The Broadmarsh story isn’t over yet. There is one final twist in this tale which relates to the 25% shareholding in the long lease on the centre which Westfield didn’t own.
To recap, Westfield agreed to sell its controlling stake in the operation of the centre to Capital Shopping Centres, the owner of the Victoria Centre.
It was, if you like, a ‘knockout’ deal, one intended to overcome the commercial roadblock caused by both Westfield and CSC wanting to redevelop their centres at the same time.
It is thought – though not confirmed - that the prime movers in this deal were John Whittaker, the Lancashire billionaire whose property business, Peel Holdings, has the controlling stake in CSC, and Stephen Lowy, whose family empire owns Westfield.
You’d have thought that the minority shareholder in Broadmarsh would simply have to accept that the senior partner had done a game-changing deal.
But that’s not necessarily the case.
The 25% shareholder is the Royal Mail Pension Fund. And the terms of its shareholding are that it has pre-emption rights – in other words, it can table a counter offer for the 75% that Westfield has agreed in principle to sell to CSC.
In theory, it has 60 days in which to table a bid.
In practice, it will probably have to make up its mind within the next few days. That’s because CSC has also made an offer to buy its 25%.
We don’t know the terms of that offer, but it will almost certainly contain an ultimatum that unless it is taken up the offer will be withdrawn in less than the 60 days allowed to exercise the pre-emption right.
In other words, it’s an attempt to spike the guns of a counter-bid before anyone has the time to put one together.
This may seem uncompromising stuff, but that’s the way big corporates operate when the value of their business is at risk. No one on the stock exchange would bat an eyelid.
Nevertheless, there is emerging evidence that CSC is going to have to be mindful of the impact this deal has on the reception it gets in Nottingham.
There is considerable political disquiet at the way the sale deal was done – no one in Nottingham knew about it, and the first public confirmation was on the Sydney and London stock exchanges.
Phone calls to all the concerned parties were made last Wednesday evening, but by then the die had been cast.
Standard corporate practice though it was, this did not go down well in the city.
It is against that background that CSC may decide that it wants to go ahead with the expansion of the Victoria Centre and ditch the redevelopment of Broadmarsh.
It needs Nottingham City Council onside to do this. Yet the Victoria Centre was probably not their favoured scheme.
While the Broadmarsh design offered an open environment which cleaned up an eyesore right next to the site of the new transport hub, Victoria Centre’s plan envisages a large-scale – and architecturally dull – extension of an existing sealed mall. It’s making a big box bigger.
Worse in the eyes of city planners, it threatens a potentially significant increase in car-borne visitors in the home of what is arguably one of the best public transport systems in Britain.
Finally, sealed malls are all about keeping trade to yourself. Where would that leave the rest of the city centre around Nottingham’s iconic Market Square?
It is this spectre that is now occupying the minds of the city’s political leadership in a very big way. They see a fundamental part of Nottingham’s future apparently being determined not by elected politicians but by corporate Britain. Whether you think it’s fair or not, corporate Britain doesn’t have a great name right now.
Capital Shopping Centres may well succeed in knocking out potential commercial opposition.
That won’t necessarily translate into support from Nottingham.
One way or another, there will still have to be a plan for Broadmarsh.
Wednesday, 16 November 2011
Friday, 11 November 2011
Westfield and CSC: This town wasn't big enough for the both of them
So, what are we to make of Westfield’s decision to walk away from Broadmarsh within sight of a much-vaunted £450m revamp?
I don’t think there’s any question that they’ve decided it would be an awful lot easier to make the numbers add up elsewhere – specifically in the south east, which simply isn’t experiencing anything like the downturn seen in the rest of the country.
In Nottingham, they waded through a complex land assembly and protracted planning, only to see the economic tide head back out.
But the signs are that Westfield may not have made the first move in this decision (though it was certainly wearying of a planning process which went on so long a rival appeared).
No one locally knew about this decision in advance. There is evidence, too, that Westfield’s own UK executives may not have been the first to find out, either. Senior figures here were still proceeding with this plan as recently as last week.
From Capital Shopping Centres, under whose name a statement confirming the intended £55m purchase of Broadmarsh was issued yesterday, we have heard nothing.
