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INFLATION SPECIAL
OUR ANALYSIS OF SIR MERVYN KING’S LAST REPORT
GADGETS TO
WATCH OUT FOR
Allister Heath p2, News p3, The Capitalist p15 and Andrew Sentance in the Forum p26 See Page 30
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2 NEWS To contact the newsdesk email news@cityam.com
LETTER
wages will rise, you may be one of year for full-time male public sector freer and more responsible for their measurement error: income is hard
the great winners of our age. If you workers (and rose in cash terms, own lives. The increase in numbers (of to quantify in the freelance sector.
are self-employed, work in the private despite the supposed pay freeze) com- around 10 per cent) is one reason for Unless you are lucky, very skilled
sector, have lots of savings and have pared with a drop of 3.1 per cent per the decline in median incomes; new and in an industry where productivi-
limited control over your income, you
are fast becoming one of the losers.
ALLISTER HEATH year for their private sector counter-
parts. Yet again, austerity has been
entrants probably earn less because
they lost their jobs, couldn’t (or didn’t
ty is increasing (or a firm that is buck-
ing the trend), brace for years of
That, in a nutshell, are the conclu- much harsher in the private sector want to) find an alternative position misery and declining living stan-
sions to be drawn from devastating lower than they were in 2003. Average than in the public sector. but found that they could still earn dards. Deals are back in the City –
data showing the extent and distribu- private sector wages have been falling Astonishingly, median self- something by going freelance. with yesterday’s mulled bid by
tion of falling real wages in the UK – since 2009; they peaked in 2008 but employed income has collapsed by 25 Another reason is the collapse in the Vodafone for Kabel Deutschland just
and the Bank of England’s dramatic, gains seen in previous years have per cent in real terms from peak – construction industries. Many other the latest – but the financial sector’s
semi-explicit admission that inflation been undone. Male full-time employ- and by an almost incredible 33.8 per freelance intensive industries – such partial recovery should not be misin-
is now being allowed to rip. Prices will ees resident in London earned £15.54 cent in London. So why are the self- as personal trainers – are very terpreted for an overall economic
continue to rise above the target, with per hour in 2012, compared with employed doing so badly? Their dependent on the earnings of their rebound. For most people, especially
the Bank blaming all sorts of factors £16.14 in real terms in 2002 – a drop income fluctuates much more with clients; if these fall, the impact on the outside of London and its commuter
apart from themselves. That suits of 4 per cent. the economic cycle; freelance con- self-employed is disproportionate. belt, the grim reality of declining real
some borrowers just fine but is a dis- Public sector workers have done tracts are short-term and can easily be Self-employed people who work for wages won’t go away any time soon.
aster for many, who wrongly trusted best. Their incomes started to fall well renegotiated up or down very quickly. big firms are the easiest buffer: when
the authorities to protect the pound. after those of their private sector Their number is up by 367,000 since demand falls, their hours get allister.heath@cityam.com
Real median wages are now slightly counterparts; the drops, when they 2008; far more Brits are working for chopped before staff get fired (a bit Follow me on Twitter: @allisterheath
£11.24 £11.21
inflation and sluggish pay growth.
Including the effects of inflation, ALL WORKERS IN LONDON
the median average UK wage last
year was even lower than it was in -0.26%
2003, new data revealed yesterday. 12 16
The Office for National Statistics MEDIAN HOURLY WAGE AT 2012 CONSTANT PRICES
(ONS) said that the median hourly
wage dropped to £11.21 in 2012 –
below 2003, when it would have
LONDON*
been the equivalent of £11.24 when
2003 2012 10 14 WORKERS IN LONDON WHO ALSO LIVE IN THE CAPITAL
adjusted to last year’s price levels.
Real wages peaked in 2009 when
they reached an equivalent of £12.25
per hour, adjusted to 2012 prices –
£15.74 £15.70
yet they have been on the decline
-0.25% 12
8
since, partly due to the UK’s 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
stubbornly high inflation. MEDIAN HOURLY WAGE AT 2012 CONSTANT PRICES
The consumer price index *includes workers who commute into London
measure of inflation was confirmed REAL PUBLIC vs PRIVATE WAGES REAL SELF-EMPLOYED WAGES
earlier this week at 2.7 per cent for LONDON’S SELF EMPLOYED
January, the 38th straight month 18 £ per hour 400 £ per week
that it has held above the Bank of
England’s two per cent target. 2007-08 2010-11 PUBLIC SECTOR
MEN
Yesterday, the ONS figures also
revealed a stark drop in the median £378 £250 16
350 LONDON
average real wage of the self-
employed. Having touched a peak of
-33.8%
14 PUBLIC SECTOR
£281 per week in 2006/07, at MEDIAN WEEKLY WAGE AT 2010/11 CONSTANT PRICES WOMEN
constant 2012 prices, it was down to 300
£212 last year. 12
And London’s self-employed have MALE WORKERS IN LONDON PRIVATE SECTOR
MEN
seen their median weekly pay drop
250 UK
from a high of £378 in 2007/08 to
just £250 in 2012.
“In April-June 2012, self-employed
£17.33 £20.22 10
PRIVATE SECTOR
people comprised 14 per cent of PRIVATE SECTOR PUBLIC SECTOR 8
WOMEN
200
people in employment in the UK and
18 per cent of people in employment 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2002/03 2004/05 2006/07 2008/09 2010/11
in London,” the ONS report added. MEDIAN HOURLY WAGE FOR 2012 *ALL GRAPHS SHOW MEDIAN AVERAGE
be hitting its limits 2003 and 2009. marine flotilla. manufacturers Airbus and Boeing.
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 5
of tech startups
here.” THE proposed £1.4bn merger of soft
drinks giants AG Barr and Britvic
was thrown into disarray yesterday
ERROL DAMELIN after a trading watchdog referred
CHIEF EXECUTIVE OF WONGA the deal to the Competition
Commission (CC).
“If we want to build Googles, Facebooks, and Apples in The current terms of the all share
BY MARION DAKERS law partner Jonathan King. Britain, our entrepreneurs need the backing of British merger, agreed in November, have
“It’s obviously great news for high- financial institutions. The London Stock Exchange is lis- now been shelved after the Office of
THE LONDON Stock Exchange is try- growth companies, but it’s also great Fair Trading said the range of
ing to tempt fast-growing tech firms news for private equity houses who, in tening, and I hope these proposals will create a platform Britvic and Barr’s drinks made its
away from Silicon Valley by launching light of the more relaxed free float for fast-growth companies with the character and the merger a threat to competition in
a “high growth segment” with less requirement, have an additional liq- capability to go global.” the £9bn soft drink market.
onerous listing rules. uidity channel available to them.” “We’re in the long grass for at
The exchange said yesterday that Some market watchers, including NEIL RIMER least nine months,” Britvic
companies with an annual growth governance body Manifest, questioned CO-FOUNDER OF INDEX VENTURES chairman Gerald Corbett said
rate of 20 per cent over three years whether such a small free float “We welcome the LSE’s proposals to help kick-start yesterday, criticising the OFT for its
will from next month be able to join requirement would attract long-term decision to refer the merger.
