Posts Tagged ‘david cameron’

file000743237320

Did you read the one about wind farms that can only produce enough electricity to make a few cups of tea? What a scandal! Why do we need these cursed wind farms? Yet take another look, and it turns out that actually wind farms are growing in importance all the time. The problem is not so much with wind energy; it is the way in which it is portrayed.

The ‘Telegraph’ ran the expose, and its report was widely cited across the Twittersphere. To use the nerdy jargon, it trended. “Some of Britain’s biggest wind farms are at times producing only enough electricity to make a few cups of tea,” stated the ‘Telegraph’ article.

It turns out that official government data has drawn the shocking conclusion that wind farms are not very productive when there is no wind. Here is some more news for you, hot off the press: it is much hotter during the summer. Is that a story? Of course not, to use the jargon, it is somewhat obvious.

So why then run an entire article saying that wind farms don’t do much when the wind is quiet?

But then you might as well ask: why it is that some politicians appear to find it impossible to utter the words wind farm without prefixing them with the word ghastly?

Stuck near the bottom of the ‘Telegraph’ piece, Maf Smith — a spokesperson for RenewableUK — said: “We hit a new record in March, when we generated enough electricity from wind at one point to power four in ten British homes.”

To be fair, the stat saying wind energy powered 40 per cent of British homes is about as meaningless as the one that says at other times it hardly generated wind at all. Presumably this point in March occurred when it wind conditions were optimum and probably in the middle of the night when electricity usage was minimal.

A more interesting quote from the same Maf Smith said: “Government figures show that in 2012 , more than 11 per cent of the UK’s electricity came from renewable sources, with wind providing the lion’s share.”

What we are lacking in the UK is any sense of objectivity. David Cameron jumps on the fracking bandwagon – maybe he is right, but frankly there is no evidence to support the pro or anti lobby yet, so why support it so wholeheartedly at this point?

What we lack in the debate about UK energy be it renewables, shale gas, algae, synthetic energy, or whatever, is any attempt at objectivity.

In fairness, the greens are just as bad as the oil lobby. Bear this in mind, however. According to James Martin in his book ‘The meaning of the 21st century’, the world’s reserves of oil, not counting the undiscovered ones, have a value of about 60 trillion UK dollars. You could say there is an awful lot of money at stake in this one, and the last thing those who hope to make money from these 40 trillion worth of oil reserves want is for us to find a cheaper, and inexhaustible alternative. The last thing they want is an objective debate based on evidence.

© Investment & Business News 2013

file9691241993471

Facts don’t seem to be all that important. If you want to express an opinion on immigration, it appears what matters is who can shout the loudest, and who is best at riding the latest populist wave. Many people say that immigration is the most important issue concerning the UK today. How about this for a contrary view? It may be more accurate to say the way in which the topic of immigration is portrayed in the press poses the single biggest threat to the UK today.

Let us look at some of the arguments often bandied about. First off, the UK is swamped by immigrants. The OECD has taken look at data on immigration flow for 2011 (or for the latest year for which data is available) for 24 of the largest OECD countries. The country with the largest inflow of immigrants was Switzerland, followed by Norway, then New Zealand, Australia, Sweden, Spain, Ireland, Denmark, Canada, Belgium, Austria, the Netherlands, and then the UK. In fact, migration inflows into the UK were less than the OECD average.

Now look at the migrant population, which is to say the percentage of population for each country who were foreign born. In the case of Luxembourg, the number stands at around 40 per cent. The OECD average is around 13.1 per cent; it is 12 per cent for the UK. In fact across 32 OECD countries, 15 have a higher proportion of their population who are foreign born, while 16 have a lower proportion. In other words, the UK is below the mean average and just above the median average.

What many people forget when talking about immigration is the other side of the coin: emigration. Setting aside the fact that immigration into the UK is below the OECD average, what many overlook is that the UK also sees a high level of emigration. According to the ONS, “500,000 people immigrated to the UK in the year ending September 2012, which is significantly lower than the 581,000 who migrated the previous year…. 347,000 emigrants left the UK in the year ending September 2012, similar to the estimate of 339,000 in the year to September 2011.”

