Outlook: Concorde assigned to the cupboard marked historic relics

Selfridges hunted; Brown's forecasts
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The Independent Online

CONCORDE MAY, as they say, get you there before you take-off, but in all other respects it has long since passed its sell-by date. The banker's shuttle, which routinely touches down in JFK two hours before it leaves Heathrow, was all well and good in a bull market when the £4,000 one-way fare was the equivalent of a few minutes' work for a top corporate financier.

Concorde may, as they say, get you there before you take-off, but in all other respects it has long since passed its sell-by date. The banker's shuttle, which routinely touches down in JFK two hours before it leaves Heathrow, was all well and good in a bull market when the £4,000 one-way fare was the equivalent of a few minutes' work for a top corporate financier.

These days the rainmakers have discovered they don't need to fly in any sort of aircraft, supersonic or otherwise. The post 11 September fear of a terrorist rocket attack has further undermined the bird's appeal. For many, it's just too obvious a target for terrorist attack. Better to take a few more hours flying on a relatively anonymous jumbo than risk being shot out of the sky over the fields of Berkshire, figure many of its once regular users.

The bucket leather seats and the bespoke Concorde lounge, the captain who personally attended to his passengers before the flight, and the sheer indulgence of the thing - all will be sadly missed. But not the sonic boom nor the roar of the engines which, even at sub-sonic speeds, prevented Concorde from ever doing anything other than the transatlantic run.

The Paris crash undermined passenger confidence in Concorde and 11 September shredded it further still. What was once a symbol of Anglo-French engineering excellence became a potential target for the ultimate terrorist attack in the minds of too many passengers. But what has finally done for this veteran curiosity of the skies is its sky-high maintenance costs. Concorde is nowadays a seriously ancient airliner. Its delta wing and droop nose may give it a futuristic look but in all other respects it is a product of 1960s engineering and ageing aircraft are costly to keep in the air.

The utilitarian airliners which will replace Concorde, such as the ghastly A380 superjumbo and Boeing's 7E7, may never draw the same admiring looks, but in terms of operating costs and technology they are light years ahead.

Even with the costs long since written off to the taxpayer, BA could not make a profit out of Concorde. Air France has contrived to run up even bigger losses on its fleet. It is for this reason that Sir Richard Branson's interest in resurrecting Concorde will, as he himself concedes, come to nothing in all probability. BA's Rod Eddington is in any case determined that if he cannot make Concorde work, nobody else will be allowed to try. It's been too important to the BA brand to let it pass to anyone else.

With the passing of Concorde, we will also, in all probability, have witnessed the end of supersonic air travel. To escape the sonic boom, it is necessary to leave the earth's atmosphere but the higher an aircraft flies the greater is its fuel consumption. This isn't the sort of technological conundrum that either Airbus or Boeing are in a hurry to resolve. So get along now to your local travel agent for those unbeatable Concorde offers. There are less than 200 supersonic days left to be a small part of history, and that alone should guarantee that the flights remain full until Concorde is assigned to that great graveyard in the sky.

Selfridges hunted

Peter Williams, the new chief executive of Selfridges, has been in the job barely a month, and already he's received a takevoer approach. Tom Hunter, the Scottish financier who's got the company in his sights, seems to have become something of a department store junkie. In recent months he's tried to takeover both Allders and House of Fraser, and in both cases he's failed to secure his prey. If he's serious about Selfridges, he's going to have to pay up, for although trading at the flagship store on London's Oxford Street is said to have been dire in recent weeks, the company owns the underlying freehold as well as the retailing business, which makes Selfridges as much a property as a retail play.

It's been one thing after another at Selfridges, what with foot and mouth, 11 September, the central line crash, the threat of further terrorist atrocities in the build up to the war against Iraq, the congestion charge, and now SARS, but despite the adverse effect of all these factors on foot traffic through Oxford Street, Selfridges remains one of the better department stores in London and a big cash generator at that.

The blessing of owning the freehold is that the company doesn't pay any rent, which makes it much more profitable than otherwise. When Selfridges was demerged from Sears five years ago, it also came with a £100m dowry, courtesy of the substantial refurbishment that Sears had just financed. The flamboyant Italian retailer, Vittorio Radice, added flair and style to the whole endeavour, and until the atrocities of 11 September, the share price flourished.

Mr Williams has inherited the reigns in altogether more inhospitable times, but he may yet surprise us. Mr Williams is the type of accountant who always secretly wanted to be a lion tamer. He speaks enthusiastically and loudly and his attire belies the image of a grey suited bean counter.

None the less, to fight off the acquisitive Mr Hunter he'll have to beat the hunter at his own game, and to do that he will have to resort more to the techniques of financial engineering than inspirational retailing. The Oxford Street freehold is a prime property, the back of which could easily be redeveloped. Alternatively, the property could be mortgaged, or sold and leased back, with the money returned to shareholders.

Investors are still smarting at the way Dixon Poon managed to take Harvey Nichols private at an apparent undervalue and they'll be determined to stop Mr Hunter doing the same with Selfridges. Having twice failed to bag his retail prize, Mr Hunter won't want to fail a third time, but is he prepared to pay the price, and what other predators might be lurking out there, ready to pounce?

Brown's forecasts

Gordon Brown insisted that he was no gambler when confronted with the front page of the Independent's Budget supplement on breakfast TV yesterday - "Gordon gambles on growth". The truth is that the more you delve into the assumptions that lie behind his growth forecasts, the more incredible they seem. Page 230 of the doorstopper of a report that accompanied this extraordinarily thin Budget, "Building a Britain of economic strength and social justice", contains a helpful little table explaining how the Treasury arrives at its 3.25 per cent mid-range forecast for growth in 2004 and 2005.

The most startling assumption concerns private consumption, which the Treasury thinks will keep growing at a fair old clip, contributing 1.75 per centage points to growth next year and 2 per centage points the year after. As it happens, growth in consumption is slowing markedly right now after a debt fuelled boom, and it will take something quite remarkable, such as further steep cuts in interest rates, to keep it growing further at a time when taxes are rising and job insecurity is growing.

The Bank of England's growth forecasts are much lower than the Chancellor's. If they were as high, it would be raising interest rates right now, not lowering them. There is thus a conundrum at the heart of Mr Brown's predictions. The Chancellor needs rates to fall to meet a growth forecast which would cause the Bank to raise rates.

The other main ingredients to the growth forecasts are continued strong Government spending and a sharp turnaround in business investment. Only the first of these influences is guaranteed. The forecasts also assume a very considerable easing in the negative influence of very weak trade in goods and services. For that to happen would require a pick up in world trade and in particular a revival of economic activity in the eurozone. There's nothing wrong with optimism, but it is also the stock in trade of the gambler.

jeremy.warner@independent.co.uk

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