Newspaper article The Evening Standard (London, England)

Our Problems Are Not over Yet; City Comment

Newspaper article The Evening Standard (London, England)

Our Problems Are Not over Yet; City Comment

Article excerpt


THE last time, back in the 1980s, the dollar went on the skids as it has in recent months, the then American Treasury Secretary John Connelly told protesting Europeans: "It is our currency but it is your problem."

No one has quite said that this time in the US administration but it is as true now as it was then and current Washington policy is every bit as ruthless and cynical. The collapsing dollar, and its opposite, the ever strengthening euro, are signs of America exporting its deflation and unemployment across the Atlantic.

This country is caught in the backwash. The weakening pound as it falls with the dollar is making everyone that bit poorer. Clothing, most of it now imported, is more costly and, looking at the worst retail figures for four years, is a factor deterring shoppers. Meanwhile, the sluggishness of the main European economies means there is no improvement in our exports even where they are more price-competitive.

At the same time, the housing market is slowing down and Government finances are deteriorating.

Interestingly, governments are more popular when currencies appreciate, so the pound's weakness probably signals more bad news for Tony Blair and more political uncertainty too.

The stock market recovery of the last few weeks has made many people think the good times are returning, and even if the market is ahead of events they think optimism in the City will turn round the real economy. It would be nice if things work out like that, but I cannot believe it is going to be that easy. There are just too many really serious problems and no real solutions in sight.


I HAVE never been convinced of the need to extend regulation to the provision of mortgages and selling of travel insurance, but when the Government decided to do it, I did expect it would be done properly. Alas not.

According to the Lib-Dem man in the Lords, the former senior partner of accountant KPMG, Lord Sharman, the relevant measures before the Upper House today leave yawning gaps. Home income products, under which elderly people re-mortgage their homes so they can supplement their retirement income, is an area where there has been abuse causing genuine distress and hardship, but the additional legislation does not cover these products.

Similarly, travel insurance can be overpriced and designed to boost the profitability of the holiday being sold - in the same way extended guarantees boost profits on electrical goods and strange insurances double the cost of car hire. …

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