably upbeat, underpinned by a Reuters survey showing average GDP growth forecasts for 2011 raised to 1.4 per cent (compared with the IMF’s latest figure of 1.1 per cent for Britain) after an export-driven second-quarter bounce. Crucially for financial survival, yields on ten-year Irish government debt have fallen from a peak of 14 per cent when default rumours were rife in July to a low of 7.5 per cent; Irish bonds bought and sold at those points would have made a very shrewd investment.
Maybe this is just a familiar psychological pattern: if a crowd or a market feels that the low point of any given crisis has passed, then the good news, however sparse, begins to dominate. But when the nadir is still perceived to be some distance ahead — as it clearly is in the UK economy, and as George Osborne emphasised in Manchester with his unveiling of ‘credit easing’ to come, the bad news makes the narrative.
One of my Dublin correspondents, a leading businessman, offers a more specific take. In Ireland, he told me, ‘sport is the bank of last resort, and Ireland’s fantastic form at the Rugby World Cup has given the country a great boost — shown us we can compete again. Everyone still feels poor but Enda Kenny’s government is popular and in Michael Noonan we have a finance minister from the rugby heartland of Limerick who is well able to stand up to the [EU-ECB-IMF] “troika”. We’re back on our feet, the despondency has lifted — to reveal the long climb to a recovery. But in Ireland the glass half-empty is always seen as half-full.’ A quarter-final win against Wales on Saturday would be another boost, and it’s a grim omen for our own economy that everyone suddenly hates the English team.
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Bad names, bad banks
Beware of banks with meaningless names. A prime example was Fortis, the ragbag of Dutch and Belgian institutions that failed in 2008 after partnering Royal Bank of Scotland in its mad takeover of ABN Amro. Now comes Dexia, a merger of venerable (and in the past deeply conservative) French and Belgian savings banks which turns out to have specialised lately in lending long, borrowing short and accumulating €21 billion of bust-eurozone sovereign debt. Bailed out in 2008, it’s in deep trouble again and trying to park its poisonous assets in a so-called ‘bad bank’. What name will it choose this time? ‘Deludia’ springs to mind.
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Shelf-stacker Bates?
Bates, Lord Grantham’s lovelorn absentee valet, was discovered in this week’s episode of Downton Abbey to be working at the Red Lion in Kirkbymoorside — confirming my theory (27 November 2010) that I live bang in the middle of Julian Fellowes’s imagined landscape, and prompting thoughts both about economic change and about Ed Miliband’s facile division of the corporate world into ‘predators’ and ‘producers’. Kirkbymoorside is a Yorkshire market town six miles from my home in Helmsley, and has no pubs that look anything like the Cotswold inn glimpsed as the ‘Red Lion’. If Bates had come looking for work today, he would have had no luck at the real White Horse, which has become a pub-closure statistic and is for sale as ‘retail units’; nor at the White Swan, which has become a curry house. But like so many 21st-century job-seekers he might have fared better at Tesco, which is about to open a store beside the roundabout.
‘Are the people of Kirkbymoorside happy to allow a corporate giant to suck the life out of the centre of their town?’ asks an angry resident in the local Gazette & Herald. Tesco was expected to announce its worst UK sales figures for 20 years this week, but its store-opening programme continues apace — and the dismal small-town blight of empty shops and closed pubs is in large measure due to the relentless march of giant supermarket ‘predators’. Yet Tesco is also our biggest private-sector employer, a setter of high management and product-quality standards, and a flagship of British business abroad — while its price discounting policies make it a bulwark against inflation for the hard-pressed shopper.
And here’s another puzzler for confused Ed. If Bates had got off the bus at Helmsley he could have applied to be manager of our new Oxfam shop, which will soon start ruthlessly cannibalising the trade of several long-established retailers in the town. Oxfam a predator? The economics of commerce are as complex as a Downton plot.
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