Business Comment: Halifax float gives inflation a little extra help

The prospect of pounds 2,000 in his back pocket has clearly been too much for Joe Halifax. The theory that the strong run in the recently floated Alliance & Leicester would persuade Halifax members to hang on to their windfalls was confounded yesterday after almost a quarter said: never mind the shares, give us the lolly. What this says about the society's 8 million members is unclear.

One possible, if charitable, explanation for this week's rush to the exit is the increasing sophistication of the British public after 15 years of shareholder capitalism. With IG Index, the spread betting specialist, forecasting a 700p close on the first day of dealings in Halifax shares, some members clearly took the view that most of the good news was already in the price. Halifax no doubt deserves a decent rating, but a premium to both the sector favourite, Lloyds TSB, and the market as a whole looks ambitious.

The less charitable answer is that for many Halifax account holders this sort of payout represents a never to be repeated opportunity to have that holiday in the sun or computer. They probably don't own any other shares and wouldn't know what to do with them anyway. For a lot of people a choice between a mysterious and risky financial asset and a fistful of cash is a no-brainer.

Whatever interpretation you put on the figures, it is probably bad news for the economy. No doubt some of the windfall gains will go, not on spending binges, but to top up PEPs or into some other form of sensible investment. Perhaps even a punt on the next demutualising society. It is a fair bet that older, wealthier and more sophisticated investors are not well represented in those who plan to cash in their chips next week. Far more likely, the sellers are young recipients of the minimum 200 share handout for whom pounds 1,400 represents a fantastic what-the-hell splurge. Part of the pounds 4bn will be lavished in the bars and restaurants of the Costa, but it is hard to imagine the rest won't do its inflationary worst at home.

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