Brexit not the biggest fear
THE International Monetary Fund has always made it clear that it harbours deep misgivings about Brexit. At its annual meeting in Washington DC this week, it continues to issue grim warnings about a No Deal departure, which theoretically could still happen.
That’s unlikely but the situation is so febrile that nobody’s sure whether Chancellor Philip Hammond will show up or not.
The Fund’s predictions about the awful consequences of crashing out will no doubt be dismissed by Brexiteers as fear-mongering, and it is true that its forecasting record has, to say the least, not been immaculate.
Having said that, its conclusions are based on serious analysis and there is little dispute among serious economists that any kind of Brexit – but particularly the No Deal variety – will hit the economy at least in the short term.
It might be more soothing if Brexit were taking place against a benign global economic backdrop.
Unfortunately, the UK’s departure from the EU is not the only, or even the biggest, spectre to loom over the gathering.
The Brexit debacle is unfolding against a background of weakening global growth. The world economy is expected to slow down to 3.3pc this year, from 3.6pc in 2018, driven by a number of factors but primarily China’s strained trade relations with the US. If hopes of a truce prove illusory on this score, the outlook could darken further.
Chief economist Gita Gopinath made clear the world economy is at a delicate juncture and a forecast recovery in 2020 is precarious. One striking feature of the IMF report was the projected weakness in the eurozone, with Germany forecast to grow by 0.8pc this year, stagnation in Italy and 1.3pc growth forecast in France.
Numbers like these are a concern because a strong world and eurozone economy would make for a smoother Brexit along with better prospects for international trade. This is no time for Schadenfreude.
Heat’s on Conn
THE chief executives of utility businesses, who provide essential services customers need in their everyday lives, have a particular responsibility to behave with moderation on their pay.
British Gas owner Centrica has a long and ignoble record on this front, dating right back to the mid-1990s when the then boss Cedric Brown was awarded £475,000, a sum that seemed grotesque at the time.
Now, it would seem insultingly small for a FTSE 100 boss, which just shows how damaging upward executive pay inflation is: once the spiral is allowed to start, it is almost impossible to stop.
Recruiting a new chief on less than the old one is difficult for obvious reasons – and if the new boss is female it could even open a company up to accusations of gender pay discrimination and a fast track to a damaging lawsuit.
The Centrica annual report – which is mostly a door- stopping PR brochure – treats shareholders to reams on ‘creating stronger communities’ and photographs of trendy engineers with man-buns.
Anyone persevering as far as page 90 and the pay report will find that the bare figure of £2.4m for chief executive Iain Conn does not tell the full story.
Conn, the report reveals, is paid nearly 60 times as much as a servicing engineer on £41,000. He receives a 30pc salary supplement in lieu of pension payments. He gets a £124,000 stipend as a part time non-executive at BT, so even his spare time job pays a multiple of the average wage.
Conn has overseen an exodus of customers, thousands of job cuts and a sinking share price for poor old Sid. But don’t take my word, here’s what it says in the report. ‘Overall, Iain has demonstrated exceptional leadership during the year; however, delivery has been behind the expectations of the market.’ Yet since he joined in 2015, he has been paid more than £11m. Notice I don’t use the word ‘earned’.
Ashley’s woe
MIKE Ashley should take his knockback with Debenhams as a message to focus his attention on his core business at Sports Direct.
Its half-year profits fell sharply and the share price is down by a third since last summer. As a major shareholder, Ashley is a hard man to discipline – but outside investors, who are tolerant while the going is good, will not be happy.
Some unkind folk have called him the Tony Soprano of the High Street, but he’s been behaving like the Billy Bunter of retail, with an insatiable greed to swallow up any distressed business that catches his eye.