Archive for July, 2011

UK Economy: these numbers are bad!

Posted in economics with tags , , , , on July 26, 2011 by Tom Leatherbarrow

Well, there is no hiding from this. Today’s numbers just released by the Office of National Statistics for the UK economy in the second quarter of 2011 are dire.

I’m all for being optimistic, but there is no escaping that the economy is flatlining. Economic activity increased by 0.2 per cent in the second quarter of 2011, following an increase of 0.5 per cent in the first quarter of 2011. In other words, it’s going backwards.

Total services output increased by 0.5 per cent in the second quarter compared with an increase of 0.9 per cent in the previous quarter (again backwards). The largest contribution to the growth in this quarter was from business services and finance with 0.7 per cent growth.

Transport, storage and communication increased by 1.1 per cent, compared with an increase of 2.5 per cent previously. The story is the same with distribution, hotels and restaurants which increased by 0.3 per cent, compared with an increase of 0.9 per cent.

The one bit of light is construction output which increased by 0.5 per cent in the second quarter, compared with a decrease of 3.4 per cent in the previous quarter.

From a personal point of view (in fact anybody involved in manufacturing PR or engineering PR should be worried) the bullish manufacturing statistics of the last few months appear to have stalled. Manufacturing decreased by 0.3 per cent compared with an increase of 0.7 per cent in the previous quarter.

Where do we go from here? The Chancellor is adamant that there is no Plan B but as one client said to me recently, “as soon as he admits there is a Plan B then Plan A is dead.” What is clear is that the increase in VAT, petrol prices and fear over hefty increases in domestic gas and electricity prices have all given the UK consumer a fright and we are reigning in our spending. In my opinion, there has also been too much talk of austerity measures and comparisons with Greece etal (yes our debt is of a similar size but our economy is six times bigger!).

The Chancellor has taken a gamble. The lesson of the Great Depression was that stagnant economies need to be inflated, which in turn brings more receipts back into the Treasury. Instead he has chosen to take money out of the economy at a critical time.

On such decisions careers are made and lost.

PS: there is a political angle to all of this as well. Today’s numbers play right into Ed Balls’ rhetoric that the Chancellor is in ‘growth denial’. Expect to see Ed all over the news today as he hammers home this point which, on the basis of these numbers, is likely to gain some traction.

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It’s a goddam impossible way of life

Posted in Media with tags , , , on July 25, 2011 by Tom Leatherbarrow

What a horrendous weekend of news. Famine, mass murder and Amy Winehouse.

Coverage of the Norwegian massacre was impersonal but then it had to be. Pixilated screens where presumably dead bodies lay kept us a discreet distance from the horror. Watching the coverage on BBC News 24 I was reminded of Stalin’s famous quote, “one death is a tragedy; one million is a statistic.”

The Amy Winehouse story was sensitively covered by the BBC and at least here the Corporation could use archive footage of performances. I couldn’t help feeling that we’ve been down this road before though. Cobain, Morrison, Billie Holliday, Janis Joplin, Jimi Hendrix and Richard Manuel to name but a few.

As I watched the interview obituaries though you couldn’t help but ask yourself the question, why do so many rock stars die in similar circumstances? Are these troubled souls attracted to this world or is the use of hard drugs a necessary part of the creative process?

I recall an interview with Robbie Robertson (anybody under 40 will now say, “who?”) in the Last Waltz, Martin Scorsese’s brilliant film of the very last performance by The Band. In the interview, recorded sometime after the performance, Robertson explains why The Band had to stop. “The road,” he said, in other words the pressures of the album, tour, album, tour treadmill, “has claimed a lot of the greats, Janis, Jimi,” before giving what should probably be the final verdict on the rock star lifestyle, “it’s a goddam impossible way of life.”

Robertson was young enough and smart enough to get off the treadmill. Unfortunately, Winehouse won’t have the chance.