So who was the driving force behind this move?
One interpretation is that this has the stamp of a clear-sighted attempt to solve the fundamental dilemma facing both Westfield and Capital Shopping Centres: both were pitching the same set of high-profile retailers.
So only one scheme was going to succeed.
This would have affected the prospects – and therefore the value – of the losing side. The respective shareholders in Westfield and CSC would not have wanted that to happen. So there was a price to be negotiated, one determined by the present and future value of one centre and the impact its development might have on the value of the other.
It’s the kind of deal negotiated by people who know development lives on private profits not public plaudits. Pretty no-nonsense hard-heads, I’d guess.
The no-nonsense hard-heads behind this deal have solved their problem. Infact, they’ve handed the dilemma back to the city’s planners and politicians…whose measure of success is defined by the same criteria in reverse: plaudits not profits.
Nottingham City Council wanted the Broadmarsh revamp to go-ahead because it would rid the city of a series of shockingly decrepit 1960s eyesores which should have been levelled by a smartbomb 20 years ago.
Instead, we would have a new, expanded shopping centre featuring big-name retailers in eye-catching street scenes which spoke of an ambitious regional capital.
So one last deal is still to be done. It will determine whether Capital Shopping Centres expands the Victoria Centre and merely dusts a few cobwebs off Broadmarsh, or is persuaded that there is a way of making the Broadmarsh numbers add up in a way Westfield decided it couldn’t.
This will be a very tough negotiation for Nottingham City Council, a negotiation which will determine the way our city looks for perhaps 30 years ahead.
Whether in person or proxy, the man they will effectively be dealing with may well have been cutting a deal with someone in Sydney recently.
He is clearly a formidably determined character. And he now has Nottingham’s retail future in his hands.
I don’t think there’s any question that they’ve decided it would be an awful lot easier to make the numbers add up elsewhere – specifically in the south east, which simply isn’t experiencing anything like the downturn seen in the rest of the country.
In Nottingham, they waded through a complex land assembly and protracted planning, only to see the economic tide head back out.
But the signs are that Westfield may not have made the first move in this decision (though it was certainly wearying of a planning process which went on so long a rival appeared).
No one locally knew about this decision in advance. There is evidence, too, that Westfield’s own UK executives may not have been the first to find out, either. Senior figures here were still proceeding with this plan as recently as last week.
From Capital Shopping Centres, under whose name a statement confirming the intended £55m purchase of Broadmarsh was issued yesterday, we have heard nothing.
So who was the driving force behind this move?
One interpretation is that this has the stamp of a clear-sighted attempt to solve the fundamental dilemma facing both Westfield and Capital Shopping Centres: both were pitching the same set of high-profile retailers.
So only one scheme was going to succeed.
This would have affected the prospects – and therefore the value – of the losing side. The respective shareholders in Westfield and CSC would not have wanted that to happen. So there was a price to be negotiated, one determined by the present and future value of one centre and the impact its development might have on the value of the other.
It’s the kind of deal negotiated by people who know development lives on private profits not public plaudits. Pretty no-nonsense hard-heads, I’d guess.
The no-nonsense hard-heads behind this deal have solved their problem. Infact, they’ve handed the dilemma back to the city’s planners and politicians…whose measure of success is defined by the same criteria in reverse: plaudits not profits.
Nottingham City Council wanted the Broadmarsh revamp to go-ahead because it would rid the city of a series of shockingly decrepit 1960s eyesores which should have been levelled by a smartbomb 20 years ago.
Instead, we would have a new, expanded shopping centre featuring big-name retailers in eye-catching street scenes which spoke of an ambitious regional capital.
So one last deal is still to be done. It will determine whether Capital Shopping Centres expands the Victoria Centre and merely dusts a few cobwebs off Broadmarsh, or is persuaded that there is a way of making the Broadmarsh numbers add up in a way Westfield decided it couldn’t.
This will be a very tough negotiation for Nottingham City Council, a negotiation which will determine the way our city looks for perhaps 30 years ahead.
Whether in person or proxy, the man they will effectively be dealing with may well have been cutting a deal with someone in Sydney recently.