So why are people entering the UK? There are lots of reasons, of course. But according to the ONS, “Study remains the most common reason for migrating to the UK.” But if people enter the UK to study, this is unambiguously a good thing. Foreign students bring money into the UK. That this number is so high is testimony to the strength of our universities. This is to be applauded. But, according to the ONS, “In the year to March 2013, there were 206,814 visas issued for the purpose of study (excluding student visitors), a fall of 9 per cent compared with the previous 12 months.” This is surely disastrous news, but such is the attitude towards immigration in the popular press that this worrying trend is barely mentioned.

What about the drain on public finances? OECD data suggests immigration made a 0.46 per cent fiscal contribution to the UK in the most recent year for which data is available.

What about the argument that immigrants take our benefits? Take for example data on Polish Immigrants. It turns out that around 7,000 Poles receive job seekers’ allowance, when there are in the region of 500,000 Poles in the UK. Does that strike you as a high number?

According to the Department of Work and Pensions, “As at February 2011, 16.6 per cent of working age UK nationals were claiming a DWP working age benefit compared to 6.6 per cent of working age non-UK nationals.”

Then there is the rather old argument that immigrants take up hospital beds; that the NHS cannot cope. Well does this argument lack joined up thinking or what? Is it not the case that immigrants are an important source of labour for the NHS?

The truth is the UK has always been a country of immigrants. From the Anglo Saxons, to the Vikings, to refugees fleeing from the French revolution. Many of our kings and queens were immigrants too. Richard the Lionheart couldn’t speak English. King George I and II were German through and through. Prince Philip is Greek; Prince Albert was German.

Isambard Kingdom Brunel was the son of a Frenchman. The man who did more than anyone to define British classical music, Handel, was an immigrant. And coming up to date, perhaps the most important British innovation of the last decades was the discovery of graphene, by Andre Geim and Konstantin Novoselov at the University of Manchester. Both men were Russian born.

In the world of sport, where would British success have been in the last Olympics if it had not been for Jessica Ennis, whose father was a Jamaican born immigrant, and Mo Farah of Somalian birth?

Immigration is not always a good thing. The UK is small country and its capacity for accepting many more people is limited.

On the other hand, the UK, like much of Europe, faces a major demographic shock, as its indigenous population ages. Immigration may be all that stands between the UK experiencing a Japanese style lost two decades.

The real issue here, however, is that we rarely hear the pro-immigration arguments. Instead we send a van around East London, telling immigrants to go home. This is just plain nasty, not to mention utterly bizarre.

Many of the tabloid newspapers have become mouthpieces for the anti-immigration lobby.

David Cameron is courting the anti-immigration lobby, trying to score cheap points by saying: “We hate immigrants more than Labour.”

Our leaders are failing us. Mr Cameron is an intelligent and decent man, who is letting opinion polls dictate policy over his true beliefs. Tony Blair made the same error. At least that was one crime that we could never have accused Mrs Thatcher of committing.

Right now, our leaders should be leading, correcting myths, and promoting an objective discussion of this incredibly important topic. Instead they ride the surf created by an increasingly hysterical media, and it is very, very dangerous.

© Investment & Business News 2013

China is not happy with the EU, the EU is not happy with China, and the British Solar Trade Association seems to side with China.

The EU has imposed anti-dumping duties on China’s solar panel exports. China has responded with tariffs on Europe’s wine exports.
Actually, this is the EU compromising. It is phasing in the tariffs much more slowly than originally intended, and they will, in any case, be at a much lower rate.

The EU says China is using subsidies to sell its panels on the cheap, and reckons they should be some 88 per cent more expensive.
On the other hand, the solar industry has received large subsidies in Europe, too.

Ray Noble, PV Specialist at Solar Trade Association (STA), reckons that the real problem for the EU is that the European industry has not invested as much as it should have. It has taken the money from subsidies, and, as it were, run. China has invested far more and consequently enjoys greater scale. That is why it can sell panels for less money than European companies.

STA CEO Paul Barwell recently said, “If duties are imposed, panel prices will rise across the board, and consumers and installers alike will lose out. It makes no sense to safeguard 8,000 manufacturing jobs by sacrificing up to 200,000 jobs in the wider industry.”

Mr Noble said, “I suggest David Cameron and Angela Merkel work together to sort out these absurd rules and remove this lingering market uncertainty, so that industry can get on with installing low cost, clean and affordable solar energy.”

© Investment & Business News 2013

They used to talk about the bells of Shoreditch. You might recall the words ‘When I get rich, say the bells of Shoreditch’. Better than the oranges and lemons offered by the Bells of St Clements.

