Martin Vander Weyer

During a lull in the pandemic I rented a little flat in Oxford for the academic year I was thrilled to have been offered; then Covid came back, my college all but closed and I made so little use of my lodgings that it would have been cheaper per night to stay in a suite at Le Manoir aux Quat’Saisons. As bills mounted, I learned that modern renting is astonishingly expensive – while for the landlord, I thought, it looked like easy money. So in the next phase of life, I became a buy-to-letter myself – and as I do the maths at the end of the tax year, I’m discovering the meaning of what the Daily Telegraph recently called ‘Britain’s demented war on landlords’.

‘March madness’ was a tag applied with hindsight to last month’s scare provoked by the unconnected collapses of Silicon Valley Bank and Credit Suisse. Nothing systemic there, said the wise men. But this week began with another rumble, as reputable US institutions, including State Street of Boston and the stockbroker Charles Schwab, reported large deposit outflows, while shares in others dived. Meanwhile, the Bank of England was assessing whether to raise the state guarantee of bank deposits from its current £85,000 to avert social-media panics. But the problem is becoming circular: as interest rates rise, depositors are keener to move money around in search of higher yield.

Three months ago I praised Tony Danker, director general of the Confederation of British Industry, for berating the government over corporate tax rises and skill shortages: at last, I said, a CBI chief con brio. But now he’s been fired following an investigation into his ‘workplace conduct’ and three other CBI staffers have been suspended over other claims, including a rape allegation. The taint is life-threatening: if members flee, the CBI won’t survive. And if it doesn’t, say critics, not much is lost – because as a lobby group for the interests of its dominant large corporate subscribers, the UK’s leading employers’ organisation was already past its sell-by date. Fair comment?

BBC News reported Britain’s imminent accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership behind two stories about racism in cricket, giving no suggestion that it might represent a major economic breakthrough. Rather the opposite, with emphasison the cautious official prediction that CPTPP membership will add just 0.08 per cent to UK GDP over the next 15 years. But as a former Asia-Pacific wanderer myself, I’m almost as excited as Lord Frost about the prospect of tariff-free trade with Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

When markets are in ‘seek and destroy’ mode, like the last dragon in Game of Thrones, it’s fruitless to guess where they might attack next. Silicon Valley Bank’s excess of deposits was not in itself a signal of distress. Credit Suisse’s balance sheet was stronger than those of many other leading European banks. Deutsche Bank is a lot better-managed than Credit Suisse. But still investors swarm in search of weaklings. And their next focus – alongside the impact on bond portfolios of fast-rising interest rates, as in SVB’s case – will be the most traditional of all causes of banking crises: commercial property. America has $20 trillion worth of it.

If G-SIBs were a gentlemen’s club rather than a category invented by the Basel-based Financial Stability Board, Credit Suisse would have been kicked down the front steps months ago. G-SIBs are the thirty "global systemically important banks" and even within that list, Credit Suisse counted among those with the lowest "required levels of addition capital buffers": in short, regulators considered it rock-solid. But that was a judgment on its end-2021 balance sheet, not its management. Credit Suisse has been so badly run for so long — so riven by tension between the dull Swiss wealth business it ought to have been and the global player it imagined itself to be — that some of us wondered how it survived.

If G-SIBs were a gentlemen’s club rather than a category invented by the Basel-based Financial Stability Board, Credit Suisse would have been kicked down the front steps months ago. G-SIBs are the 30 ‘global systemically important banks’ and even within that list, Credit Suisse counted among those with the lowest ‘required levels of addition capital buffers’: in short, regulators considered it rock-solid. But that was a judgment on its end-2021 balance sheet, not its management. Credit Suisse has been so badly run for so long – so riven by tension between the dull Swiss wealth business it ought to have been and the global player it imagined itself to be – that some of us wondered how it survived.

How is it possible for a bank to collapse because it holds too many customer deposits – rather than too few, or too many bad loans? That was the mystery of the sudden failure of Silicon Valley Bank, America’s 16th largest, which had seen its cash holdings double to almost $200 billion during the pandemic period because its customers, mostly high-growth tech companies, were awash with venture capital funding that they could not immediately spend. So they deposited it with SVB, which in turn invested a large portion in illiquid long-term fixed-rate mortgage bonds offering the highest yield available from a meagre range of choices.

Talk of a ‘stampede’ for the exit from the London Stock Exchange (LSE) may be overdone, but there’s clearly a problem. It was highlighted this week by the decisions of the Cambridge-based chip designer Arm to list in New York rather than London and of the Irish-based building supplies group CRH to shift its existing listing likewise. Other multinationals with US interests and tech ventures with hot prospects are rumoured to be thinking the same way. In short – the argument goes – the LSE tends to generate lower valuations than New York’s exchanges because it is populated by too many old-economy stocks and risk-averse investors, including pension funds and insurers that prefer stodgy bond portfolios to high-growth equities.

