David Parkin on getting spanked by an economist
THE Co-op’s decision to pull out of buying more than 600 bank branches from Lloyds Banking Group was portrayed by some elements of the media as a failure.
But for who?
The Co-op blamed the continued economic downturn and tougher regulatory environment imposed on banks.
It had been hoped that the Co-op’s purchase of the branches would create a bigger competitor to the main high street banks.
But it seems to me that the Co-op’s prudence – and you can’t blame a mutual organisation for that – reflects badly on the Government.
The deal would have been a fitting final flourish for the out-going chief executive, Yorkshire-born Peter Marks, as the organisation moves into a smart new HQ at Angel Square in Manchester.
But Mr Marks and his team decided against it, and they should make no apology for that.
“I think it is very disappointing. I was really hoping this would happen,” was Business Secretary Vince Cable’s reaction.
I bet he was disappointed. His plans to encourage more competition in the retail banking market are now back on the drawing board with Lloyds saying it will now look to sell the branches as a stand-alone bank through a stock market listing.
The Government, who are struggling to convince most people that they can speed up economic growth, have addressed issues in the banking market with plenty of reforms. But it appears these new regulations, coupled with a flat economy, have put off The Co-operative Group from taking on the 631 Lloyds branches.
There is a chunk of the RBS Corporate business that is likely to be floated next year too, after similar sell-off plans fell through.
That may see the return of the Williams & Glynns name above the doors of bank branches.
But will investors back these plans, given both operations will be tiddlers in the UK banking market?
Mr Cable and his colleagues better hope so, or the UK banking market will be even less competitive than before all this started.
AM I getting more intelligent or are economists getting more interesting?
Unfortunately for me, it appears to be the latter.
I sat through a presentation by Royal Bank of Scotland Corporate economist David Fenton this week and I think I understood everything he said.
Now, given I struggled to get an E in my economics A level, twice, that has to be because of the way the speech was written, rather than my growing grasp of matters fiscal.
And, fortunately for me, Mr Fenton is not alone. You only have to listen to others of his ilk, like Tom Vosa at Yorkshire Bank, to realise that there are a new generation of economists out there who don’t take delight in baffling their audiences, but actually want to engage with them.
It seems a long way from the time I sat in a briefing with the then CBI chief Adair Turner and didn’t understand a word he said.
And I still shudder when I remember interviewing former Deloitte economist Roger Bootle who was explaining in great detail about the strength of the dollar versus the pound.
“So that’s not good if you’re going to America on your holidays,” I chipped in.
“I won’t bother to answer that,” replied the eminent economist, known for his lugubrious approach and whose only recorded smile was when his prediction of UK recession finally came true.