These days the area is more known for its roundabout,  or silicon roundabout as it is called. For this has come to symbolise an attempt to create a rival to California’s Silicon Valley in the east end of London. The UK government has come together with Tech City Investment Organisation to try to realise this dream.

On Sunday, a Vice President of Facebook – Joanna Shields – who also happens to be Managing Director of Facebook Europe, Middle East and Africa, was chosen to be the new head of the Tech City organisation.

She will start in January.

As a dotcom star, her credentials are impressive. Ms Shields has been a President at AOL, responsible for social and communications businesses, and previously served as chief executive of Bebo. She has also been Google’s Managing Director for Europe, Russia, the Middle East & Africa.

On the news of her appointment she said: “Throughout my career I have had the privilege of working with great entrepreneurs and innovators to create thriving new businesses and industries. The seeds have been sown in East London for a dynamic and successful cluster: we have the infrastructure, the technology and the talent, now we need to accelerate the growth. I am looking forward to leading the Tech City Investment Organisation in the next phase of its development. With the right boost now, there is no reason why we can’t make London the number one location for tech in the world.”

Bold words indeed! If her stated objective can be realised, then for once we would have to cast aside cynicism, and say “well done”.

But right now there are critics. For one thing, Facebook has not been paying much tax in the UK. It’s been in the media this week. Last year the company apparently only paid around £2oo,000 tax from sales of £20.4 million. It’s an embarrassing one for Ms Shields to explain away. She admits she has received some pretty stroppy emails on the subject, but suggests that now it’s different. Since the government is actively promoting the area, its tech occupants will be happy to have their tax domicile in the UK. It’s a kind of quid pro quo. “We do this,” says the government, “you reciprocate.”

But there are other criticisms. James Dyson, for example, says that all the government is doing is forcing up rents in the region, making it all but impossible for other companies to operate. Those are companies which produce real things, things you can see and touch; things like… I don’t  know… vacuum cleaners perhaps.

And that brings us to another criticism.

What does Facebook produce? Some say nothing, literally nothing, it produces ether. It trades in a kind of Ponzi scheme, in which its one real asset is popularity, and it’s popular because… well because it’s popular.

For that matter, these same critics might say the same of AOL, Google and Bebo. So goes their critique: how can a woman who has excelled in selling ether do something real, like create a hub to power the UK economy?

Then there is the anti-London argument. ‘Why London?’ they ask?

And finally, the anti-immigration brigade can always be called in to support the ‘no to silicon roundabout campaign’.  For the Cameron government plans to allow certain rules making it easier for budding tech entrepreneurs in silicon roundabout to migrate to the UK.

Some of the criticism may be fair. Most is off the mark.

On the topic of immigrants, hubs like London’s tech city need them.  For that matter, so does Silicon Valley, which to a certain extent was built by immigrants . Not literally built, but the ideas and the social network, and Silicon Valley’s culture was built by them. But the US is tightening up on rules regarding immigrants – really tightening up.  From Uncle Sam’s point of view it’s a highly dangerous move. After all the US is a country of immigrants. It is they who made it so dynamic. It is no good bringing up the drawbridge and expecting the US to continue to enjoy economic dominance. So the mistake in the US is the UK’s opportunity, though no doubt the ‘Daily Mail’ will try to stop it.

As for the argument that Tech City is based on vapour ware companies, well that is surely wrong. You would hardly expect ‘Investment and Business News’, which exists solely because of vapour ware, to agree with that.

The thing is that the UK does produce excellent designers in tech. Remember Jonathan Ive? He’s the man behind the iMac, iPod, iPhone and iPad. Even Steve Jobs recognised how crucial he was to Apple. He still is crucial, of course. Then there is ARM, the chip company that designs the chips that sit in so many mobile devices, including Apple’s products. ARM grew out of 1980s computer company Acorn.

The UK’s problem is that it has failed to convert design brilliance into creating British companies that shake the world. For Tech city to be a true success, it needs to create some of the can-do spirit that encapsulates Silicon Valley; the real dynamism that sees investors willing to consider most ideas, and a culture immersed in the idea of innovation.

Silicon Valley was not deliberately created. It created itself. But that is no reason to think that trying to create something similar in London, one of the most important cities in the world, isn’t a dream worth pursuing, or indeed is an unrealistic dream.

©2012 Investment and Business News.

