Next chancellor’s inbox
THE last time Philip Hammond made his own headlines was at the IMF in Washington in April when he told the travelling press it was time the Tories looked again at the commitment not to raise income tax, national insurance or VAT.
That was almost certainly the beginning of the end for ‘Spreadsheet Phil’, who has been all but invisible ever since.
In recent times, chancellors have been regarded as irremovable because of concerns of the impact on financial markets.
Gordon Brown had ten years in the job before moving next door to No 10. Alistair Darling survived for three years, riding out the tornado of the financial crisis and efforts to replace him with Ed Balls. And George Osborne lasted for six tortuous years, imposing austerity but guiding the economy back from the brink.
All the indications are that Hammond has held up the red dispatch case for the last time. If that is the case, who will be standing at the lectern next Thursday evening when the chancellor traditionally delivers his main monetary speech of the year at the Mansion House dinner?
The most mentioned Tory name is Home Secretary Amber Rudd, who is regarded as having had a good campaign and can claim financial expertise from her time at JP Morgan. Gung-ho Defence Secretary Sir Michael Fallon has been mentioned, but may have cooked his goose when he tried to rule out tax rises for upper income earners.
Even if you don’t believe in higher taxation, it is never wise to narrow options.
After that, the pickings are a little thin. Business Secretary Greg Clark could be a possibility, but was barely visible in a period which featured the Sports Direct and BHS embarrassments, the sale of Vauxhall to Peugeot and much else.
Ben Gummer, a Theresa May favourite, currently holds a junior Treasury post but is seen as not yet ready for high office.
If we are to have our first woman in No 11 then possibly Justine Greening, who has managed several Cabinet jobs, might be worth considering.
Whoever it is has an unenviable task. The economy has slowed this year and it is important to keep it fizzing as the hugely tough Brexit negotiations take place.
Ideally, the next chancellor will recognise the need for a real shift from dependence on monetary expansion to investment in R&D and infrastructure using some innovative financing models. The Corbyn £250m infrastructure promise may be pie in the sky, but bold vision is required.
Sheikh down
THE Co-operative Bank long ago surrendered the right to be described by such a misleading name.
The majority of shareholders are hedge funds whose only concept of mutual benefit is to make their very rich investors even richer. Its previous controlling shareholder, the Co-op Group, has effectively washed its hands of the bank by writing down its 20pc stake to zero.
If it is to stay afloat, the bank is required to raise some £750m of new capital. It also has an obligation to make sure that its pension scheme is fully funded.
In the past few months, potential buyers have come and gone and, unlike Spain, where there has been a forced marriage between Santander and ailing Banco Popular, Britain’s regulators are not going down that route. It would repeat the mistake made when Lloyds Bank was encouraged to buy HBOS – with disastrous consequences.
Latest Co-op Bank suitors reportedly include Swiss and Qatari investment groups. Given the present boycott of Qatar by Gulf neighbours, an offer from the ambitious state might not be that welcome at present. If tensions were to lead to removal of the emir, Sheikh Tamim bin Hamad, it is by no means clear who would control Qatar’s British assets, which include stakes in London Stock Exchange, Sainsbury and BA.
As for Co-op Bank, it is time for the wouldbe buyers, including hedge funds Blue Mountain, Silver Point et al, to cough up or retreat. Weak banks are an invite to a run on deposits.
Empire building
ESTABLISHED banks have been relaxed about the idea that digital giants could move into their space.
Interesting to note that small firms on Amazon Marketplace were granted a record $1bn (£800m) in loans from the online giant over the past year at interest rates ranging from 6pc to 14pc.
From small beginnings…