He is clearly a formidably determined character. And he now has Nottingham’s retail future in his hands.
Thursday, 10 November 2011
Westfield's Broadmarsh bombshell
It’s a bombshell announcement from Australia which will send ripples not just across Nottingham but the whole of the UK retail industry.
Westfield announced overnight that it has sold its controlling stake in the city’s Broadmarsh shopping centre. And it has sold it to the people who own the Victoria Centre.
The £55m deal will see the Australian shopping centre giant’s 75 per cent share in Broadmarsh taken over by Capital Shopping Centres.
The deal has huge implications for the future development of Nottingham city centre, and its status as one of the top retail destinations in the UK
Westfield was about to push the button on the first stages of the £450m redevelopment – one that Nottingham has been waiting for the best part of 20 years.
So why has it backed out when designs have been drawn up and negotiations with a raft of big retail names have reached an advanced stage?
The official line from Australia – and that’s where this announcement has come from, not London – is that it has taken a strategic decision to increase its focus on ‘larger, iconic centres’ like the giant mall it has developed next to the London 2012 Olympics site.
But the fact that it has sold to Capital Shopping Centres raises another question. CSC is also in the advanced stages of a £250m plan to massively increase the size of the Victoria Centre, and the consensus among property experts was that only one of these two schemes could succeed.
So has Westfield decided to cut a deal where it walks away with a premium on the book value and leaves the field in Nottingham open to one developer?
Either way, its decision to abandon Nottingham is hugely controversial. The city has lived with a weary retail relic for years, watching a previous redevelopment plan sink beneath the credit crunch.
After some difficult negotiations with the city council, Westfield then came forward with a new plan which would not only have redeveloped Broadmarsh but also have tidied up the southern gateway to the city centre, dovetailing neatly with plans to turn the railway station into a transport interchange.
So it was not just retail redevelopment, but tangible regeneration.
As I write, there is no statement from Capital Retail to say what their intentions with Broadmarsh are. But the city will be desperate to keep the idea of a southern gateway alive, and it has real concerns about a Victoria Centre extension which appears to tilt the retail centre of gravity away from the city centre and northwards.
There could be some political recrimination from this, too – has the city allowed a major opportunity to slip out of its grasp for a second time?
Let’s hope not. In terms of spend, Nottingham is still the fifth biggest retail destination outside London, and the interest of the likes of Harvey Nichols predates the current Broadmarsh plan.
Capital Shopping Centres hasn’t spent £55m buying out Westfield for nothing: one way or another, a big investment in Nottingham retail is still going to happen.
Westfield announced overnight that it has sold its controlling stake in the city’s Broadmarsh shopping centre. And it has sold it to the people who own the Victoria Centre.
The £55m deal will see the Australian shopping centre giant’s 75 per cent share in Broadmarsh taken over by Capital Shopping Centres.
The deal has huge implications for the future development of Nottingham city centre, and its status as one of the top retail destinations in the UK
Westfield was about to push the button on the first stages of the £450m redevelopment – one that Nottingham has been waiting for the best part of 20 years.
So why has it backed out when designs have been drawn up and negotiations with a raft of big retail names have reached an advanced stage?
The official line from Australia – and that’s where this announcement has come from, not London – is that it has taken a strategic decision to increase its focus on ‘larger, iconic centres’ like the giant mall it has developed next to the London 2012 Olympics site.
But the fact that it has sold to Capital Shopping Centres raises another question. CSC is also in the advanced stages of a £250m plan to massively increase the size of the Victoria Centre, and the consensus among property experts was that only one of these two schemes could succeed.
So has Westfield decided to cut a deal where it walks away with a premium on the book value and leaves the field in Nottingham open to one developer?
Either way, its decision to abandon Nottingham is hugely controversial. The city has lived with a weary retail relic for years, watching a previous redevelopment plan sink beneath the credit crunch.
After some difficult negotiations with the city council, Westfield then came forward with a new plan which would not only have redeveloped Broadmarsh but also have tidied up the southern gateway to the city centre, dovetailing neatly with plans to turn the railway station into a transport interchange.
So it was not just retail redevelopment, but tangible regeneration.