Investment and Business News is a succinct, sometimes amusing often thought provoking and always informative email newsletter. Our readers say they look forward to receiving it, and so will you. Sign-up here

The political entanglements in the euro area are escalating. Last week a triumvirate of finance ministers from Germany, Holland and Finland put a rather large spoke in the wheel. You may know that during the summer it was agreed that Spain’s banks could be bailed out directly by the IMF, EU Commission and the ECB via the organisation called the European Stability Mechanism (ESM).  But last week the three finance ministers issued a statement saying: “The ESM can take direct responsibility for problems that occur under the new supervision, but legacy assets should be under the responsibility of national authorities.”  So what was that: “legacy issues”? What does that mean? Were they referring to bank bail-outs that occurred some time ago, such as Ireland’s? If this is the case, their statement seems pretty reasonable. Alternatively, were they referring to the bail-out of Spain’s banks? Many interpreted it that way, leading to claims that Spain had been betrayed.

Meanwhile, Helmut Kohl – who as you may recall was German Chancellor during German reunification, and an out and out supporters of the euro – made a speech in which he said of Angela Merkel: “She is destroying my Europe.” He called for giving Greece more time to make its reforms.

Then there was Vaclav Klaus, President of the Czech Republic. When his country joined the EU, its leaders signed a treaty agreeing to also join the euro at some point in the future. But the treaty imposed no time frame. So when did Mr Klaus think this will happen?

“Perhaps in the year 2074 we can join the European Monetary Union,” he said last week.

So that wasn’t very nice about the euro, was it?

In the UK, calls for a referendum on staying in the EU are growing, and the talk is that David Cameron will pledge to hold such a referendum if he wins the next election.

That’s the snag. Either the euro falls apart, which – according to many – will be a disaster for the world economy, or we see closer political union, which will probably leave the UK’s membership of the EU in tatters.

But there is a third way. The euro could survive, without political union.

Also see the following related articles:

Is there hope for the euro? Catalonia’s rift with Spain
Spain’s woes are not down to debt
Catalonia’s strife; currency’s knife
Political shenanigans in Europe
The fix to the euro crisis

©2012 Investment and Business News.

Investment and Business News is a succinct, sometimes amusing often thought provoking and always informative email newsletter. Our readers say they look forward to receiving it, and so will you. Sign-up here

A lot of economists don’t get it. Why oh why, oh why? The UK economy has been contracting of late, but employment rising. In Q1 of this year UK labour productivity, measured as output per hour, fell by 1.3 per cent, and UK unit labour costs increased by 1.4 per cent. According to stats out last week, labour productivity in the UK was no less than 15 per cent below the G7 average.

The poor level of UK productivity is not news.  It has been a permanent problem for the UK for decades.

Since the start of the recession in 2007, growth of UK output per hour has trailed that of the US, and the UK’s  productivity has been lagging behind Germany, France and Italy for decades. Since the recession the gap has not grown, but it is still there.

If you give UK productivity per hour a score of 100, then US productivity is 127, French productivity is 125, German 122, Italy’s only marginally higher, Canada’s is the same, and Japan’s is less.

Then there is the riddle of how the UK’s employment rises while GDP falls. Some of the explanation lies in the rise in numbers of part-time workers, but on its own this explanation is insufficient.

Another theory, put forward by the Bank of England’s Ben Broadbent, is that financial markets are broken, and capital is being allocated inefficiently, and therefore business, starved of the necessary funding, is putting cash flow before investment. So rather than investing in new equipment that requires a big up front outlay, businesses are employing more staff. Extending that argument, maybe business lacks confidence. Its lack of certainty means it is reluctant to invest, and therefore hires more staff to meet outputs targets.

Martin Wolf took a look at these problems in the ‘FT’ a few days ago. He also speculated that falling wages may encourage businesses to take on staff, even when the extra productivity generated is not that great.

But then the issue of why the UK lags behind the other major economies has been troubling economists and politicians alike for years. Take this article in the ‘Economist’, from 1998:  The British disease revisited

You may recall that solving the UK’s poor productivity was considered to be something of a priority for the Blair government. One theory doing the rounds at the time when Tony Blair moved into number 10 was that the UK’s poor productivity was down to low investment, and that was down to the erratic nature of the UK economy, drifting from boom to bust. It is quite interesting to look back at Gordon Brown’s claim that he had put an end to boom and bust; it now seems daft. Indeed, his preoccupation with steady growth may have hidden underlying problems. It is just that in 1998, the idea made an awful lot of sense.

Here are some theories.