The pound rose a cent or two against the dollar in response to the new trade deal for Northern Ireland. The FTSE 100 index rose on Monday but slid back on Tuesday, deterred by the prospect of a stronger pound, while the more domestic FTSE 250 showed a clearer uptrend. Overall, markets were cautiously positive about the Windsor Framework, not so much for its effect on movement of goods through Northern Irish ports as for its signal of calmer UK-EU trade relations ahead on a wider front. And what really matters is whether this change of tone catalyses a new wave of inward investment. The recent claim by economist Jonathan Haskel that Brexit had cost us £29 billion in lost investment and productivity provoked outrage in some quarters.

‘Greenwashing vs Sportswashing’, as Sky Sports put it, is a curious way to characterise the emerging £6 billion takeover tussle for Manchester United between industrialist Sir Jim Ratcliffe and Sheikh Jassim bin Hamad Al Thani from Qatar. The latter might feel that his emirate – contrary to expectations, shall we say – has been not just sportswashed but drycleaned, pressed and showcased on the red carpet as host of last year’s World Cup, which ended without significant disruption by human rights or anti-corruption activists. Following that with membership of the rogues’ gallery of Premier League owners – recently joined by the Public Investment Fund of Saudi Arabia as majority owner of Newcastle United – is hardly likely to win higher moral standing.

‘Great news, Prime Minister, Astra-Zeneca has decided to site a new £320 million factory on Mersey-side. Your vision of the UK as a science superpower is becoming a reality.’ What a moment that would be for a Downing Street intern in search of the positive for an otherwise grim morning briefing; almost up there with ‘Great news, Prime Minister, Boris Johnson has joined a Trappist monastery’. But no, AstraZeneca decided some time ago to put its next factory in Dublin. This is the pharma multinational that was a corporate hero of the Covid vaccine rollout and is a descendant of ICI, Britain’s greatest 20th-century science company; the very model of the kind of investor Rishi Sunak hopes to attract.

What comfort can we draw from the FTSE 100 Index’s all-time high of 7905 last Friday? Yes, in a limited sense, it’s a reason to be cheerful: first, because it’s a boost to the value of pension and tracker funds; second, because it fits the current narrative of gloom receding, in which inflation has probably peaked, interest rates look set to follow soon and the Bank of England says the coming recession will be shallower than first thought. But the new top is less than a thousand points above the ‘dotcom bubble’ record of 6930 at the turn of the millennium, so no spectacular reward for long-term equity holders.

Does a change of chief executive at Unilever, the British-based shampoo-to-Marmite multinational, signal the demise of the fashion for corporate ‘purpose’? Alan Jope, who steps down in July, drew scorn when he declared that every brand in his portfolio should ‘stand for something more important than just making your hair shiny… or your food tastier’. His reputation was also dented by the failure of a £50 billion bid for the consumer arm of the pharma giant GSK – but it was his preaching about sustainability and purpose while Unilever’s performance continued to flag that ultimately cheesed off his shareholders.

As a scattering of snow settles on the desolate site at Blyth in Northumberland that might have become the £3.8 billion Britishvolt battery factory, differences of opinion over the failure of this would-be flagship of the UK’s electric vehicle revolution become clearer. For Andrew Orlowski in the Daily Telegraph, it’s ‘a surprising success’, ministers having rightly declined to inject public funds into a venture with no market-ready technology, no customers and an executive team with a taste for private jets: at least ‘we know we won’t have another DeLorean to rue’.

If you were rich, foreign and globally mobile, would you choose to move to the UK? The trend, it turns out, is the other way: according to migration consultants Henley & Partners, we’ve seen a net outflow of 12,000 millionaires since 2017, with 1,500 departures last year. And it’s pretty obvious why. If tax is your top concern, a tightening of non-dom rules and the near-certain prospect of a Keir Starmer government abolishing non-dom status altogether would loom large. If you’re Asian, you may think Australia looks more welcoming. If you’re European and offended by Brexit, you might prefer Ireland or fashionable Portugal. But actually we’d be mad not to make an effort to attract well-heeled incomers, unless they’re Russian.

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’.

How bad can it be? Predictions for 2023 have been universally miserable. Even if inflation and interest rates stop rising, there’s no pundit out there who believes consumers, homebuyers, investors or business owners will be cracking open the Mayerling brut rosé recommended below in 12 months’ time and saying: ‘Phew, that was tough but I feel great about 2024, so pull my cracker and I’ll put my paper hat on.’ And I’m not here to buck the trend. We’re in for a long haul of budgets squeezed and projects deferred. Let me nevertheless rebut one doom strand with a plea for common sense, provoked by a Telegraph piece headed: ‘Why house prices will nosedive in 2023… Property experts predict a plunge as buyers are priced out and sellers panic.