As I write, there is no statement from Capital Retail to say what their intentions with Broadmarsh are. But the city will be desperate to keep the idea of a southern gateway alive, and it has real concerns about a Victoria Centre extension which appears to tilt the retail centre of gravity away from the city centre and northwards.
There could be some political recrimination from this, too – has the city allowed a major opportunity to slip out of its grasp for a second time?
Let’s hope not. In terms of spend, Nottingham is still the fifth biggest retail destination outside London, and the interest of the likes of Harvey Nichols predates the current Broadmarsh plan.
Capital Shopping Centres hasn’t spent £55m buying out Westfield for nothing: one way or another, a big investment in Nottingham retail is still going to happen.
Thursday, 3 November 2011
A Nightmare on Euro Street
You don’t need to be a professor of political economics to get your head round the disaster area that is the Greek economy.
If you run your own business, then a few simple facts and figures should do the trick. So here they are (warning to any EU finance ministers: look away now).
Greece currently owes around £300 billion in debts. Yet its economy is worth only £200 billion a year (for the purposes of comparison, the UK economy is worth around £1.38 trillion). So it isn’t making enough money to pay.
It’s almost certain that the Greek government told creative fibs about the scale of its budget deficit (the shortfall between its tax income and its spending). We now know that, at times, it has been twice the stated level.
Greece ‘qualified’ to join the euro with a budget deficit supposedly amounting to 3.7% of its GDP. Before the credit crunch hit in 2007, the deficit was already 6.5% - well above any other Eurozone country. By 2009, it was just short of 16%. (We’re not short of budget deficit issues in the UK, of course, but our figure for 2009 was 11.5%, and that for an economy six times the size of Greece).
One of the reasons Greece runs up big budget deficits is that there is widespread tax dodging. In 2005, for example, 49 per cent of tax went unpaid in one three-month period. Overall, it’s thought the Greek government loses as much as £18 billion a year in unpaid tax.
The public sector accounts for around 40% of the Greek economy…which will, of course, needs to be fed a huge and steady stream of tax. Tax-and-spend government is fine - but only if you collect the tax.
In theory, then, Greece will routinely need to borrow supertankers full of money to make ends meet. But the bonds it tries to sell to raise that cash don’t even qualify for junk status now – the financial equivalent of scrap metal.
So, it’s bust.
Not a pretty picture for Greece, and now a Nightmare on Euro Street.
You can see from those numbers that Greece never really had the financial discipline to join a one-size-fits-all currency system where 17 different countries had to meet the same financial rules.
Greece has exploded out of the seams of it, and the rest of the Eurozone countries are now desperately trying to stitch those seams back together. It is a painful spectacle.
Italy is facing the same nightmare scenario for three reasons: it, too, engaged in creative accounting about its budget deficit, it has huge debts, and its prime minister, Silvio Berlusconi, is widely derided as a political clown who has lost control of the country’s finances. This in the third biggest economy in the Eurozone…
Financial markets haven’t just written Greece off. They think it exposes a flaw at the heart of the whole Eurozone project: that you can’t have one currency when there are 17 governments unable to agree on a way forward because their economies are operating at different speeds.
The Greek government’s decision to agree a debt restructuring deal one week but put it in doubt through a referendum the next illustrates the point. Markets won't wait; they will take their own decision.
And this is why the Greek dilemma is not some distant wrangle you can read about over your cornflakes and forget when you go to work (though the antics of some Conservative eurosceptics last week suggest some still think this is a playground knockabout).
The clear and present danger posed by the eurozone crisis is that banks, confronted by losses on loans to indebted countries, put the brakes on lending again, tipping the UK’s biggest export market back into recession - and us with it.
Beyond that, the big question beginning to loom over the whole Greek tragedy is this: is an EU with single currency heading towards a single treasury?
If you run your own business, then a few simple facts and figures should do the trick. So here they are (warning to any EU finance ministers: look away now).
Greece currently owes around £300 billion in debts. Yet its economy is worth only £200 billion a year (for the purposes of comparison, the UK economy is worth around £1.38 trillion). So it isn’t making enough money to pay.
It’s almost certain that the Greek government told creative fibs about the scale of its budget deficit (the shortfall between its tax income and its spending). We now know that, at times, it has been twice the stated level.