Part of the reason why labour productivity has fallen in recent years is down to the smaller slice given over to the City in the UK economic cake. You may argue that much of the City’s productivity was illusionary, but the fact is that, on paper at least, it is highly productive. As it cuts jobs, overall productivity falls.

As for why the UK lags behind most of the G7, maybe we need to rewind the clock back to 1997, and ask what the problems were then.

To an extent the comparison with France and Italy was clouded by the fact that employment is much lower in these two countries. Labour laws are so tough, that employers only take on more staff if the productivity gains that result are very significant. There is also anecdotal evidence that workers, and in particular management, work longer hours than they are declaring. So they have certain targets they wish to meet, but there is a limit to how many hours they are allowed to work, so they work longer to meet those targets and lie on their time sheets.

But that does not explain Germany and the US. German unemployment is lower than in the UK. Output per worker is higher. It doesn’t explain higher productivity in the US, where labour laws are of course much looser.

Well, in 1998 McKinsey came up with a theory. So, quoting the ‘Economist’ quoting McKinsey, ”[the problem partly] lies in the effect of regulations governing product markets and land use on competitive behaviour, investment and pricing.” The ‘Economist’ piece continued: “Although British food retailers are world leaders, says McKinsey, they would do better still if planning restrictions did not stop the building of stores on the scale of America and France. Hoteliers are hobbled, say the consultants, because not only are almost half of the country’s hotels more than 100 years old, compared with 3 per cent in America and 14 per cent in France, but they are constrained by planning restrictions. And until recently telecoms regulators kept call charges too high relative to line rentals, discouraging greater use of telecoms.”

And if that sounds like déjà vu, maybe there is a good reason. After all, David Cameron’s call for less dither, and to make it easier to build, is very much targeting this same issue.

It just goes to show that 15 years later, we have completed the longest ever run of economic growth, but we are in the midst of the worse downturn ever, and yet peek beneath the surface and some of the challenges haven’t changed at all.

©2012 Investment and Business News.

Investment and Business News is a succinct, sometimes amusing often thought provoking and always informative email newsletter. Our readers say they look forward to receiving it, and so will you. Sign-up here

This is no wind up. The last week or so has seen hints. The green shoots may not be big, peeking above the surface like scared mice, but they have been there all the same. So is this for real? Has the recovery begun?

Yesterday on the Andrew Marr Show former Prime Minister John Major said: “Recovery begins from the darkest moment. I’m not certain, but I think we have passed the darkest moment.”

So what’s the evidence?

Earlier this month, data from the ONS revealed another rise in employment – this time up 236,000 in the three months to July. Elsewhere, data on July’s industrial production indicated the biggest jump in this sector for 25 years. The OECD took a look at the G7 and the four big emerging economies (BRICs) and saved its most bullish words for the UK and Brazil, which were the only countries that it said were due to see a pick-up next year.

The round of good news was completed by the Centre of Economics and Business Research (CEBR), which has forecast that 2013 will see the first rise in real incomes for UK households since 2009.

Looking beyond the UK’s borders, markets were c*ck-a-whoop. Both the US Fed and the Euro regions’ central bank – the ECB – have announced QE (or in the case of the ECB QE ish), and at last they are saying central bankers are taking decisive action. A report from ‘Financial Times Deutschland’ suggested that unit labour costs have fallen by 15 per cent in Greece since 2010, with significant falls also seen in Spain and Ireland. Greece saw its current account deficit fall by 54 per cent between 2007 and 2011.

Finally maybe policy makers are learning lessons. Vince Cable is agreeing to relax labour laws in the UK. David Cameron wants to cut down on red tape, and make it easier to gain planning permission. He wants to see an end to dithering.

Then there is the funding for lending scheme.  This is an idea that really seems to have struck a chord across the world, so much so that some economists in the US are now urging the Fed to announce a similar idea.

And finally, the World Economic Forum has released its latest league table showing the world’s most competitive countries. And guess which country moved from number ten on the chart to number eight? Yes, that’s right the UK. The usual suspects did better: Switzerland, Singapore, Finland, Sweden and the Netherlands. But of the G7 only Germany in sixth spot and the US in seventh scored higher.

Recessions are bad, of course they are, but they can have a cleansing effect. They can correct bad habits, get rid of bad ideas, and create economies that are more focused on ideas that work. The UK has had a torrid few years, but maybe it is now set to benefit from the correction.

Well is it? Read on…