James Moore: It's not just the weather that's making homebuyers batten down the hatches
Outlook. Plus: Hiscox quits with a storming success; Pearson boss vows to stick with the FT
It snowed a bit in January, which was bound to have an impact on the housing market. A lot of people will have understandably put off their viewings, offers and mortgage applications. But that isn't the only reason behind yesterday's poor figures from the British Bankers' Association on mortgage approvals.
The market is in a very bad place because confidence remains desperately low, even with the Bank of England spraying cheap money around and at least two banks (Barclays and HSBC) seeming to be quite keen to lend as a result.
Faced with declining real incomes, rising taxes, and a general feeling of a country mired in economic malaise, homebuyers aren't biting. Instead, they are battening down the hatches and putting off big decisions, such as buying a new house, for the long term, not just the time it takes for the snow to melt.
That's not good for the economy, which apparently took another knock yesterday from Moody's, the credit ratings agency and an organisation which enjoys almost zero credibility with anyone with an ounce of sense.
It does, apparently, have credibility with both the Chancellor, George Osborne, and Ed Balls, his shadow, however.
Mr Osborne made great play of the AAA credit rating which Britain used to have from Moody's in formulating his economic policy. And Mr Balls made great play of the downgrade's impact and Moody's apparent humiliation of the Chancellor.
So they shouted at each other, debating the decision of an anonymous pen pusher in Canary Wharf and virtually ignoring the plight of our prospective home buyers, whose situation ought to worry them. And the plight of their friends and families who already have homes and mortgages. Their situation is really scary.
In far too many cases, even a modest rise in interest rates will do more than hit the disposable incomes of these people. It will obliterate them, and then call into question their ability to repay their home loans. All of a sudden we might find out just how effective the regulators' measures to strengthen the banks have been.
Mark Carney's £600,000 hot seat as the Bank of England's new Governor might be at boiling point when he sits down for his first meeting. No wonder he's been hinting at the abandonment of Britain's inflation target.
With no room for fiscal stimulus under this Chancellor, he'll be under pressure to produce another round of monetary stimulus. That will put the pound under far more pressure than Moody's erasing Britain's As.
Devalue, though, and you do at least inflate debts away. But it's a dangerous game to play. More dangerous than Mr Balls' prescription of borrowing even more until growth returns (if it returns)? We might be about to find out.
Hiscox quits with a storming success
Superstorm Sandy? A drop in the ocean for Hiscox, the Lloyd's of London insurer which has quietly become a City success story.
A lot of that is down to its incorrigible chairman, Robert Hiscox, who is signing off with something rather better than the traditional gold watch in the form of a £200m return of capital to shareholders. As a major investor he will be a big beneficiary, and a more than comfortable retirement beckons.
Mr Hiscox has been one of the more colourful and entertaining characters in what is, generally, a rather dull industry. There's something of the old City about him. But there's nothing old-fashioned about the way he has run the board at Hiscox and the people he has brought in. He has always had a good eye for those who understand how to underwrite insurance profitably, as yesterday's results showed.
Despite the storm, Hiscox made £14.50 on every £100 of premium taken in before any return on investing those premiums is taken into consideration.
So should we all cheer him off? Well, up to a point. There is a sting in the tail, you see. Like so many "British" success stories, Hiscox isn't quite as British as it once was. In common with most of London's insurance industry the company is now incorporated and headquartered in the sunny and virtually tax-free haven of Bermuda. So it's Bermuda's residents that should really be cheering Hiscox's success.
Pearson boss vows to stick with the FT
The City wasn't much impressed with John Fallon's plan for what ails Pearson, the world's largest educational publisher and the owner of the FT, at least if the performance of the shares is anything to go by.
The company is faced with significant challenges, not least declining education spending in its key North American market, and the continuing impact of the internet on its business.
Mr Fallon's plan for dealing with this conundrum hardly smacks of original thinking: he's going to slash costs. A target of £100m or so annually has been set. The money saved will be invested in refining Pearson's digital offering, particularly in faster-growing "emerging" markets.
Things should be just peachy by, erm, 2015.
Mr Fallon was dealt a poor hand when he stepped up to replace Dame Marjorie Scardino, who timed her departure to perfection. If he wanted to really put his stamp on the business and do something radical he could have looked at options for the pink paper, sorry, the pink web pages. It really doesn't sit all that well alongside an educational publishing business, and has serious challenges of its own to deal with when it comes to the digital revolution.
But unlike, say, Pearson's 50 per cent stake in FTSE International, he remains adamant that the FT is going nowhere. Did someone say "trophy asset"?
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits record low as popularity suffers in wake of Ukip sex scandal
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Germany sees 'visible rise' in support for far-right extremism in response to perceived 'Islamisation' of the West
iJobs Money & Business
£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...
£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...
£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...
£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...