Greece ‘qualified’ to join the euro with a budget deficit supposedly amounting to 3.7% of its GDP. Before the credit crunch hit in 2007, the deficit was already 6.5% - well above any other Eurozone country. By 2009, it was just short of 16%. (We’re not short of budget deficit issues in the UK, of course, but our figure for 2009 was 11.5%, and that for an economy six times the size of Greece).
One of the reasons Greece runs up big budget deficits is that there is widespread tax dodging. In 2005, for example, 49 per cent of tax went unpaid in one three-month period. Overall, it’s thought the Greek government loses as much as £18 billion a year in unpaid tax.
The public sector accounts for around 40% of the Greek economy…which will, of course, needs to be fed a huge and steady stream of tax. Tax-and-spend government is fine - but only if you collect the tax.
In theory, then, Greece will routinely need to borrow supertankers full of money to make ends meet. But the bonds it tries to sell to raise that cash don’t even qualify for junk status now – the financial equivalent of scrap metal.
So, it’s bust.
Not a pretty picture for Greece, and now a Nightmare on Euro Street.
You can see from those numbers that Greece never really had the financial discipline to join a one-size-fits-all currency system where 17 different countries had to meet the same financial rules.
Greece has exploded out of the seams of it, and the rest of the Eurozone countries are now desperately trying to stitch those seams back together. It is a painful spectacle.
Italy is facing the same nightmare scenario for three reasons: it, too, engaged in creative accounting about its budget deficit, it has huge debts, and its prime minister, Silvio Berlusconi, is widely derided as a political clown who has lost control of the country’s finances. This in the third biggest economy in the Eurozone…
Financial markets haven’t just written Greece off. They think it exposes a flaw at the heart of the whole Eurozone project: that you can’t have one currency when there are 17 governments unable to agree on a way forward because their economies are operating at different speeds.
The Greek government’s decision to agree a debt restructuring deal one week but put it in doubt through a referendum the next illustrates the point. Markets won't wait; they will take their own decision.
And this is why the Greek dilemma is not some distant wrangle you can read about over your cornflakes and forget when you go to work (though the antics of some Conservative eurosceptics last week suggest some still think this is a playground knockabout).
The clear and present danger posed by the eurozone crisis is that banks, confronted by losses on loans to indebted countries, put the brakes on lending again, tipping the UK’s biggest export market back into recession - and us with it.
Beyond that, the big question beginning to loom over the whole Greek tragedy is this: is an EU with single currency heading towards a single treasury?
Monday, 31 October 2011
Regional Growth Fund: Has the East Midlands been short-changed again?
The government may face accusations that it has turned its own philosophy on its head with the results of the second round of bidding for the Regional Growth Fund.
This, if you remember, was the £1.4 billion pot of money designed to cushion the blow of the loss of regional development budgets.
The East Midlands didn’t do well in the first round of bidding. In Notts, only one small project was approved, cash which will help a science company expand.
But local politicians – and, significantly, the Derbyshire-Nottinghamshire Local Enterprise Partnership – comforted themselves that the lion’s share of the money, some £900m, was going to be handed out in the second round.
All sorts of local projects submitted bids, a number of them related to small business growth. In Notts, only one bid succeeded again, cash for the Worksop wire rope manufacturer Brunton Shaw..
The decisions released today suggest that the dead hand of national politics has played a part. Derby will, quite rightly, be celebrating the success of the £50m Derby City bid. But it’s difficult not to wonder whether the Bombardier fiasco was in the back of the minds of ministers signing off these decisions.
Giving Derby a second kick in the teeth would have been a political disaster. So good luck to Derby - £50m represents a massive opportunity to make up ground lost through a series of big business setbacks.
Yet it also appears to fly in the face of Conservative philosophy, which suggests the best way to grow a sustainable economy is to avoid an over-dependence on public money.
There was bound to be disappointment in this exercise. While £900m was on offer, the value of the 492 bids nationally totalled more than £3.3 billion.
The point has also been made before that the East Midlands isn’t viewed as a weak economy, so more money is likely to go further north (indeed, nearly 40% of the bids came from the North East and North West).