the segment of the main market with investors to UK firms. London’s IPO market for high growth companies... but these The OFT will release its report
a minimum free float of just 10 per And Deloitte pointed out while tech changes are not a panacea. In order to give European growth into the ruling in the coming
cent. firms have abandoned the LSE in the companies robust access to public markets, the institutional weeks. Former Britvic chief
This compares to the usual require- last three years, smaller companies investment community need to invest in understanding how executive Paul Moody stepped down
ment of a 25 per cent free float. already use the junior Alternative in anticipation of the merger,
“Ensuring that the UK’s fastest grow- Investment Market as a launch pad. growth models work and how they are valued to develop which would have
ing and most dynamic companies Around 30 tech firms have listed on conviction about owning pieces of these companies.” seen Barr boss
have access to equity capital is a prior- Aim in the past three years, it said, Roger White taking
ity for London Stock Exchange,” said including software group WANDisco’s GREG CLARK over. Yesterday
chief executive Alexander Justham. oversubscribed £15m initial public FINANCIAL SECRETARY TO THE TREASURY Britvic made
“The High Growth Segment will pro- offering last year. managing director
vide an additional attractive choice, The scheme mirrors the Jobs Act in “We are delighted that the London Stock Exchange is of Britvic GB Simon
giving these companies a launch pad the United States, which last year taking action to ensure that London’s public markets are Litherland chief
for further success.” streamlined float requirements for organised to help these companies fuel their growth. The executive until the
The changes, backed by the govern- companies generating less than $1bn issue is resolved.
ment after months of consultations, (£644m) annual revenues. UK has a world leading crop of high growth businesses,
should provide investors with easier Manchester United was criticised for and the announcement is an important step in creating
the right environment for them to IPO in London.” Simon Litherland fills
access to the UK’s future tech success using the Jobs Act exemptions for its
stories, said Osborne Clarke corporate $234m IPO in New York last summer. Paul Moody’s boots
6 NEWS
THURSDAY 14 FEBRUARY 2013 cityam.com
hails a jubilant
DEREK
SHAKESPEARE
BARCLAYS
housebuilding boss
his confidence in London seems
market return
BY DAVID HELLIER
to have been well placed.
BARCLAYS Capital and HSBC acted as STEPHEN Stone was a happy man Certainly he reports no lack of
joint sponsors, joint global co-ordina- yesterday. But he was, after a interest in his group’s story. He
tors and joint bookrunners on Crest gruelling round of presentations, said all the large UK institutions
Nicholson’s initial public offering. also a man with a gravelly were interested to hear from him.
Derek Shakespeare, a managing direc-
sounding voice. Many now think Crest
tor at Barclays’ investment banking
The chief executive of Crest Nicholson's success will prompt
division, is leading the effort for the
Nicholson since 2005, Stone is the other companies to revisit their
bank. He recently advised Redrow
first person to lead a company to flotation plans. “The success of
BY KASMIRA JEFFORD founder and chairman Steve Morgan’s
tressed investment fund Varde vehicle Bridgemere and fund manager a main stock market listing in our float is good for the housing
Partners took majority ownership Tosca on their bid to take over the London this year and that’s sector and good overall.”
CREST NICHOLSON made a success- after buying up its debt in 2011. housebuilder, which was eventually required a massive round of With a bit of luck, Stone might
ful return to the stock market yester- The company, which builds homes pulled. He is joined by Chris presentations, lunches and be able to enjoy a couple of quiet
day, after the 50-year old British mainly in the south of England, also Madderson, part of the bank’s UK origi- breakfasts that have clearly taken days to leave him in tip-top
housebuilder completed a listing reported last month it returned to a nation team and Ben West in the equity their toll on the vocal chords. condition for another day in the
which valued it at £553m. pre-tax profit of £62.1m last year, up syndicates team. Born in the east end of London, spotlight next week.
The company, taken private by from a £27m loss in 2011. HSBC’s advisory team was led by Nick Stone never doubted London was Unconditional dealings start
Scottish entrepreneur Tom Hunter at Norton Rose partner Mark Lloyd Donald, head of equity capital markets the best place to float his on Monday and the housebuilding
the height of the housing bubble in Williams who worked on the IPO – (ECM). His previous deals include act- housebuilding group, which had boss is in talks
2007, priced its shares at 220p, the the first on the London Stock ing as joint bookrunner for miner been financially restructured by with the
upper half of its original range. Exchange this year – said: “This Lonmin on its $817m rights issue in Deutsche Bank and Varde after a London
As part of the listing, Crest is rais- flotation is a litmus test for all those November. Simon Cloke, head of diver- heavily leveraged deal headed by Stock
ing £224.9m, with £169m going to watching to see if the UK equity sified industries at HSBC and ECM Sir Tom Hunter ran into trouble. Exchange
existing shareholders Varde markets have reopened for busi- director Stuart Dickson worked with “I always thought of London as about
Investment Partners and Deutsche ness”. Donald on the deal. the place to float, it’s our home opening
Bank and £56m going to the compa- Norton Rose, the law firm also acted for town after all,” says Stone. “It was the
ny to pay down existing debt. Crest Nicholson holdings limited PLC obvious to float here.” market
Crest Nicholson, with corporate part-
Stephen Stone, who has been chief p Crest Nicholson, 50 years of that day.
executive since 2005 saw the value of
255.00 ners Mark Lloyd Williams and Tom Vita
age this year, is based in
13 Feb leading the team. Norton Rose also
his shares shoot up to £10m after the 256 recently advised the consortium led by Weybridge, Surrey, after all.
listing. Chairman William Rucker, 254 Malaysia’s SP Setia that bought After seeing shares in the
who is also head of Lazard London 252 Battersea Power Station last year. housebuilding group, in which
saw his shares valued at £8m. 250 Meanwhile broker Numis is lead man- management have a 10 per cent
Crest Nicholson’s return to market 248 ager on the listing while Lazard & Co is stake, surge to a premium on the
brings an end to a painful five years 246 first day of conditional dealings,
244 financial adviser to Crest Nicholson.
for the group that including two
rounds of debt restructuring. US dis- 8am 10am 12pm 2pm 4pm Stephen Stone, Crest Nicholson’s chief
exec, has finished a punishing schedule
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 7
Deutsche: Jump
TOP 5 GLOBAL M&A TRANSACTIONS IN 2013 TOP 10 FINANCIAL ADVISERS ON
Deal Value Target Target’s dominant Target/Seller Bidder M&A TRANSACTIONS IN 2013
(£bn) company geography Financial advisers company
Rank House Value (£bn) Deals
13.963 Virgin Media UK Goldman Sachs; Liberty
in market means
JPMorgan Global 1 1 Goldman Sachs 39.908 19
22 JP Morgan Cazenove 37.38 19
13.909 Dell USA Evercore Partners; Silver Lake
Goldman Sachs; Partners 33 Credit Suisse 33.127 15
JPMorgan; Lazard 44 Barclays 24.576 16
SOURCE: MERGERMARKET
2.433 Spirit Realty USA Barclays Cole Credit Property 88 RBC Capital Markets 15.016 9
BY TIM WALLACE the industry, there will clearly be hopes Capital Trust II 99
that the sector-wide collapse in jobs will LionTree Advisers 14.45 2
SOARING equities markets are giving a come to an end or even reverse as more
major boost to confidence and should bankers are needed to work on the deals. 2.157
10 Citi
10 8.788 13
Slovensky Plynarensky Slovakia Advising sellers: Energeticky a
lead to a strong recovery in mergers and Deutsche expects mid-sized deals to be Prumyslovy GLOBAL M&A ACTIVITY
acquisitions and in share listings the first to come through as cautious Priemysel Citi; Deutsche Bank;
through 2013, top investment bankers at firms and investors test the market. (49 per cent stake) Morgan Stanley Holding Year to date £129.547bn 1,521
Deutsche Bank said yesterday. Well-trailed deals, like joint venture
Market activity, and thus bank rev- minority unwinds delayed by the finan-
enues, have been falling ever since the cial crisis, should also be early beneficiar-
financial crisis. But Deutsche Bank ies of the new optimism.
reports increasing optimism, forecasting A particularly helpful change is that US
a healthy recovery at last this year. investors are increasingly likely to fund
“There is a lot of positive feeling now activity in the UK and Europe, the
that the Eurozone has stabilised and bankers said, as they become more confi-
that we can now move into a growth dent that they have now seen the bottom
phase,” said UK equity capital markets of the Eurozone crisis.
head Lorcan O’Shea. Private equity groups are also expected
“There is a significant pipeline of IPOs to take advantage of the rising tide to
coming through in the UK.” offload assets they have been sitting on
Although it is too soon to say what through the lean years, as well as seeking
impact this will have on employment in to raise funds in the improved climate.