Phone hacking: the waves lap around the Prime Minister’s ankles

Posted in Media, Politics with tags , , , on July 18, 2011 by Tom Leatherbarrow

Sir Paul Stephenson’s extraordinary resignation statement last night has brought the earthquake that is phone hacking to the doors of 10 Downing Street.

The Commissioner of the Metropolitan Police’s long and mostly self-justificatory statement contained, approximately half way through, a knifing in the back of the Prime Minister. Referring to his hiring of former News of the World journalist Neil Wallis, who was last week arrested in relation to phone hacking, Sir Paul made the following comments:

“Once Mr Wallis’s name did become associated with Operation Weeting [into phone hacking], I did not want to compromise the Prime Minister in any way by revealing or discussing a potential suspect who clearly had a close relationship with Mr Coulson.”

Sir Paul is in effect saying: “I couldn’t tell you about Wallis because you are close mates with Coulson who would have gone running back to News International to tell them all about our investigation.”

In his statement last night Sir Paul went on to say: “Unlike Mr Coulson, Mr Wallis had not resigned from the News of the World or, to the best of my knowledge been in any way associated with the original phone hacking investigation.”

In other words: “I’ve got a good excuse for hiring an ex-News of the World staffer because he hadn’t been forced to resign from his previous job over phone hacking. What’s yours for hiring Coulson after he was forced to resign the editorship of the NOTW?”

There are two key issues now for the Prime Minister. Firstly, to use another Watergate analogy, is there a ‘Smoking Gun’ which points to the fact that he was asked to appoint Coulson by News International or worse forced to appoint him.

The other key issue is how the Tory press will react. Nearly two weeks ago Peter Oborne in the paper turned on the Prime Minster questioning his judgement over appointing Coulson. One veteran reader of the Daily Telegraph said to me it was “the most scathing indictment of a Conservative Prime Minister in the Telegraph since the paper turned on Anthony Eden over the Suez Crisis”.

Many Tory supporters are worried. Last night Tory blogger Iain Dale questioned whether the Prime Minister, indeed the Government, could survive this.

If the Prime Minister is not careful the waves currently lapping around his ankles will be up to his neck.

We live in extraordinary times

A Good Day for Democracy

Posted in Media, Politics with tags , , , , , on July 7, 2011 by Tom Leatherbarrow

Yesterday was (another) bad day for Rupert Murdoch and News International but it was a good one for democracy.

Speaker John Bercow (who is rapidly becoming a serious contender for my Man of the Year) has played a blinder in the last few days. In agreeing to an emergency debate on phone-hacking he has placed the House of Commons at the centre of the phone-hacking crisis, which is exactly where it should be.

The previous speaker (Gorbals Mick) would never have dared get on the wrong side of the previous Labour Government in agreeing to a debate, but Bercow has proved he is his own man (one suspects Cameron and the Whips Office are privately furious with him).

I was fortunate enough to be in the car on the way back from a client meeting and able to listen to a packed House during one of its finest hours for many a year. Tom Watson (who for me had the line of the day “News International had entered the criminal underworld”), John Whittingdale, Bob Stewart, Alan Johnson, Nicholas Soames, Yvette Cooper, Simon Hughes and Menzies Campbell all spoke well, eloquently and without shrillness. For the Government, Dominic Grieve, the Attorney General, made a series of telling points.

For me the big loser was Cameron (it was a good day as well for Ed Miliband at PMQs which even the Daily Telegraph conceded!). Yes the Prime Minister agreed to a Public Inquiry (perhaps even two) but I think he is still behind the curve on this one (and Peter Oborne explains why in today’s Telegraph). My concern when he announced an Inquiry was the potential for it to be very narrow in its terms of reference and without teeth. Lo and behold this morning the Independent reports that the PM and Clegg are at loggerheads over whether a judge should take charge of one or both – Clegg wants the judiciary involved, the PM doesn’t.

Frankly, any Inquiry needs teeth and that means a Judge in charge of it who is able to sanction those who refuse to attend (a tried and tested News International tactic) and then cross-examine under oath with all the consequences that entails.