Yet the East Midlands does appear to have come off badly from this exercise. One of the key measures is the number of direct and indirect jobs which successful bids will support. In the East Midlands it’s 1,400 direct jobs, 7.800 indirect. This is smaller than any other region, including the booming South East.
Three other questions are raised by the RGF result in the East Midlands. One is where this leaves the LEP, which needed a big project to give it some purpose – does the Derby City bid provide that or not?
The second revolves around Boots and its enterprise zone. The company is thought to have put in a bid for £200m. It got nothing, so where does that leave plans for a zone launched personally by David Cameron and Nick Clegg?
It certainly raises the stakes on the fight to win government funding for the dualling of the A453, which Boots views as crucial to the future of its Nottingham site.
The final question is one which seems to have dogged so many civil service business decisions, most notably Bombardier: did it enforce the rules around RGF decision-making literally, or did it interpret them in a way which ensured a desirable result?
This, if you remember, was the £1.4 billion pot of money designed to cushion the blow of the loss of regional development budgets.
The East Midlands didn’t do well in the first round of bidding. In Notts, only one small project was approved, cash which will help a science company expand.
But local politicians – and, significantly, the Derbyshire-Nottinghamshire Local Enterprise Partnership – comforted themselves that the lion’s share of the money, some £900m, was going to be handed out in the second round.
All sorts of local projects submitted bids, a number of them related to small business growth. In Notts, only one bid succeeded again, cash for the Worksop wire rope manufacturer Brunton Shaw..
The decisions released today suggest that the dead hand of national politics has played a part. Derby will, quite rightly, be celebrating the success of the £50m Derby City bid. But it’s difficult not to wonder whether the Bombardier fiasco was in the back of the minds of ministers signing off these decisions.
Giving Derby a second kick in the teeth would have been a political disaster. So good luck to Derby - £50m represents a massive opportunity to make up ground lost through a series of big business setbacks.
Yet it also appears to fly in the face of Conservative philosophy, which suggests the best way to grow a sustainable economy is to avoid an over-dependence on public money.
There was bound to be disappointment in this exercise. While £900m was on offer, the value of the 492 bids nationally totalled more than £3.3 billion.
The point has also been made before that the East Midlands isn’t viewed as a weak economy, so more money is likely to go further north (indeed, nearly 40% of the bids came from the North East and North West).
Yet the East Midlands does appear to have come off badly from this exercise. One of the key measures is the number of direct and indirect jobs which successful bids will support. In the East Midlands it’s 1,400 direct jobs, 7.800 indirect. This is smaller than any other region, including the booming South East.
Three other questions are raised by the RGF result in the East Midlands. One is where this leaves the LEP, which needed a big project to give it some purpose – does the Derby City bid provide that or not?
The second revolves around Boots and its enterprise zone. The company is thought to have put in a bid for £200m. It got nothing, so where does that leave plans for a zone launched personally by David Cameron and Nick Clegg?
It certainly raises the stakes on the fight to win government funding for the dualling of the A453, which Boots views as crucial to the future of its Nottingham site.
The final question is one which seems to have dogged so many civil service business decisions, most notably Bombardier: did it enforce the rules around RGF decision-making literally, or did it interpret them in a way which ensured a desirable result?
Tuesday, 18 October 2011
Give way...or give up?
It’s long been my belief that the way road signs are erected has little to do with the safe and organised flow of traffic and everything to do with council departments justifying their budgets.On top of that, it’s turned into a nice little earner for the industry which makes them.
I reached that conclusion years ago after a drive down Southwell Road West in Mansfield where, in the space of around a quarter of a mile, it appeared someone had fly-tipped half of that year’s road sign production.
There were so many that it was impossible to take in all the advice they were giving. Worse, some repeated the same message so often that you began to wonder whether you were living in a goldfish bowl and going round in circles.
And on top of that, they made a clean, simple road look like officialdom had simply emptied a dustbin all over it.
It was confusing, it was annoying, it was wasteful. And it was just one road. You’ll all have your own favourite roads, dual carriageways, alleyways even, where signs are either completely overdone or totally unnecessary. Or both.