8 NEWS
THURSDAY 14 FEBRUARY 2013 cityam.com
administration
designed to take into account the
growing importance of online sales.
The partnership, which has a
reputation for looking after its staff,
said it was consulting on the need to
have individual departmental
managers for sections such as
womenswear and furnishings in its
BY KASMIRA JEFFORD insolvency process,” Kelly said. store. The changes are being made to
The group will continue to trade reflect the growing importance of its
BRITAIN’S already fragile high street while Ernst & Young try to sell the website, which now produces a
was dealt a fresh blow yesterday after business as a going concern. quarter of total revenue.
fashion chain Republic collapsed into Republics’s demise marks the latest
administration. in a string of casualties since the start
Blockbuster to
Ernst & Young, the business adviso- of the year after Jessops, Blockbuster Republic began as a men's denim retailer in 1986 under the Best Jeans brand in Leeds
ry firm, has been appointed as admin- and HMV all entered administration.
istrator and 150 staff at its Leeds US private equity firm TPG bought
ADVISERS
close 164 shops
headquarters were immediately the chain in 2010 for £300m with the
made redundant. aim of doubling the size of the busi- working with private equity investors.
The retailer, which sells youth fash- ness to over 200 stores. Some of the major restructurings Hudson
ion brands including Jack Jones and The firm has twice tried to inject has worked on include Focus DIY, the hard-
SoulCal, runs 121 stores and employs more cash but the retailer has failed to
ALAN HUDSON ware chain owned by private equity firm BY KASMIRA JEFFORD
around 2,500 staff. stem falling sales amid fierce competi- Cerberus, which appointed Ernst & Young as
Hunter Kelly, joint tion and weak demand, particularly ERNST & YOUNG administrators in May 2011 and DTZ, the BLOCKBUSTER, the DVD and games
administrator, said among young consumers. global real estate services firm which fell rental chain, is to close a further 164
Republic was hit by The latest accounts show sales into administration in December 2011. It stores the firm’s administrators said
poor trading declined by 2.3 per cent to £177m in Alan Hudson, partner and head of restruc- was then sold to Australian engineering yesterday, putting a further 800 staff
results in Autumn the year to January 2012. Pre-tax profit turing at Ernst & Young, is acting as joint firm UGL. In 2011, Hudson acted as joint at risk.
and “a sudden and slumped from £27.3m to £3.2m. administrator of the fashion retailer administrator and receiver of London land- Deloitte said the stores will shut
rapid decline in Former Asda boss Andy Bond Republic together with Leeds-based partner mark Battersea Power Station, which was over the coming week as part of a
sales” in January. stepped down as chairman at the end Hunter Kelly and director John Sumpton. then sold a year later to a Malaysian consor- “phased closure” as it continues to
“The impact on of January but a spokesper- A licensed insolvency practitioner, Hudson tium led by SP Setia and Sime Darby for find a buyer for the business and its
cash flows has result- son said it was not related has more than 24 years’ experience of work- £400m. Meanwhile Hunter, a partner since remaining 204 stores. The latest cull
ed in the business to the company entering ing across restructuring and accelerated 1996, has worked on a number of insolven- comes on top of the 168 store
being unable to administration. M&A. He also in the past headed up Ernst & cy appointments including Snackhouse, closures announced last month. The
continue to Young’s transaction advisory services retail once one of the UK’s biggest snackfood chain employed 4,190 staff and ran
operate out- Andy Bond, former team in the UK and now has particular focus makers which collapsed in 2001. 528 stores at the time of its collapse.
side of an chairman of Republic
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 9
up top brass
divestments as the group sells off group’s bailout, giving
BY TIM WALLACE
non-core units such as its UK €1.125bn to the Dutch
DUTCH finance group ING savings arm. government in the year – a
yesterday announced it is cutting On an underlying basis payment which hit the
another 2,400 jobs as it unveiled profits dipped from €664m to institution’s core tier one
a disappointing fourth-quarter €184m with the bank tax and capital ratio to the tune of
I
main business lines into three in an the deputy position, while Didier
drive to cut costs.
SocGen lost €476m (£412m) in the
final three months of the year com-
Haugel and Jean-Luc Parer will jointly
lead the new international retail bank-
ing and financial services division.
BOTTOM
T’S simply too tough out there, said
the last official tweet from
@republicfashion, announcing the
now eyeing Germany’s Kabel
Deutschland. However, Vodafone’s
shares fell on the news, suggesting a
pared with profit of €100m in the
same period of 2011.
And on the year profits fell 67.5 per
Meanwhile investment manage-
ment head Jacques Ripoll is leaving
the bank.
LINE
company’s fall into administration.
With inflation still stubbornly high
and the news today of real wages back
dim market reception.
That’s perhaps because it means
pouring more money into a Europe
cent to €774m.
The bank managed to drag down
SocGen’s shares dipped 3.57 per cent. at 2003 levels, it is certainly a tough
market. Republic is just the latest MARC SIDWELL stuck in the economic doldrums.
Vodafone takes 69 per cent of its
operating expenses by 3.5 per cent, Societe Generale casualty in a post-Christmas cull of revenue from Europe, and the
31.50
but operating income fell much more 33.00 € 13 Feb the UK high street, itself following in Eurozone crisis has hit it hard, even
sharply at 22.4 per cent, resulting in 32.75 the wake of Comet last year and it while taking advantage of the in a relatively strong market like
the weaker figure. Part of the hit 32.50 doesn’t look likely to be the last migration to online shopping are Germany. More scale and the ability
came from a €300m litigation impair- 32.25 company to suffer. As such, the UK’s suffering most. It’s tough out there, to bundle products would increase
ment charge in the quarter, while a listed retailers look like risky bets for but it’s also the survival of the fittest. revenue but at a price – and in a
goodwill writedown on its NewEdge 32.00 investors. Yet this is not some declining market the returns risk
joint venture also came in at €390m. 31.75 indiscriminate, mass-extinction event. CABLE TIES being less than stellar. Vodafone is
Analysts fear more reforms are need- 31.50 Those firms that are failing to tightly The purchase of Virgin Media by tied: with so much of its business in
ed before the bank returns to health. 31.25 control the costs of maintaining a Liberty Global may be kicking off a Europe it has to make the best of it.
“Although management has dealt bricks-and-mortar store network consolidation trend, with Vodafone But it won’t be cheap or easy.
convincingly with concerns about 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 11
Reckitt figures
Reckitt Benckiser boss Rakesh Kapoor has overseen operating profit of £2.6bn for 2012
HIGH-FREQUENCY trading business
ANALYST VIEWS
Interviews by Kasmira Jefford
HAS RECKITT BENCKISER
GOT OFF TO A HEALTHY
START TO 2013?
