Margareta Pagano: Mr Osborne: You must heed the danger of division

A 1920s Steiff Harlequin teddy bear – being sold by a disgraced hedge fund manager – was bought for £46,850 at Christie's last Wednesday while the whole teddy collection fetched more than £1m.

In Paris, LVMH, which flogs Moet & Chandon champers, £1,100 Brea handbags and Tag Heuer watches, reported a 24 per cent rise in sales over three months and predicts greater things to come. Its flagship Louis Vuitton store on the Champs-Élysées, where tourists queue to enter, has been closing an hour early to preserve stock for what it expects to be a sell-out Christmas.

Meanwhile, Ferrari recently sold five of its ¤1.95m, 415kph Bugatti cars and is forecasting record profits this year. Chanel put its handbag prices up by 20 per cent, but they are still selling like hot cakes while Italian shoe-maker Salvatore Ferragamo says shoes are striding out of its stores like never before. Hugo Boss, Germany's upmarket fashion retailer, said profits growth will be twice earlier predictions and Burberry, hot on the heels of Mulberry last week, said current trading is go-go-go.

Before you scream with envy, or indeed outrage, it's worth noting that the luxury goods boom is great news for all of us. Even though these companies are selling most of their goods to tourists visiting Europe as well as through their shops in China, there is a knock-on effect here in terms of jobs and tax receipts.

What this brand bonanza reinforces, however, is how the world is splitting ever more deeply between West and East. And it is particularly ironic that this return to flamboyance comes the week before the most vicious cuts to government spending in living memory. As Kenneth Clarke, the Justice Secretary, warned in his inimitable way last week, the West is in grave danger of financial collapse if we don't sort ourselves out.

Even more dangerous than the global split are the divisions emerging within Britain as the coalition struggles to tackle the deficit; divisions between classes and generations. Attempts by George Osborne to play "fair" in the way he's spreading the pain is turning into the most farcical, and potentially explosive case of divide and rule between the classes. As usual, the working and upper classes will be spared while the middle classes get clobbered. What's worse, they are biddable: they don't threaten to flee to Swiss tax-havens, can't afford tax avoidance and don't strike. Well, not yet.

You can see why Osborne wants to cut child benefits, but he got the process terribly wrong and it's backfired by infuriating those he needs on side. Most people, myself included, accept they shouldn't receive child benefit but view the money as a rebate for the absurd amount of tax we pay. While there had to be reform in university funding, pushing up tuition fees will lead to a huge fall in the numbers of middle-class teenagers going to university at a time when we need investment in new skills more than ever.

Paradoxically, it's this middle strata which is the UK's most productive, which creates most of the new businesses, provides the country with new jobs, pays the most tax and, dare I say it, provides the country with the cultural glue that keeps it special. Osborne, and his coalition partners, must understand that ruling by division might be an easy way for now but in the long term will not create the unity of purpose we need to solve our problems.

Alien visitor: Has Varley just dropped in from outer space?

If men are from Mars and women are from Venus, then it's surely time for bankers to have their own planet too. Anyone listening to John Varley, the Barclays boss on Radio 4 talking about bonuses the other day couldn't fail to reach the same conclusion. Varley got into the most terrible twist because, instead of saying why his 150,000 investment bankers are worth bonuses of £1.5bn on top of their salaries, he tried to excuse it by claiming they were only a small number of the total – as most workers are in call centres, where "pay is no different from the millions of other British workers". By inference, he suggested this makes it OK to pay the rest a fortune; sorry, the logic doesn't work.

Then he tried to deflect the issue by saying only 15 per cent of total costs went on bonuses and that this is not "an outrageous number". Please, Mr Varley, that doesn't mean anything. If your bankers are worth it, then please have the guts to say so or people will wonder what planet you are on. Pluto would be perfect but it's no longer a planet so Uranus will have to do.

A university market, including Harvard's Cambridge, heralds recruitment changes

The big shake-up is coming. Within days of the threat of higher tuition fees, along comes supermarket group Morrisons with plans to fund 20 undergraduates to study for a BSc degree at Bradford's School of Management, one of the top 10 in the country. The new students will start their three-year "learn as you earn" block-release course in January, alternating between studying and working on the factory floor of Morrisons' s food manufacturing business – the second biggest in the UK with 18 factories around the country. But, once the students have finished the management and business studies, they have no obligations to stay, although most are expected to.

Norman Pickavance, the chain'sdirector of human resources, tells me the company decided on the pilot scheme because its graduates, who had studied mainly vocational degrees, would benefit from more experience. Jobs at Morrisons are always oversubscribed – from shop floor to top floor – and he expects masses of applications and even more when tuition fees soar.

Morrisons is not the only company adjusting its recruitment. Over dinner last week, the director of one of Britain's fastest growing companies, employing hundreds of engineering graduates, predicted that his own company – and others – would also start funding degree courses, rather like the Army. Companies might go further, as they already do with post-graduate research, hooking up with specific departments within universities and sponsoring more specialist subjects. Another biotech director I spoke to predicts our better universities, like UCL in London, could be taken over by US Ivy League colleges which have oodles of money. Once you introduce a market into higher education, then you'll open one up in the universities themselves. If you thought there was an outcry when Kraft bought Cadbury, just wait till Cambridge is pounced on by Harvard or Imperial College by Bejing's Tsinghua University. You can hear the fireworks now.

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