Tag: Business and finance

THE two sides of the Brexit debate do not agree on much, but they agree on this: if Britain fails to reach a trade deal with the EU it will have to revert to the “WTO option”. This involves trading only under rules set by the World Trade Organisation. The Leave camp is happy with this idea; Remainers less so. But the awkward truth is that the WTO option is not much of a fallback. Becoming an independent WTO member will be tortuous.

It is puzzling that Brexiteers, whose campaign was summed up as “Vote Leave, take back control”, seem happy with the WTO option. The WTO is truly global, with only a handful of countries outside it (zealous as they are about sovereignty, Brexiteers do not want to join the ranks of Turkmenistan and Nauru). But forsaking one unelected, unaccountable bureaucracy in Brussels for another housed in a leafy district of Geneva seems perverse. WTO members are at the mercy of its “dispute-settlement” regime, which allows other countries to enforce penalties.

Inconsistency has its upside. Membership of the WTO appears to be good for trade. Most economists believe Britain’s overall trade will suffer if Britain…Continue reading

IN THE early days of commercial flight, people would dress up to take to the air and marvel at the fact that they, members of a heretofore land-bound species, were flying through the sky. Nowadays we clamour for the opposite mindset: one in which we do our best to pretend we are not flying at all.

Such denial has moved a step closer. A French startup called SkyLights has produced a 3-D virtual-reality (VR) headset, with noise-cancelling headphones, that envelops travellers in a cinematic world completely removed from their airborne surroundings. In mid-December, XL Airways, a French low-cost carrier, became the first airline to offer SkyLights to flyers. For $16 per flight, travellers can immerse themselves in new Hollywood releases, in their own individual theatres.

For travellers who want to get away from the many annoyances of flying—from the screaming child in the next row, the loud conversation across the aisle, the seatback movie selection that seems to consist entirely of lowbrow sequels—SkyLights and similar technology could be a godsend. And yet there’s something sad, something resigned, about confining oneself to an…Continue reading

INDUSTRIAL policy via Twitter is a new development in economics but we may all have to get used to it over the next four (or eight) years. Donald Trump’s tweets on the car industry (and his planned cuts to corporate income tax) may or may not have persuaded Ford to keep a plant in Michigan, creating 700 jobs. But the problem with such headline-grabbing is that there are thousands of companies in the US, and jobs are being created or destroyed every day; intervening in all these situations is impossible. Even in cars, for example, GM has recently announced 3,300 lay-offs, almost five times greater than the Ford additions.  

History suggests that the aim of creating large numbers of manufacturing jobs will be a lost cause. In 1979, the high point for US manufacturing jobs was reached at 19.5m. The subsequent recession of the early 1980s caused that number to fall but there were regularly 17m-18m jobs in the 1980s and 1990s. From the turn of the millennium, however, the total fell pretty remorselessly, with the 2008-09 recession proving the coup de grace. The low was just under 11.5m in early…Continue reading

Five Bowies make a Winston

TUCKED away in a corner of Brixton, in south London, a rainbow-coloured ATM dispenses cash, looking for all the world like any other. But the notes it spews out are not pounds sterling. They are Brixton pounds (B£). Not to be mistaken for silly Monopoly money, the Brixton pound can actually be spent, legally: the currency, which has a fixed one-for-one exchange rate with sterling, is accepted at over 150 local shops and businesses. It can even be used to pay local taxes.

Launched in 2009, this is one of many such initiatives. Local currencies have been adopted in other towns and cities in Britain, such as Bristol, Exeter and Totnes. Elsewhere, examples include the eusko, used in the French Basques; BerkShares, used in western Massachusetts; and the Ithaca Hour, in Ithaca, New York. Barcelona plans an experiment in 2017.

Such schemes aim to boost spending at local retailers and suppliers, by encouraging the recirculation of money within a community. Because the currency is worthless outside its defined geographic area, holders spend it in the neighbourhood, thus creating a “local…Continue reading

2016 was not a great year for business travellers. In Britain, the Brexit referendum and related collapse in the value of the pound made travelling abroad costly; transport strikes meant getting around was an ordeal for those who stayed put. In continental Europe, terror attacks targeted airports and tourist spots, while striking workers blockaded sea ports, grounded airlines and nobbled the air-traffic control system. America, meanwhile, had to deal with mammoth security lines at airports and Asian travellers had to contend with a slowdown in China, the world’s biggest business-travel market.

Sadly, 2017 does not look like it is going to be any better. Indeed, things could get worse. First of all there are oil prices. For travellers, the low cost of fuel was a rare bright spot in 2016. Cheaper flights meant more chance to chip away at the corporate-travel budget. Now the oil price is creeping back up, which means purse-strings may be tightened. Indeed, some airlines are already looking to offset rising costs by charging for drinks on long haul…Continue reading

DONALD TRUMP’S election has generated much uncertainty about the future of travel to America, but one group of travellers might have reason to celebrate: those who hope to ride in driverless cars.