Getco yesterday revealed an 82 per
cent drop in profits for the first nine
months of 2012 thanks to poor
market conditions.
The figures – the first time that
GRAHAM JONES PANMURE GORDON the company has made its financial
“
BY KASMIRA JEFFORD hygiene sector, with brands such as performance public – were
Durex condoms and Dettol disinfec- contained in a filing to the US
A HEAVY flu and cold season in the tant, which it said will account for 72
Reckitt’s full-year results came in ahead of expectations, with like-for-like securities and exchange made as
growth of six per cent in the fourth quarter better than our 4.2 per cent forecast, with
”
US caused misery for many people per cent of net revenue by 2015 – up part of its reverse takeover of Knight
but helped Strepsils-maker Reckitt from 68 per cent today. the outperformance entirely coming in ENA (Europe, North America) where Capital.
Benckiser yesterday report a healthy It is also targeting emerging mar- growth was three per cent helped by a favourable cold season. Net profits for the nine months to
lift in fourth quarter sales. kets and plans for half of net revenue 30 September were $24.6m (£15.4m)
Reckitt said sales in Europe and in its core business to come from DARREN SHIRLEY SHORE CAPITAL compared to $134.8m in the same
“
North America grew three per cent developing markets by 2015. period last year.
after “higher incidences of cold and With the positive impact of the strong flu season flowing into the first Total revenue dropped from
flu” had boosted demand for prod- Reckitt Benckiser Group PLC $719m to $425.3m on the same basis.
4,419.00 quarter...we believe 2013 has started well for Reckitt... We expect the market to
”
ucts such as Mucinex decongestant. 4,500 p Worryingly for investors, this
13 Feb respond positively to yesterday’s results, whilst recognising some investors
Total annual revenues rose five per appears to be part of a long-term
cent on a like-for-like basis, excluding 4,450 may be underwhelmed by management’s full year targets. downward slide since the start of the
non-core pharmaceuticals, to £9.6bn. 4,400 financial crisis with full-year
ALICIA FORRY CANACCORD GENUITY
“
Chief executive Rakesh Kapoor said 4,350 revenues peaking at $1.2bn in 2008.
this year the group would target rev- Getco agreed to buy Knight Capital
enue growth of between five and six 4,300 last year for $1.4bn after it was badly
Reckitt’s results are strong...While our numbers and consensus will clearly
per cent, including acquisitions and 4,250 need to come up by around five per cent, we retain our ‘sell’ recommendation, hit by an incident last August when
”
disposals announced to date. 4,200 its software malfunctioned, causing
Reckitt has also been shifting its based on valuation, though we acknowledge the progress that has been major volatility on the New York
focus to the fast-growing health and 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb made in the last year. We still expect competition for Suboxone this year. Stock Exchange.
Find your
next step at
CITYAMCAREERS.com
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12 NEWS
THURSDAY 14 FEBRUARY 2013 cityam.com
stalls for London expansion requirements for London and avoid the hub capacity you have, flying to
BY MARION DAKERS
the need for a hub airport, but to places that frankly should be point
TRANSPORT bosses locked horns boot you will also spread the to point out of other airports,” said
over how to provide London with economic benefits that are driven Aitken.
more flights yesterday, as rival by the airports around the city, and But Heathrow director of public
firms ramp up campaigns aimed at also distribute the environmental policy Nigel Milton said that a well-
the coalition’s Davies Commission impact caused by aviation,” he told connected hub airport is the only
on the future of air travel. the London Assembly. way forward. “All of the evidence
Gatwick chief executive Stewart Wingate and EasyJet’s UK shows that the lack of hub capacity
Wingate said his firm will propose commercial manager Hugh Aitken in London is harming the UK today,”
to Davies that the UK should allow argued that existing airports could he said, claiming Heathrow has lost
a new runway each at Gatwick and create capacity almost immediately. routes to Amsterdam, Frankfurt and
Stansted, enabling them to “We find it surprising that British Paris.
compete with Heathrow. Airways is starting flights out of Davies’ panel will spend the next
“Not only will you support the Heathrow to Alicante and Ibiza this few months taking submissions,
vast majority of the connectivity summer. That’s not effectively using but will not report until 2015.
TIME is running out for Vijay Mallya’s Kingsfisher Airlines, after the firm’s lenders
decided to take initial steps towards recovering $1.4bn (£901m) of loans in default.
Shares in the firm slumped a further five per cent yesterday after the lenders’ meeting.
Santander may
shut financial
advice division
BY TIM WALLACE looking to invest a lump sum through
a bank or building society – with
SANTANDER is reviewing the future Santander believed to have been
of its bancassurance division after it referred to the enforcement division
struggled to train its hundreds of over poor advice and practices.
advisers to meet the new regulations The FSA said that overall the results
around the sector, the bank’s UK arm of its mystery shopping exercise were
announced yesterday. disappointing.
That could lead to the division being In 11 per cent of cases the advice was
closed, joining the swathe of banks unsuitable, and in 15 per cent the
cutting back on mass advice as a advisers had not obtained enough
result of the new Retail Distribution information to make a proper recom-
Review rules. mendation.
The bank will continue to provide The FSA’s survey found three main
advice to existing investment cus- problems with sales staff; firstly a fail-
tomers, but has not yet decided what ure to assess the level of risk customers
will happen to the rest of that busi- were prepared to take; secondly a fail-
ness. ure to assess the customers individual
“There is never a good time to financial needs and thirdly failing to
announce changes such as this and take into account how long the cus-
we are acutely aware of the uncertain- tomer wanted to hold their invest-
ty staff are facing,” said a spokesper- ment for.
son. “This review shows that customers
“We are working closely with other are not consistently getting the quality
business areas to ensure that many of of advice on their investments that
those who may be impacted are able they should expect when visiting an
to secure roles in a growing adviser in a bank or building society,”
Santander Group.” said Clive Adamson of the FSA.
It came as the Financial Services “Whilst we are disappointed by the
Authority (FSA) released the results of results of this review, we are encour-
its mystery shopping exercise which aged by the action that the firms
found cause for concern in the advice involved have taken to rectify the situ-
given to one quarter of customers
CITYVIEWS
” ation for their customers.”
GLYNIS WIGGINTON
KEMP LITTLE
” tion, then in real terms it's not affecting you.
The rise is very tangible for consumers like me.
The cost of everything has risen dramatically
which results in a significant impact on disposable
income.
ALEX CUNYNGHAME Not for me but when there are general pay
DELOITTE freezes, job cuts –look what’s happening at
Barclays – and increasing costs of living, I can see why it
would be worrying for some.
These views are those of the individuals above and not necessarily those of their company
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cityam.com THURSDAY 14 FEBRUARY 2013
15
THECAPITALIST
Got A Story? Email
thecapitalist@cityam.com
Governor’s 20 City maverick David Buik slams Many readers may be refraining
from the pleasures of chocolate,
caffeine or booze for Lent. However
year flashback
DrinkCoach. Creators told The Capitalist
the app is “not about stopping
CITY stalwart David Buik of “However having looked at the drinking” but “merely making lifestyle
Cantor, who is known for his tea-leaf remnants made from Sir improvements by providing useful tools
poetic City commentary – often Mervyn King’s comments at the to change behaviour as wanted.” The
quoting the likes of Whitman, Inflation Report, I would be invitation for the launch party, to be
doesn’t add up
Shakespeare, Poe and Housman - amazed if he did not send out
held at the City’s Guildhall, promises
was left unimpressed with the coded comments that some large
Bank of England governor UK banks will need the injection catered food and beverages. Sadly The
yesterday. of substantial capital in the years Capitalist hears that organisers thought
“I would hardly describe to come.” Clearly not won over by long and hard, but settled on serving
myself as the sharpest pin in the the anniversary reminiscence, strictly non-alcoholic drinks only.
box” opened Buik. then.