This whole saga now looks as if it could be the high watermark for Rupert Murdoch’s influence on British public life, just as MPs expenses proved a catalyst for the House of Commons. The crucial issue now is how the Government will wriggle out of its commitment to let News International buy BskyB (and it’s going to have to however much it protests!).

Keep watching!

Full disclosure is the only route now for Murdoch

Posted in Media with tags , , , on July 5, 2011 by Tom Leatherbarrow

Rupert Murdoch must have thought he was going to have a good summer. The phone-hacking scandal was dying down, Sienna Miller had been paid off and the Culture Secretary had kindly waved through his takeover of BskyB.

And then we find out that the News of the World (NOTW) had been hacking into Milly Dowler’s phone! There are multiple reasons why this is a horrendous story for News International.

Firstly, from a journalistic ethics point of view, it is hard to scrape any lower than this. Regardless of the potential effect on the family of hacking and, crucially deleting, messages it is highly likely that, at best, the NOTW’s actions diverted police resources and, at worst, de-railed an entire investigation at a crucial time.

Secondly, these disclosures widen the dates of the phone hacking back to 2002. We now have a four-year window when we know, categorically, that phone-hacking was taking place, namely 2002 to 2006 not the two-year window (2004-2006) that News International has claimed all along.

Thirdly, Rebekah Brooks, for the first time, can be said to have been in a position, namely editor where, even if she didn’t know, then she should have known what was going on. Previously, under the two-year 2004 to 2006 window she could claim to have been out of the loop.

Finally, this story now has all the potential to gain a foothold in the public consciousness. Previously, exposure of the NOTW’s antics has been almost exclusively the territory of The Guardian and, latterly, The Telegraph, but with the Prime Minister wading in the whole media corps will stoke a strong sense of revulsion on the part of the public.

What does Rupert Murdoch do now? My own view, and it’s long overdue, is that only full disclosure of all the facts, regardless of how painful it will be, will stem the tide now for News International. That means a full cleansing of the augean stables, sackings, full compliance with the police investigation, attendance and an end to stonewalling at Parliamentary Select Committee enquiries and full co-operation with what is looking increasingly like a full Public Inquiry.

PR statements and front page apologies are not going to cut it anymore. What’s more Rupert is probably going to have to cut Brooks free at some point. This will be painful as she is his direct line into Downing Street, but even Nixon eventually sacked his Chief of Staff HR Haldeman.

The Watergate analogy is not cheap. What started out as a “third rate burglary” in the words of the 37th President, eventually brought him down. Murdoch is probably insulated from that fate but he will be keen to ensure that his family are bomb-proof on this one which probably explains why James Murdoch has recently been moved to New York.

Rebekah though is still in London!

UK Manufacturing: Suddenly it’s sexy again!

Posted in Banking, business with tags , , , , , , on July 1, 2011 by Tom Leatherbarrow

Take a look at the advertisement on the left. Now look again. No, your eyes are not deceiving you, this is actually an advertisement taken out by a financial institution to boast about supporting an SME manufacturing business based in the North of England!

What’s more it’s a true story, will wonders never cease? I wasn’t aware that most banks knew where Rochdale is let alone would actually support a business based there!

Fair play to GE Capital on this one, where most banks fear to tread they’ve gone in and backed a British manufacturer when far too many doors in our big UK banks are at best barely ajar and at worst are slammed in manager’s faces, despite the assurances given with Project Merlin.

What’s more GE Capital are telling the world about it with a series of advertisements. In fact this one is running across national newspapers including the FT, business publications and regional newspapers. It is next due to run in the Birmingham Post on 7th July.

If anything proves the extraordinary performance, resilience and all round “just get on with it” spirit of British manufacturers surely this it. As John Hanson, son of the managing director quoted in the advertisement, told me yesterday: “People want to know us [manufacturers] again. We’re hot.” Yes, even the banks!