The tainted war on Uber
AS London still retains its status as the world’s financial capital it should not be surprising that the new chief executive of Uber, one Dara Khosrowshahi, is hotfooting it across the Atlantic to try to make peace with Transport for London (TfL) before the ride service loses its licence next month.
But no one should kid themselves that the dispute between TfL, London’s Labour mayor Sadiq Khan and Uber is simply about the poor reporting of alleged sexual assaults and infringements of licence rules.
At the core of the disagreement is the battle between a hi-tech disrupter, Uber, and existing interests including black cab drivers and highly unionised TfL staff.
There is a fairy tale view that disrupters do no harm to existing markets. Tell that to Toys R Us, which has just filed for bankruptcy in the US, newspaper publishers, book store chains and music distributors such as HmV which have all been hit hard by Amazon and other digital challengers.
Unfair competition from Uber in the shape of the employment status of drivers and dodgy taxes might well be legitimate reasons to challenge the licence. But as Theresa may points out, the livelihoods of 40,000 Uber drivers is a public good. So is the convenience, tracking and cheaper fares much loved by young metropolitan people.
even if, as a worst case, Uber were to lose all its appeals and licence, a similar service such as Lyft, which is exploring an initial public offering in the US, would soon step into the vacuum.
The real danger of the disrupters is not to black cabs (they are to Britain what Selfridges is to retail), but the tens of thousands of minicab services dotted around the capital.
They may have TfL approval, but the quality of service and the pricing policy is mixed and offers none of the assurances passengers receive from Uber. Resisting the disrupters may seem a noble cause. But free markets and customer choice will win out in the end.
Carney dilemma
JUDGeD by the normally gnomic standards of central bankers, mark Carney was forthright in his BBC interview.
The bank rate will rise in the ‘relatively near term’, personal lending is becoming a ‘little frothy’ and there is a prospect of ‘reckless lending’ developing.
it sounds as if Bank insiders are aching to join dissidents on the monetary Policy Committee to take away the punch bowl.
The post-Brexit cut in the bank rate to just 0.25pc may have been a step too far. The next formal opportunity for the Bank to act is at its meeting on November 2. But it is not quite as simple as that.
The Bank may be independent but it cannot act without regard to the economy. it would be unusual to act before the Chancellor delivers his Budget on November 22.
Philip Hammond could arguably want to adjust the Bank’s mandate in the light of loose credit conditions. moreover, Bank economists might want to crawl over the fiscal projections and growth forecasts before changing direction.
The revised output data for the second quarter, which suggests weaker consumption than expected, might be a factor. The Bank may be reluctant to discourage business investment and exports which are taking up some of the slack.
At 1.5pc in the second quarter, GDP came in below consensus estimates of 1.7pc and looks to be expanding at its slowest since 2003. Carney may be in a trap of his own making. By preparing markets for a rate rise, pulling back might be seen as the return of the ‘unreliable boyfriend’. Yet diving into the ocean in November may look like unnecessary bravado ahead of the Budget.
VW immunity
VOLKSWAGeN shares took another tumble in latest trading after it set aside a further £2.3bn to cover the cost of replacing diesel cars in North America.
The German carmaker’s use of fraudulent software to cheat emissions tests is expected to cost it around £22bn, mostly from fines and compensation in the US.
in europe there has been a stoic silence about the scandal, with VW claiming its actions have not been illegal.
maybe, but VW owners in the UK, who have seen their diesel vehicles plummet in value, and municipalities poisoned by emissions should test the claims. An unwillingness to challenge an inward investor in Bentley and the UK is no reason to demur.