WHILST another governor may have compares the economic situation now
used yesterday’s Inflation Report with 1993. In April 1993 the govern-
press conference to look forward, Sir ment declared the official end of the
Mervyn King took a more nostalgic recession after growth reached 0.6 per
approach in his opening remarks. cent. But with the latest figures
The Bank of England governor at –0.3 per cent, there hardly seems to
reminded us that this was the 20th be the same hope that it will all end
birthday edition of the Report. Back in up quite so rosily.
1993, King was serving in the There are similarities though – in
more lowly position of chief 1993 we had a Conservative PM in
economist and executive John Major. And a Royal scandal –
director at the Bank of Princess Diana sued the Daily
England. Mirror over photographs that were
King’s anniversary compar- taken of her at a gym whereas now
isons made yesterday don’t the focus is over photographs of the
all bear scrutiny. The pregnant Duchess of Cambridge in
Capitalist won- an Italian magazine.
ders if King At least some things
isn’t being too don’t change.
optimistic
when he BoE boss Sir Mervyn King
The date for the 2013 Standard Chartered Great City Race, the annual 5k
running challenge that sees corporate joggers sprint around the closed-off
streets of the City of London, has been set for Thursday 11 July. As in previous
years, over 5,000 workers from the Square Mile are expected to don their running
gear, come rain or shine. This is the ninth year that Standard Chartered have
sponsored the charity dash, which helps to raise awareness and funds for eyesight
charity Seeing is Believing. Ten pounds from every £30 entry fee will be donated
to an eye-care project in Zambia. To register go to www.cityrace.co.uk.
Find your
next step at
CITYAMCAREERS.com
16 NEWS
THURSDAY 14 FEBRUARY 2013 cityam.com
IN BRIEF
Total to raise exploration budget
n French oil major Total plans to raise Shale oil could SHALE OIL HAS POTENTIAL TO REVOLUTIONISE GLOBAL ENERGY MARKETS
add £50bn to
its exploration budget in 2013 under
UK GDP by 2035
(£1.8bn) on exploration in 2013, up
from $2.5bn last year.
2035
Shale oil, much like shale gas, is a the UK can contribute to investment,
hydrocarbon produced through employment, economic growth and
MetLife hit by derivative losses fracking, and resources have been energy independence, and lower oil
n MetLife, the largest US life insurer, found worldwide. prices mean the UK can become a net
Production of shale oil – also called oil importer over time, PwC says.
last night reported a 90 per cent fall in
“tight” oil – has the potential to PwC’s report suggests that shale oil
quarterly profits as a result of reach up to 14m barrels of oil a day has the potential to spread away from
derivative losses linked to its credit
13.8m*
by 2035, which could push global oil the US – where 553,000 barrels were
spreads. However its operating profit prices down by up to 40 per cent over produced in 2011, up from 110,000
beat estimates and the company the period thanks to the extra sup- barrels in 2004 – and increase to
reported a fall in net income to $96m ply, according to PwC’s shale oil almost 12 per cent of the world’s total
(£61m) from $959m a year earlier. report. oil supply by 2035.
In this scenario, the resource has “Lower global oil prices due to
MF Global UK debtors boosted the potential to revolutionise the UK increased shale oil supply could have
economy, and the development of a major impact on the future evolu-
n Unsecured British debtors of failed shale oil could see UK GDP increase tion of the world economy by allow-
brokerage MF Global are set to receive by between two to 3.3 per cent by ing more output to be produced at
an interim payment of 40p in the £1, 2035, equalling a rise of around £500 the same cost,” John Hawksworth, * NUMBERS REFER TO
according to KPMG who are winding to £800 per person. chief economist at PwC and co- BARRELS OF OIL A DAY
up the business. Further payments On a global scale, GDP could rise by author of the report, said yesterday.
could be made, depending on the around 2.3 to 3.7 per cent by 2035, or “For the UK alone, the benefit of
outcome of lawsuits involving the US up to $2.7 trillion (£1.7 trillion) at lower than expected oil prices could
arm of the business. today’s values. be around £30bn to £50bn at today’s
The UK – which has a big presence values.”
cityam.com THURSDAY 14 FEBRUARY 2013
NEWS 19
warns output
yesterday agreed to expand their
cooperation agreement to include an
extra 600,000 square kilometres of
exploration acreage in the Arctic. The
agreement includes seven new
offshore licences in the Chukchi,
BY CATHY ADAMS talks between ABG parent Barrick Finmeccanica names new head
Gold and a national Chinese gold n Italy’s Finmeccanica promoted
SHARES in gold miner African company in January, the Tanzania- company insider Alessandro Pansa to
Barrick Gold sank yesterday as it focused company kicked off an opera- run the defence group as chief
Byron Grote, to join Anglo American, enjoyed a career with BP spanning 33 years
posted disappointing results for the tional review, with emphasis on cost executive officer after the arrest of its
robust outlook
BY MARION DAKERS
Deere results beat forecasts Dr Pepper Snapple Group US market helps Hyatt Cisco sees higher revenue
on strong farm demands outlook disappoints Street Hotels profit top estimates and profit in second quarter
DEERE & Co, the world’s largest farm DR PEPPER Snapple Group forecast profit HYATT Hotels reported a better-than- NETWORK equipment maker Cisco Systems
equipment maker, reported first-quarter for the current year below analysts’ expected fourth-quarter profit and said it reported quarterly revenue and earnings last
results above analysts’ expectations estimates as the soft drink maker expects expects a year of solid growth ahead. night that beat Wall Street’s average
yesterday as farmers geared up to plant the raw material costs to continue to constrain Hyatt’s higher exposure to a better- estimates.
biggest corn crop in US history following the earnings. On a conference call with analysts, positioned US market is coming in handy at Revenue rose five per cent for Cisco’s fiscal
worst drought in the US Midwest in 56 years. Dr Pepper executives said they expected a time when it said it sees “headwinds” in second quarter that ended 26 January to
The company also raised its forecast for net packaging and ingredients to increase the some other markets this year. About three $12.1bn versus a year ago. Analysts, on
income in 2013 to $3.3 bn (£2.05bn) from total cost of goods by about two per cent in quarters of Hyatt’s revenue comes from the average, were expecting $12.06bn.