So, I was thrilled to hear yesterday that Transport Minister Norman Baker hoped to “dramatically reduce” the number of road signs in the wake of the biggest review into this nice little earner in 40 years.
Let me quote the Minister: “Sometimes the jungles of signs and tangles of white, red and yellow lines can leave people more confused than informed. This expensive clutter can also leave our roadsides looking unsightly and unwelcoming, so the changes I am announcing today will help councils cut the number of signs they need to use.”
I couldn’t have put it better myself – a clear acknowledgement that councils and highway authorities spray white and yellow paint around like it’s going out of fashion, and appear oblivious to the fact that every new sign is yet another unsightly distraction.
It sometimes seem as if highway teams lurk round corners giving virgin tarmac five minutes to set before they dive in and stab it to death with signs in triplicate.
So, Mr Baker’s announcement is going to bring an end to this ridiculous and expensive little industry, right? Not exactly...
Elsewhere in his announcement are a number of phrases which, I confidently predict, highway authorities will leap on and use as a justification for continuing to litter our countryside with ugly and unnecessary statements of the bleedin’ obvious.
I quote:
“These new measures will significantly cut red tape by allowing councils to put in place frequently used signs without needing to get government permission every time.”
Which may be translated at the town hall as: You’ve got licence to plant more signs.
Or:
“There will be new signs to alert drivers to parking spaces with charging points for electric vehicles and councils will be able to indicate estimated journey times on cycle routes, to help people plan their journeys.”
Which translates as: You can also plant a whole load of new signs alongside the ones you already litter the pavement with.
There is a miserable predictability about all this. A government minister admits there is a problem we’ve known about for years and announces clear and decisive action...which will make no difference whatsoever.
I would love to think councils will leap on this as an opportunity to do things differently at a time when they are painfully short of money.
The cynic in me suggests that they simply can’t stop themselves telling you what to do, and that the desire to preserve departments and budgets means this is a habit they can’t kick.
Cynicism aside, there’s a serious point to all this. Road signage and layouts have in places become complicated to the point where they are distracting and difficult to understand. Planting huge yellow signs which shout ‘Speed Kills’ seems almost ironic.
Roadsides are no place for sloganeering.
Thursday, 6 October 2011
The Smell of Fear
I wouldn’t bother looking at the TV news if I was you. It’s not very nice. Draw the curtains and make a cup of tea instead.
Over on the continent, you have a sovereign debt problem about to be turned into a banking crisis by political incompetence. Which, I guess, is what happens when you try to get a room full of chalk and cheese to agree on anything.
Over in the USA, the Republican Congress’s determination to turf Barack Obama out of the White House means both sides can't agree on any long-term solution to the USA’s gargantuan budget deficit before the 2012 Presidential vote. Which is certainly brave, but may turn out to be stupid.
With those two elephants in the room, do we even need to talk about the UK’s flat-as-a-pancake GDP? Thought not.
Much as I’d like to dismiss the problems over in the Eurozone – and the political turmoil in particular is a gift to Europhobes – it presents a clear and present danger to our frayed economy. Despite all the talk of China, India, Russia and Brazil being the Next Big Thing in exporting, the amount of money we earn from them is dwarfed by what we routinely rake in from the likes of Ireland, France, Germany, Holland, Belgium etc.
They are our closest trading partners in every sense, and we need to do more with them.
So, imagine a situation where your business partner on the continent says he can’t pay you this quarter and isn’t currently able to finance any new orders. Unfortunately, that scenario is no longer completely in the realms of fantasy land.
The Eurozone crisis is a story of world financial markets ruthlessly chasing down governments and banks who haven’t given a straight answer to the question ‘When are you going to pay off your debts?’. Greece borrowed so much that, whatever the eurozone might pretend, markets have already decided it can’t pay.
So the next question is what happens to the people it and other debtor nations owe money too? That’s where some European banks come in, and they now find themselves in the same situation that UK banks did in 2007-2008: carrying huge debts that they do not have enough of their own capital to cover.
This, though, isn’t the problem. That lies with European governments. Between them, they can decide to let Greece default on its debts and provide banks with all the funds they need to cope. It won’t be pretty, but it can be done in an organised fashion.