The Obama administration hasn’t exactly cracked down on this emerging technology. The 15-point guidelines released in September by the National Highway Traffic Safety Administration, which cover everything from data protection to allowing a sober person to take control of the vehicle in the event of a malfunction, are voluntary for now, although the agency does plan to formalise them soon. But under Mr Trump, regulation of autonomous vehicles could be far more laissez-faire—or even actively supportive.

The first clues come from his early appointments. Most notable is Elaine Chao, the former secretary of labour under George W Bush (and wife of Senate Republican leader Mitch McConnell) whom Mr Trump has tapped to become secretary of transportation. Ms Chao…Continue reading

FOR months, a bail-out had seemed likely; for weeks, unavoidable. On December 23rd it became fact. Monte dei Paschi di Siena, Italy’s third-largest bank and Europe’s most troubled, announced it had requested state help. The European Central Bank (ECB), Monte dei Paschi’s supervisor, had given it until the end of the year to find €5bn ($5.2bn) in equity, but the bank’s attempts to raise the money from the private sector failed. Paolo Gentiloni, Italy’s new prime minister, said that “today represents a turning-point [for the bank] and a reassurance for its depositors and its future”.

That is the hope. The Tuscan lender’s problems have been rumbling for years. In 2007 it ill-advisedly bought Antonveneta, another Italian bank, from Spain’s Santander for €9bn in cash; more tales of mismanagement have emerged since. Monte dei Paschi has already had two state bail-outs, and raised €8bn from share issues in 2014 and 2015. Its gross non-performing loans amount to one-third of its book. In this summer’s European stress tests, it ranked 51st of 51 institutions. In the past year its stockmarket value has fallen by 88%, to a piddling…Continue reading

NEWS that a domestic flight operated by Afriqiyah Airways, a state-owned Libyan airline, has been hijacked and flown to Europe should shock and appal an industry that has, since 9/11, spared no expense to end the scourge of such horrors. Events are still unfolding, but it is clear that two men claiming to have grenades forced the aircraft, an Airbus A320, to bypass its intended destination of Tripoli and fly on to Malta, the tiny Mediterranean island nation situated between Libya and Italy. Few details have emerged about the motives or demands of the hijackers. But, at the time of writing, all passengers and some crew had been released, signalling a peaceful end to the crisis.

Aviation in Libya is a messy affair. Afriqiyah lost one aircraft during the 2011 uprising against Muammar Qaddafi, and another two during the 2014 assault by Islamist militias on Tripoli International Airport. Several other planes are awaiting repairs after that assault, which all but destroyed the capital’s main airport (flights are now operated from the nearby Mitiga Airport, a former military base). Another of Afriqiyah’s planes was supposed to be leased to Turkish Airlines, but has been impounded…Continue reading

WELL, it might have been worse. Early on December 23rd Deutsche Bank announced that it had reached a settlement “in principle” with America’s Department of Justice (DoJ), over claims that it had mis-sold residential mortgage-backed securities (RMBSs) in 2005-07, in the run-up to the financial crisis. Deutsche says the agreement is worth $7.2bn—a far cry from the $14bn that the DoJ demanded in September, sending Deutsche’s share price reeling. Credit Suisse said that it too had struck a deal, worth $5.3bn. However, the DoJ is suing Barclays, with which it had also been negotiating, and two of its bankers. Barclays says it will fight the complaint.

Deutsche, Germany’s biggest bank, has always insisted that it would not pay anything like as much as the DoJ had asked for. Although $7.2bn is more than analysts had expected, investors will probably see the deal as good news: Deutsche will fork out only—“only”—$3.1bn in cash and pay the rest as “consumer relief”, such as changes to borrowers’ loans, which will be spread over five years. On the morning of the announcement the bank’s shares were trading 3-4% up.

Such…Continue reading

SOME 45.2m passengers are expected to fly on America’s airlines during the three-week holiday season that began last Friday. That is 3.5% more than flew during the same period last year, adding volume to an already-high baseline: the days around Christmas and New Year typically see 23% more travel than the rest of the year.

That is likely to exacerbate the woes that plagued American airports in 2016 even when travel volumes were normal. The main problem has been that the Transportation Security Administration (TSA), in its wisdom, cut the number of screeners at security checkpoints. It did so anticipating that 25m people would sign up for its PreCheck programme, which allows pre-cleared passengers to bypass some security elements and speed up the process. Instead, fewer than 10m did. The result, predictably, was a worsening bottleneck at airports across the country. (The TSA is so desperate to encourage more people to sign up that it has hired a company to drive coaches around the country recruiting PreCheck members. We’ll see how that…Continue reading