US CORPORATE RESULTS $3.2bn. Analysts had estimated $3.26bn on 2013. Almost half of this increase is due to
the higher cost of apples, while the
United States, where a business-led recovery Income, excluding items, rose 6.2 per cent to
ROUND UP
average. “Relatively high commodity prices has lifted hotel occupancy rates over the $2.7bn, or 51 cents per share, three cents
and strong farm incomes are expected to remainder is primarily PET used for bottles, past year. above analysts’ average estimate of 48 cents
continue supporting a favorable level of corn for sweeteners and paper board for Hyatt’s results follow better-than-expected a share. For the current quarter, Cisco said it
demand for farm machinery during the packaging, finance chief Marty Ellen said. earnings from Starwood Hotels & Resorts expects revenue in the current period to
year,” Deere said. The US Agriculture The company expects full-year profit of Worldwide last week. grow within a range of four to six per cent
Department said this week farm income $3.04 to $3.12 per share and sales growth of Marriott International is scheduled to report from the same period last year.
would soar to a record $127.6bn this year, up about three per cent, implying revenue of results on 19 February. Analysts had been expecting Cisco to do
15 per cent. Sales of agriculture and turf about $6.17bn. Analysts were looking for a Hyatt reported a 7.5 per cent increase in better than forecast and Shaw Wu, an
equipment – which make up three-quarters profit of $3.20 per share on revenue of revenue per available room (revPAR) in the analyst at Sterne Agee, said that “it’s pretty
of Deere’s total revenue – jumped 16 per $6.17bn. Dr Pepper reported fourth-quarter fourth quarter ended December. much going to boil down to guidance now”.
cent in the quarter ended 31 January. Total SG&A expenses of $555m for the quarter Total revenue rose one per cent to $1bn “They did say they got a benefit from taxes.
revenue rose 10 per cent to $7.42bn, well ended 31 December, up from $553m a year (£643m). Net profit fell to $16m, or nine When you (take) that out its 50 cents. That
ahead of the $6.72bn expected. earlier. The company said total volumes cents per share, from $52m, or 31 cents per still beat by twp cents,” he said referring to
Net income attributable to Deere rose to declined one per cent, with beverage share, largely due to one-time items such as Cisco’s earnings per share. Cisco’s shares fell
$649.7m, or $1.65 per share, in the first concentrates declining the most. Profit rose lower tax benefits and investment losses. 1.2 per cent in after-hours trading to $20.89.
quarter from $532.9m, or $1.30 per share, a to $170m, or 81 cents per share, from $166m, Excluding these, it earned 20 cents per They have risen almost 25 per cent since its
year earlier. or 77 cents per share, a year earlier. share. last quarterly earnings report.
head of Saga
GLOBAL specialist recruiter Harvey
Nash said yesterday it plans to
increase its final dividend by 10 per
cent after it posted a slight increase
in full-year profits, adding that its
full-year results would be ahead of
expectations.
an 120 per cent drawdown limit, and Pre-tax profit at the firm, which
BY BEN SOUTHWOOD putting the problems of QE squarely specialises in technology and IT
SAGA boss Ros Altmann yesterday on the maps,” she told City A.M. service roles, is expected to rise to
announced she was stepping down as But she would not rest on her lau- £8.6m for the year to 31 January
Business customers have been travelling less due to tough conditions across Europe
director-general of the over-50s lobby, rels, she said, and planned to return to from £8.5m a year earlier.
KNG Securities associate in its sports group. Kelham spent seven Legg Mason Alvarez and Marsal
years as senior lawyer on brand protection matters for
The fixed income specialist the London Organising Committee of the Olympic The asset management firm has announced the The professional services firm has announced the
has announced the Games. She will be working closely with Lewis Silkin’s appointment of Joseph A Sullivan as president and appointment of Wayne Grundy as managing director
appointment of Armando La media, brands and technology team. chief executive. Sullivan joined the firm as chief to lead its new European cyber practice. Grundy has 16
Morgia as a head of structured administrative officer in 2008, and has held prior years’ experience working within internet security,
finance. He joins from Hemera executive roles at Dain Bosworth and Piper Jaffray. and joins from Raytheon UK, where he was chief
Capital Management, where USS Investment Management information officer.
he focused on residential
mortgage-backed and Robin Filmer-Wilson will join the investment Metlife
consumer asset-backed management firm as investment manager in private
Shirley Fell has been appointed chief operations Throgmorton
securities. equity co-investments. He has over 14 years’ direct
private equity and investment experience, and started officer, UK at the insurance company. She has over 30 Carolyn Twist will join the accountancy and back office
his career at Brown Brothers Harriman & Co in New years’ experience in the financial services industry, services firm as senior client adviser. Twist has worked
Lewis Silkin York. He was most recently director at TCR Capital, having previously worked for HBOS and Zurich. She at Morgan Stanley for the past 15 years, most recently
Alex Kelham will join the City law firm as senior where he worked on leveraged buyout transactions. will be responsible for IT application development. as executive director and European controller.
IMF demands
details on EU
banking union now vary widely across Europe – some-
BY TIM WALLACE
thing the IMF is keen to stop happen-
THE EU must lay out a careful plan ing again.
towards a banking union, ironing out “Single supervision should reduce
disagreements and preparing thor- national distortions, bring a uniform-
oughly if the new system of regula- ly high standard of oversight, and mit-
tion is to work smoothly, the igate the buildup of concentrated risk
International Monetary Fund (IMF) that compromises stability for all,”
warned yesterday. said Rishi Goyal, who wrote the
TICKETS A lack of good staff, a need for report. “And moving responsibility for
increased cooperation between potential financial support to the
ON SALE national authorities and determining supranational level would de-couple
NOW the exact nature of the central reg-
ulator’s powers are all chal-
banks’ prospects from that of sover-
eigns with weak finances, pro-
lenges to the end goal, it said. tect individual sovereigns from
The global finance advisor banking sector weaknesses,
approves of the aims of the and thus enhance confi-
banking union, as the nation- dence.”
al arrangement of financial But the IMF warned there are
supervision, resolution and challenges ahead, as bringing
safety nets struggled to cope non-euro members into the
with the credit crunch. union raises tough
Banks became questions over the
unwilling to lend structure of the safe-
across borders to ty net.
areas where funding
was scarce and lend- The IMF’s Christine Lagarde
ing and deposit rates approves of the bank plan
rise in Eurozone
away from fourth quarter GDP 90 series work in the UK, at 26.3 per cent – transport, according to the figures ONS says this means what it calls
growth, May said. down from 33.5 per cent in 2001. from 2011. Around 3.6m walk or the “productivity conundrum” is
“December’s increase reversed 85 Nearly half (48.3 per cent) arrive cycle to work. not unique to these isles.
2003 2007 2012
as losses grow
from 284p in 2011. Chairman and chief
executive Edward Ziff blamed higher
borrowing costs following its 2011
refinancing for the fall. “We retain a
robust financial position,” he added.
CITYDASHBOARD
In association with
YOUR ONE-
STOP SHOP
BROKER VIEWS AND
MARKET REPORTS
five-year high
1,620
U
7 Feb 8 Feb 11 Feb 12 Feb 13 Feb
S stocks drifted in light volume
PETROFAC yesterday, ending little
changed, as investors remained
UBS yesterday upgraded oilfield services group Petrofac from “neutral” to “buy”, cautious after the S&P 500
with the target price increased from 1,575p to 1,875p. “We think Petrofac has a solid index briefly hit its highest intraday
business model within the onshore engineering & construction end market,” the
T
level since November 2007.
HE FTSE 100 staged a late rally Kenyan well test results, which it note said. UBS recommends “deploying cash organically” within other parts of the The S&P 500 was buoyed by General
yesterday when shorts got said could lead to the country's first business in order to avoid the risks associated with M&A activity. Electric after cable company Comcast
squeezed by the continued commercial production. said it will buy from GE the the part of
resilience of the market on “Whilst this test rate exceeds prior Capita PLC NBCUniversal it didn’t already own
the back of rising investor guidance, some of this positive news
p
831.00 for $16.7bn. Comcast’s stock hit the
confidence. should be in the price, with the stock 840 13 Feb highest since 1999 before closing up 3
Britain’s top share index closed up trading up after disappointing per cent at $40.13 and GE gained 3.6
830
20.73 points, or 0.3 per cent, at announcements yesterday,” per cent to $23.39.