It can, but will it? European institutions are not used to taking decisions quickly, when you dissect those decisions they often turn out to be fudges open to localised interpretation, and there is a history of allowing exceptions through opt-outs or different groupings.
What do world financial markets do when confronted with the failure to answer serious questions about debtors? They take the decision themselves.
That’s what is happening at the moment. When indebted European banks go out into the money markets and seek routine funding to support their cash flows they are being told ‘Fine – but the price has gone up’.
This is exactly what happened here in 2008 when the London Interbank Offered Rate – what banks charge each other for lending money – shot up overnight. UK banks responded by clamping down on lending out the money in their own accounts, and the results of that are still being seen in our own dismal GDP figures.
You’ve seen the Bank of England announce today that it will drop another £75 billion into the UK economy through further quantitative easing. That will help us in the medium to longer-term, and may assist some measures of business confidence.
But only when the European question is answered will we be able to look forward.
The Eurozone may yet get cajoled, pushed and kicked into a categorical pledge to support financial institutions come what may and to accept that Greece won’t pay back some of its debts.
That in itself won’t be a get-out-of-jail card. But the alternative is…well, if the alternative happens I’d send the TV set back.
Over on the continent, you have a sovereign debt problem about to be turned into a banking crisis by political incompetence. Which, I guess, is what happens when you try to get a room full of chalk and cheese to agree on anything.
Over in the USA, the Republican Congress’s determination to turf Barack Obama out of the White House means both sides can't agree on any long-term solution to the USA’s gargantuan budget deficit before the 2012 Presidential vote. Which is certainly brave, but may turn out to be stupid.
With those two elephants in the room, do we even need to talk about the UK’s flat-as-a-pancake GDP? Thought not.
Much as I’d like to dismiss the problems over in the Eurozone – and the political turmoil in particular is a gift to Europhobes – it presents a clear and present danger to our frayed economy. Despite all the talk of China, India, Russia and Brazil being the Next Big Thing in exporting, the amount of money we earn from them is dwarfed by what we routinely rake in from the likes of Ireland, France, Germany, Holland, Belgium etc.
They are our closest trading partners in every sense, and we need to do more with them.
So, imagine a situation where your business partner on the continent says he can’t pay you this quarter and isn’t currently able to finance any new orders. Unfortunately, that scenario is no longer completely in the realms of fantasy land.
The Eurozone crisis is a story of world financial markets ruthlessly chasing down governments and banks who haven’t given a straight answer to the question ‘When are you going to pay off your debts?’. Greece borrowed so much that, whatever the eurozone might pretend, markets have already decided it can’t pay.
So the next question is what happens to the people it and other debtor nations owe money too? That’s where some European banks come in, and they now find themselves in the same situation that UK banks did in 2007-2008: carrying huge debts that they do not have enough of their own capital to cover.
This, though, isn’t the problem. That lies with European governments. Between them, they can decide to let Greece default on its debts and provide banks with all the funds they need to cope. It won’t be pretty, but it can be done in an organised fashion.
It can, but will it? European institutions are not used to taking decisions quickly, when you dissect those decisions they often turn out to be fudges open to localised interpretation, and there is a history of allowing exceptions through opt-outs or different groupings.
What do world financial markets do when confronted with the failure to answer serious questions about debtors? They take the decision themselves.
That’s what is happening at the moment. When indebted European banks go out into the money markets and seek routine funding to support their cash flows they are being told ‘Fine – but the price has gone up’.
This is exactly what happened here in 2008 when the London Interbank Offered Rate – what banks charge each other for lending money – shot up overnight. UK banks responded by clamping down on lending out the money in their own accounts, and the results of that are still being seen in our own dismal GDP figures.
You’ve seen the Bank of England announce today that it will drop another £75 billion into the UK economy through further quantitative easing. That will help us in the medium to longer-term, and may assist some measures of business confidence.
But only when the European question is answered will we be able to look forward.
The Eurozone may yet get cajoled, pushed and kicked into a categorical pledge to support financial institutions come what may and to accept that Greece won’t pay back some of its debts.
That in itself won’t be a get-out-of-jail card. But the alternative is…well, if the alternative happens I’d send the TV set back.
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