‘There is no sense that we are due a re­ces­sion’

The Sunday Telegraph - Money & Business - - Business - The Sunday In­ter­view

Age: 39

Ed­u­ca­tion: PHD in Eco­nom­ics, Univer­sity Col­lege Lon­don Fam­ily: Mar­ried with two chil­dren Ca­reer: port­fo­lio man­ager at Black­rock (2015 – present), Chief of Staff to Chan­cel­lor Ge­orge Os­borne and chair­man of the Coun­cil of Eco­nomic Ad­vis­ers (2010-2015), chief eco­nomic ad­viser to Ge­orge Os­borne and David Cameron (2006-2010), se­nior re­search econ­o­mist at the In­sti­tute for Fis­cal Stud­ies (2002-2006)

In­ter­ests: en­joy­ing the coun­try­side with his chil­dren, ten­nis, ski­ing, pol­i­tics who are con­stantly will­ing to call the end of the bull mar­ket, the end of the cy­cle. I think that if you aren’t bring­ing proper fun­da­men­tals to that, when you look at the eco­nom­ics, rather than just cal­en­dar time elapsed, there is no sense that we are due a re­ces­sion soon.”

The calm clar­ity of speech, an at­tribute of Har­ri­son’s like­able cool­ness, is lost when the dis­cus­sion turns to the UK’S pro­duc­tiv­ity woes. He slips into speak­ing as the govern­ment – clearly old habits die hard when he hits a point of pas­sion­ate in­ter­est.

“The prob­lem is we don’t re­ally know how to mea­sure it well and we don’t un­der­stand the time lag on pol­icy for it. We’re over­es­ti­mat­ing in­fla­tion and un­der­es­ti­mat­ing real growth be­cause we’re not mea­sur­ing some of these new tech­nolo­gies prop­erly. There are good news sto­ries,” he says. He launches into an ex­pla­na­tion of how new teach­ing meth­ods – phon­ics in pri­mary schools – have dra­mat­i­cally changed read­ing

abil­i­ties. Work­forces will be up­skilled, met­rics will change to en­com­pass tech­nol­ogy, the pro­duc­tiv­ity prob­lem is as much out­dated at­ti­tudes as a real eco­nomic cri­sis, he ex­plains adding that other fac­tors might be skew­ing the data.

Out­put from the UK has seem­ingly stut­tered as eas­ily mea­sur­able in­dus­tries such as North Sea oil have de­clined, and banks’ bal­ance sheets have de­flated – mak­ing the pro­duc­tiv­ity of fi­nan­cial ser­vices seem poorer than they re­ally are.

The UK econ­omy, in short, still has a bright fu­ture, ac­cord­ing to Har­ri­son. A pas­sion­ate Re­mainer, but a pa­tri­otic prag­ma­tist, Har­ri­son is highly op­ti­mistic about a deal. “The con­sen­sus view on ne­go­ti­a­tions is at ev­ery stage too pes­simistic,” he says. Though he fails not to twitch his lips at the men­tion of the sec­toral anal­y­sis saga, but he does not suc­cumb to temp­ta­tion lightly.

Much more con­cern­ing, ac­cord­ing to his sources across the mar­kets who have in­ter­ests in UK as­sets, is a Cor­byn govern­ment. Peo­ple are far more con­cerned by the “ex­tent to which there would be a rad­i­cal change in the way we are gov­erned” with Cor­byn at the helm. But this is a long-term risk, as far as Har­ri­son is con­cerned. Not for him the late 2018 pre­dic­tion of US bank Mor­gan Stan­ley that could see Cor­byn hold­ing the reins by Christ­mas. In fact, the no­tion an­noys him.

“One of the few things you can be cer­tain of in Bri­tish pol­i­tics is that there won’t be an­other elec­tion for a very long time. The is­sue is that you’ve got to un­der­stand how the fixed term


‘In 2006, I heard Ge­orge Os­borne at an event, I went up and gave him my card. Three months later I was work­ing for him’

It would have been ex­tremely em­bar­rass­ing to fail the ex­ams. Great ex­ams. Fas­ci­nat­ing sub­ject mat­ter

par­lia­ment act works,” he says.

There is “ab­so­lutely no in­cen­tive” for the DUP and Con­ser­va­tive MPS to ex­plic­itly vote for an elec­tion or to hold a vote of no con­fi­dence in their own govern­ment, he ex­plains, adding that it would be a bold in­di­vid­ual who, feels con­fi­dent enough to call a snap elec­tion with a 20 point lead in the polls any­time soon.

Be­yond the UK, eco­nomic wor­ries are led by a lack of in­fla­tion­ary pres­sure in the eu­ro­zone, Har­ri­son “can’t see any” and is there­fore dis­turbed that po­lit­i­cal in­flu­ence may be lead­ing the Euro­pean Cen­tral Bank to ta­per its pro­gramme of quan­ti­ta­tive eas­ing – bond buy­ing – be­fore the eco­nomic weather is right.

“They man­aged to get ex­pec­ta­tions in the right place for the an­nounce­ment but that’s the cen­tral bank I’m most wor­ried about,” he says.

Look­ing back at 2017, Har­ri­son’s ideal trade was to hold EU equities un­hedged due to a com­bi­na­tion of a strong cur­rency and strong cor­po­rate earn­ings, and in 2018 he be­lieves an in­ter­est­ing par­al­lel has emerged.

Ja­pan has been a fixed point on eco­nomic land­scape, but re­cent state­ments from Bank of Ja­pan of­fi­cials sug­gest­ing that neg­a­tive in­ter­est rates might be do­ing harm to some parts of the econ­omy means there may be a shift in pol­icy to come. Else­where in Asia, there’s very lit­tle risk of a Chi­nese crash, Har­ri­son says, but mar­kets have yet to price in the six-month slow­down that he thinks is due.

Busi­ness-like and en­gaged as he may be when look­ing at the global eco­nomic hori­zon there’s still a sense that Har­ri­son is a frus­trated pol­i­cy­maker, and such barely con­cealed ir­ri­ta­tion with the West­min­ster state of play means ques­tions of a re­turn to the po­lit­i­cal front line will never be far away for him. When Har­ri­son first quit pol­i­tics in 2015, whis­pers of a Con­ser­va­tive lead­er­ship bid took a se­ri­ous tone. It is not hard to see why; he will turn forty this year with an ex­tra­or­di­nary CV and friends in the right places.

Tak­ing a san­guine at­ti­tude to a Tory cabi­net rid­dled with Re­mainer ver­sus Leaver ten­sion is one thing, but a so­cial­ist over­throw­ing of Har­ri­son’s eco­nomic vi­sion, how­ever, quite an­other.

Ru­pert Har­ri­son, for­mer chief of staff to Ge­orge Os­borne, be­lieves there are still years worth of road in the re­cov­ery and that there won’t be an­other elec­tion for a very long time

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