6,359.11, and touched an intraday Canaccord Genuity said in a note. 820 The S&P 500 is up 6.6 per cent so far
high of 6,384.70 – its highest in five Reckitt Benckiser, maker of this year, partly due to stronger-than-
years. Strepsils throat lozenges and 810 expected corporate earnings and a bet-
The index, however, fell short of its Mucinex decongestant, was up 1.3 ter economic outlook. The Dow
highest closing level since January 3 per cent after beating profit fore- 800 industrials is about 1 per cent away
2008 with some late profit taking casts. UBS provided a boost for from an all-time intraday high,
and strong resistance seen at 6,400, Petrofac, which rose two per cent reached in October 2007.
according to technical analysts. after the investment bank upgraded 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb The Dow Jones industrial average fell
The latest market rally has the oil services firm to “buy” from 35.79 points or 0.26 per cent, to
stretched back to November 19 2012 “neutral” after recent underperfor- CAPITA 13,982.91, the S&P 500 gained 0.9 point
without a correction, squeezing the mance following a profit warning Shore Capital have reiterated their “hold” rating on outsourcing firm Capita, with a or 0.06 per cent, to 1,520.33 and the
bears and fuelling the bulls’ appetite from European peer Saipem. target price of 810p – below yesterday’s closing price. Although the brokers expects Nasdaq Composite added 10.38 points
for equities. IMI, meanwhile, fell 0.8 per cent “contract news flow to remain positive” it insists “margin concerns persist” ahead of or 0.33 per cent, to 3,196.88. The S&P
Miner ENRC, up three per cent yes- after UBS cut its rating to “sell” from full-year results due on 28 February. “We see evidence of changing business models gained 12 per cent in the first three
terday, has rallied 26 per cent over “neutral”, saying the company faces that weigh on capital requirements,” it adds. months of 2012.
the last week as bid rumours refuse severe margin pressures in its service Deere & Co, the world’s largest farm
to go away. Vodafone fell 1.1 per cent division, and is not as deserving of its equipment maker, forecast a modest
Drax Group PLC
on reports it weighing up a bid for
Germany’s Kabel Deutschland, leav-
new multiple as other engineers.
AstraZeneca, BP, Royal Dutch 625 p
611.50 increase in sales this year despite the
prospect of the biggest corn crop in US
ing further question marks over its Shell and Sage Group all restricted 13 Feb history. The forecast fell short of ana-
dividend outlook. further gains on the index after they 620 lysts’ expectations, sending shares of
“(There is) limited scope for addi- traded without their dividend attrac- Deere down 3.5 per cent to $90.68.
tional leverage at Vodafone while tions. 615 In extended trading, shares of tech-
maintaining dividend cover,” Simon nology bellwether Cisco Systems fell 2
Maughan, strategist at Olive Tree 610 per cent after it posted results.
FTSE
Securities, said.
6,400 6,359.11 605
Dr Pepper Snapple fell 5.8 per cent
Maughan said that while address- 13 Feb to $42.69 after it forecast profit for the
ing it's lack of fixed line ‘back-haul’ 6,375 current year below analysts’ estimates.
capacity by buying Cable & Wireless 6,350 Cliffs Natural Resources lost a fifth
in the UK and TelstraClear in New 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb of its market value a day after the
6,325
Zealand, obvious gaps remain for
Vodafone in Germany, Spain and 6,300 DRAX GROUP miner reported a quarterly loss and
slashed its dividend by 76 per cent.
Italy, and less pressingly in Holland 6,275 Cantor Fitzgerald yesterday downgraded Yorkshire power station giant Drax from According to the latest Thomson
and Portugal. 6,250 “reduce” to “sell”, with a target price of 524p. Drax is proceeding with plans to Reuters data, of the 364 companies in
Elsewhere on the upside, Tullow diversify into biomass power generation but the broker fears there are still concerns the S&P 500 that have reported results,
6,225 about the plan. “We believe that the plans are not risk free, and the group remains
Oil recovered some recent losses, up 70.3 per cent have exceeded analysts'
6.8 per cent after releasing a set of 7 Feb 8 Feb 11 Feb 12 Feb 13 Feb exposed to carbon costs even after the planned unit conversions,” the note said. expectations.
Rising US debt levels are scraping a) Tell yourself you must get on with
redecorating the bedroom
the ceiling again, do you: b) Sell the Wall Street index in anticipation
of a stock market crash
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THURSDAY 14 FEBRUARY 2013
26
‘an additional
The UK has suffered
a decade of almost continuous above- “hawk” or “uber-hawk” as a result. as forecast this year and next. exports are not price sensitive and the
target inflation since the mid 2000s – Well, I’m afraid those warnings were Third, the UK has suffered from an UK doesn’t have lots of spare capacity
with two major inflation spikes above
5 per cent, and the likelihood that
correct. And the Bank of England has
officially acknowledged this in its lat-
additional surge in import prices due
to the weakness of the pound. In surge in in exporting industries. Instead, a
weak currency squeezes consumers
inflation will rise above 3 per cent est Inflation Report. February 2011, I described this as and probably does more harm than
again this year. This has happened
despite the financial crisis and a
The reasons that inflation has
remained stubbornly high are exactly
Selling England by the Pound – the
title of the classic Genesis rock album
import prices due to the good.
In the short term, the MPC is reluc-
major recession, which was originally
expected to create serious deflation-
those which I highlighted in my final
MPC speeches in early 2011, and
released 40 years ago. The recent
decline in our currency is worrying
weakness of the pound tant to take action to keep inflation
on target. But relatively high inflation
ary forces in the UK and other major they’re still available on the Bank of from this standpoint. A renewed bout and a weak currency are becoming
economies. Deflation has been fore- England website. First, the Bank of of sterling weakness would give added part of the problem for UK economy,
stalled, and instead we are suffering England’s economic model and fore- momentum to the rise in inflation, the depths of the financial crisis in rather than part of the solution. The
inflation. casts vastly overestimated the down- which the Bank is already forecasting 2009, but I don’t think it is the right sooner we recognise this, the more
To me this is not a surprise. Two ward pressure on inflation from spare for the first half of this year. approach now. Tolerating inflation is quickly we can plot a course ahead for
years ago, in my final year as a mem- capacity in the economy. In particular, These arguments were well-aired in contributing to the squeeze on con- a genuine and sustained recovery.
ber of the Monetary Policy Committee we have seen services prices in the the columns of City A.M. But it is all sumers, which is one of the main neg- Andrew Sentance is senior economic advis-
(MPC) I warned that we were set for a consumer price index rising at 3 to 4 very well to say “I told you so”. The ative factors behind weak growth. er at PwC, and a former member of the
persistent period of relatively high UK per cent consistently since 1997. The harder question is: what do we do Savers have suffered from low interest Bank of England’s Monetary Policy
inflation. I was branded an inflation recession has made little dent in this now? rates for a prolonged period of time Committee.
