Tuesday evening, I was chairing a discussion organised by Forge on the future of London.
Forge was founded by a group of companies who make their living in property and who are passionate about their industry and love to get together to talk about it. The result is a brilliant combination of think-tank and networking event, which on Tuesday attracted more than 200.
The idea was to discuss what London would be like in 50 years' time. Will we still commute in our millions? Will the streets be choked with cars? Will there be any Brits left who can afford central London prices? What jobs will there be for the kind of people who rioted last summer? Will the metropolis be much the same size, or a gigantic urban sprawl from Southend to Swindon? Will the Tube be able to cope?
I don't think we cracked it; in fact I know we didn't. The big issue of the age is what the UK does to stay in the economic game now we are experiencing this tectonic shift in power from West to East. How do we compete and what do we produce which will allow us to pay our way in the world?
The Government talks of rebalancing, but manufacturing is now only 12 per cent of national product, and only about a fifth of the sector has the technology, the products and the brand names strong enough to make an impact internationally. Even if they are encouraged and successful it is not going to be enough.
On the other hand, there are things we are good at, and many of these are particularly strong in London. The UK punches well above its weight in higher education, and students from all over the world want to come here to study. We remain at or near the top in health, in media and broadcasting and in the creative industries. We produce great software. And we are global leaders in financial services, which, remember, is a lot more than banking.
All this is very positive for the capital and those who live here. I left feeling really quite cheerful.
A revolution is brewing in financial services
Having said that financial services are part of the future, I do have doubts every time I talk to Zopa, which told me on Wednesday it had just enjoyed its best month.
Zopa is bliss for all those who hate banks because it uses the internet to cut them out. What it does is put people who want to borrow money in touch with those who have a bit of spare cash. Having made the introduction it leaves them to decide whether one will lend to the other and at what rate. The result is that people with cash get a much better return than they would leaving their funds on deposit, while those needing a loan pay less interest than a bank would charge. The average rate is a little over 6 per cent.
Lending to people you don't know may sound hairy but in seven years of operation the default rate has been only 1 per cent, which is a better record than the banks achieve. January was a record month, its £8.2m of personal loans being a noteworthy 47 per cent increase on the previous best month.
This must be a challenge to banks. Then add in the fact that there seems no technological reason even today why the stock exchange should not be on eBay, and note how much motor and home insurance is already sold direct online, and perhaps the future of our financial centre is not guaranteed. Financial services are all about intermediaries arranging things, but the internet removes the need for intermediaries.
Sir Brian Pitman, one-time boss of Lloyds Bank, used to say that finance was the one industry which had never had its industrial revolution, but when it came, most of what we take for granted would be swept away. Zopa, and similar rivals like Aldermore and Funding Circle, are still tiny, but they are the revolution, and they point to a very different future.
Why doesn't the Bank pay off our credit cards?
The Bank of England launched another £50bn package of quantitative easing this week. Here is an off-the-wall suggestion for how it might be improved. Instead of buying government debt, why doesn't the Bank of England buy personal debt – specifically, why does it not pay off the nation's credit card bills? Given that almost all the cards come from the same half-dozen suppliers, it would not be that difficult to organise, it would cost much less than £50bn, it would cheer everyone up, it would help a lot of people get their finances back under control, and it would give the rest of us an excuse to go out and spend. Must be better than giving it to the banks.
If you believe in the eurozone, buy carbon
Lunch on Thursday with Neil Eckert, who set up the London carbon emissions trading exchange – subsequently sold – which sought to establish a price of carbon, derived from the amount companies would be willing to pay for EU emissions permits.
The idea was that polluting companies would either buy permits or change their processes to emit less, but the beauty of the scheme was that it gave even low polluters the incentive to get even more carbon neutral because they could then sell the permits they would no longer need.
Additionally the EU scheme was designed gradually to reduce the number of permits and increase the number of industries requiring them, thereby exerting a gradual squeeze which would push up the carbon price, and increase the incentive to reduce the footprint. At around €40 there was a tipping point where it would be cheaper for almost all companies to change production processes.
It has not worked out as planned. First the recession reduced eurozone production and created a glut of permits, but the real damage was done when traders began to fear that the eurozone crisis would force southern European countries to ditch their carbon reduction targets to save money. As a result the price is down near its all-time lows, around €5.
But it has thrown up an interesting investment opportunity – though one better suited to hedge funds than Aunt Agatha. If you think the eurozone crisis will be resolved then buy carbon.