The financial crisis has finally ended thus fulfilling the biblical rule-of-thumb forecast that famines and feasts generally have a duration of seven years.
Of course the financial crisis may not yet be over but news from the Bank of England of its “stress tests” for our big banks seems to suggest they all have the minimum amount of capital requirement to withstand a severe global financial meltdown like 2008.
However, in a new definition of the phrase “bad bank”, two of our chaps, Royal Bank of Scotland and Standard Chartered, only managed to pass their examination by the Bank after taking some remedial action. For the record, the best of the good banks was Nationwide, not even a bank but a good old fashioned building society.
One of the stress tests the Bank runs is the impact of a sharp downturn from the Chinese economy. Lo, out this morning, is data from the People’s Republic that Chinese factory activity has fallen to a three-year low.
Talking of which, UK manufacturing isn’t looking as healthy as it was, with the official index of activity at the factory gate falling from 55.2 in October to 52.7 in November. That indicates the sector is still growing but at a sharply lower rate. Manufacturing for export looks like it is to blame which isn’t surprising with sterling on steroids and a quid buying you €1.42.
Northgate, the purveyor of vehicles for rental to the legendary White Van Man, can be taken as a proxy for the health of the economy given that its clients are small retailers, the building trade and small businesses generally. Vehicles for hire are down as are profits as is its share price - by 33 per cent since high summer.
Elsewhere, research by Ofwat has found that can’t pay/won’t pay water bill dodgers are adding £21 to the average annual bill to those that do. The water regulator wants the suppliers to do more about won’t-pay bad debtors and to do more to help the can’t-payers to contribute something.
Still upcoming today is time for Chancellor Catchphrase Bingo again. George Osborne is up before the treasury select committee and is due to talk about the European Union membership and his recent autumn statement.
He won’t be able to help himself so will almost definitely refer to the mythical “northern powerhouse”. He has had to ditch “march of the makers” (qv latest manufacturing data), so there could be another outing his new most favourite phrase: “For we are the builders.”
And does the Chancellor still have John McDonnell’s Little Red Book flung across the chamber at him last week? Maybe Mr Osborne will share the wisdom of Mao: “In times of difficulty, we must not lose sight of our achievements.”
Robert Lea
Industrial Editor
The Times
robert.lea@thetimes.co.uk
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