FOREIGN
Fly from London City Airport to a European city and enjoy a memorable
THURSDAY 14 FEBRUARY 2013
27
I
creating something new by effort and requirements for justice” in relation to it. As King that banks may require huge capital
ingenuity. But Paul Ormerod doesn’t seem one who came to the Square Mile in 1964, injections in the years to come? N THE biggest flotation of the
to recognise a difference between Schmidt my observation is that solidarity is all but @truemagic68 year so far, the housebuilder
and many of China’s new rich. The latter absent from the City and “justice” is a word Crest Nicholson has returned to
define and often administer the laws in their rarely if ever considered. The vast majority The elders of my tribe talk of a time when the stock market. One swallow
country. These men and women are part of of people who work here are decent citizens. the Bank of England met its inflation target. doesn’t make a summer, but
an oligarchy – in collusion with political But within a City increasingly dominated by But I think it’s just a story. given that we have now seen a flock
power. Like Russian oligarchs or Arab faceless international corporations, there @DanHannanMEP of the creatures, it’s clear that the
princes, they have taken hold of their has developed a potentially fatal lack of
Nobody will be happier about a US-EU trade
initial public offering (IPO) market is ANDY CROSSLEY
nation’s assets by force or guile, and have morality. The key rests with individuals at open for business.
injected no effort or creativity. Why should every level trying to live out their own values partnership than David Cameron. It makes The backdrop for such transactions But these criticisms have been taken
we be relaxed about that? and beliefs in their work. for a better argument to stay within the EU. is better than it has been for some on board by responsible banks and
John Hawkes Lord Phillips of Sudbury @IanBremmer years. First, we are talking about qual- advisers; engagement with investors
ity companies, sensibly priced, with now starts earlier in the process, syn-
YES NO
Institutional clients are also looking must be addressed, and individuals’
for new ideas: the lack of IPOs and the appetite for IPOs and equity invest-
attrition of companies through ment needs to be rekindled. This
takeovers has led to a shrinkage in the could be done by involving brokers
investable equities universe. In partic- with long-standing relationships with
ular, the quoted tech sector has retail wealth managers in syndicates,
shrunk dramatically, with Autonomy, and by giving them the responsibility
Logica, Misys, Psion, Kewill all ceasing for the intermediaries offer and for
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QUICK CROSSWORD
SUDOKU KAKURO
38 22 11 15 10 11
14 4 4
17 19
34 21
Place the numbers from 1 to 9 in each empty cell so that 28
Fill the grid so that each 45
each row, each column and each 3x3 block contains all the
block adds up to the total
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
in the box above or to the 9 9 6
11
left of it. 8 7
You can only use the 3 27 39 21
digits 1-9 and you must not 10 30
16
use the same digit twice in 13 7
a block. The same digit may 24 12
occur more than once in a 12
22
8
16 16
13
row or column, but it must 45
be in a separate block.
23 35
10 5 6
ACROSS DOWN
1 Lines where pieces 1 Drops down (5)
WORDWHEEL V I
of fabric are sewn
together (5)
3 Sketches (5)
2 Tooth with a
broad crown (5)
4 Price of a plane
Using only the letters in the Wordwheel, you have 7 Cleared of weapons such ticket (3,4)
ten minutes to find as many words as possible,
G S as H-bombs, etc (7,4) 5 Hard outer
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
O
R N
8 Concerned with
religion (6)
covering (5)
6 Nominee (9)
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
10 Use a container
to remove water
9 Belonging to
the present
SOLUTIONS KAKURO is at least one nine-letter word in the wheel. U A flooding a vessel (4) time (7)
11 Jimmy ___, host of TV’s 11 Clique (often
QUICK CROSSWORD 7 2 1 2 6 1 3 7 8 Out of 10 Cats (4) secret) that
D U P E S C O U G H
9 7 6 7 8 3 6 9 SUDOKU 12 Leave in the lurch (6) seeks power
A U W N E
8 6 3 5 9 7 1 4
15 Piece of armour usually through
R T R I B U T A R Y 2 1 9 2 8 covering the chest (11) intrigue (5)
3 5 4 7 5 1 2 3
I N T E R H M
16 Spring-loaded door 13 Patty Bouvier’s
N C L O V E A 1 4 6 2 1 4 2
WORDWHEEL
G A T E B S A N D 2 7 6 9
fastener (5) twin sister
8 8 5 9
T P R I M P A
2 1 4 9 4
17 Method of producing in TV’s The
T T I O W A N
8 1 7 2 5 1 4 3 The nine-letter word was designs on cloth by Simpsons (5)
C A L I B R A T E C
9 6 7 8 5 2 8 1 covering with wax, 14 Adjust finely (5)
C V
C H E E K
O
W A
E E
D E R 6 3 2 5 1 5 9 6
PLAYTHING then dyeing (5)
cityam.com THURSDAY 14 FEBRUARY 2013
SPORT 33
Ashes double is
ALL OUT: CHAMPIONS MISS OUT ON FINAL PLACE IN BRIEF
Fresh delay over Pompey sale
n FOOTBALL: Uncertainty over
England’s Prior
takeover broker Keith Harris. The
hearing is set to resume next week.
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P
Ferguson believes his team have one
EOPLE like to criticise him foot in the Champions League
because he is not a big name, quarter-finals after they held Real
but Jonny Evans showed last Madrid at the Bernabeu last night.
night he has the character to Danny Welbeck headed the
stand up and be counted in visitors in front with 20 minutes
Manchester United’s biggest games. played in the last 16, first leg tie, but
The centre-back was strong and United old boy Cristiano Ronaldo
played an important role in inevitably levelled 10 minutes later.
organising an excellent defensive In an even second half United
display against a talented Real went closest to grabbing a winner
Madrid attack that makes United when Robin van Persie saw a shot
firm favourites to qualify. come back off the post and
Evans wasn’t the only one; Ferguson is confident his side can
goalkeeper David de Gea, one now finish the job in the second leg
characteristic flap at a cross aside, in three weeks’ time.
was impeccable back on home soil “I’ve got to be pleased with the
and will derive great confidence result. It takes us back to Old
from his display. Trafford with a great chance,” said
De Gea could do nothing about the 71-year-old Scot.
Cristiano Ronaldo’s headed equaliser “I think we’ll score at Old
but had everything else covered, Trafford, but I know how dangerous
summoning a performance that they can be on the counter attack
because I watched them at
Manchester City earlier this season.
“So we still have a big job on our
hands, but it’s within our grasp.”
United keeper David de Gea,
much maligned for some of his
Premier League performances this
season, made several outstanding
saves to deny Real a second.
And Ferguson was full of praise
for the ex-Atletico Madrid stopper’s
performance.
“David de Gea made three or four
great saves,” he said. “But we missed
chances ourselves. It was an
interesting game.”
Real flew out of the traps in front
of an expectant home crowd and
forced a fine finger-tip save from De
Ronaldo’s header beat the otherwise outstanding De Gea to equalise for Real, after Welbeck had put United in front
Gea, who pushed Fabio Coentrao’s matches. The visitors’ lead was soon agility of De Gea with shots from in victory in the 72nd minute. First,
low, curling effort onto the post. wiped out though, when Ronaldo and around the box, but the the Dutchman got in behind the
But United weathered the storm leapt majestically to head Angel Di 22-year-old was equal to everything Madrid defence and saw a powerful
and took a surprise lead through Maria’s left-wing cross into the the home team threw at him. right-footed strike squirm through
Jonny Evans helped keep Real at bay Welbeck when the England forward bottom corner. United were forced to soak up the the hands of Real keeper Diego
rose above defender Sergio Ramos to Real continued in the ascendancy pressure for much of the second Lopez and come back off the post.
showed why United paid £18m for meet Wayne Rooney’s corner and after the interval, as Ronaldo, Di period, but Van Persie twice went And, as the hosts struggled to
the youngster. headed in only his second goal in 28 Maria and Coentrao all tested the close to snatching a memorable clear their lines, Van Persie found
Rio Ferdinand was steady
alongside Evans, while right-back
‘dominate
There is no reason why we shouldn’t
Australia in these two Ashes series
England wicketkeeper Matt Prior: Cricket, Page 33
Mourinho: We
next two RBS Six Nations fixtures after week mitigation period, recognising
being found guilty of stamping on that Healy would not have played this
England’s Dan Cole during their 12-6 weekend as Ireland are without a