ALEX BRUMMER: Britain’s stature not in doubt


There is no doubt that Britain’s stature took a beating at last month’s International Monetary Fund (IMF) gatherings in Washington.

US Treasury Secretary Janet Yellen rose to her full 5ft 3in to berate her opposite number, 6ft 5in Kwasi Kwarteng, over the mayhem caused by his botched mini-Budget.

The managing director of the IMF, Kristalina Georgieva, condescendingly reminded everyone that the UK had robust institutions in the shape of the HM Treasury, the Office for Budget Responsibility and the Bank of England – as if to say they should not be ignored.

Last month, US Treasury Secretary Janet Yellen rose to her full 5ft 3in to berate her opposite number, 6ft 5in Kwasi Kwarteng, over the mayhem caused by his botched mini-Budget

This focus on the UK may seem unusual but we shouldn’t forget that before Britain voted to leave the EU her predecessor, Christine Lagarde, warned doing so would be ‘pretty bad to very, very bad’, casting aspersions over the country’s reputation.

It was former chancellor Philip Hammond who later remarked that it was terrific having ex-Bank of England Governor Mark Carney next to him at international meetings as, when he spoke, his fellow G7 and other finance ministers always listened.

Sure, trust in the UK may have taken a knock over the market disruption caused by the mini-Budget, as Carney’s successor Andrew Bailey, testified in the House of Commons. Such market conniptions are a feature of free market capitalism.

The eurozone recovered after the Greek-generated bond crisis. No one looks at the Federal Reserve with disdain following the near implosion of the market in US treasuries in 2020. Britain helped to calm sentiment with dollar swap arrangements.

Indeed, the FT reports that the US bond market – like the gilts before it – is an accident ready to happen.

Bailey is on the wrong side of history when he refers to the damage to the UK’s reputation. The reality is: Our robust institutions have triumphed over adversity.

Don’t do evil

What the quixotic fund manager Chris Hohn makes of the rise and rise of his former associate Rishi Sunak is anyone’s guess.

As a believer in shareholder activism, one suspects he may be less than impressed with the Sunak government’s obsession with what is described as a ‘black hole’ in the UK’s public finances. The UK’s ratio of debt to national output is better than many of our G7 competitors.

The current obsession for Hohn and his TCI Fund Management group is a perceived black hole at Google owner Alphabet, with too much income being wasted.

The arrival of Elon Musk at Twitter brought with it a harsh focus on employment costs. An advertising slump at Facebook is doing the same.

Google is different, in that revenues from advertising are still strong. Moreover, Hohn’s chances of shaking Alphabet out of complacency are limited because founders Sergey Brin and Larry Page are still dominant shareholders.

Alphabet is a vacuum cleaner for engineers, and its staff numbers have jumped by a quarter to 186,779 in the last year. With median pay of $300,000 (£250,000) it offers some of the best rewards in Silicon Valley.

In spite of his own wealth, estimated at close to £6billion, Hohn thinks this extravagant. He also believes that Alphabet’s investments outside its core search function serve investors badly.

Last year the self-driving operation Waymo ran up a $5billion (£4.2billion) loss alone.

In the recent go-go years for tech stocks, investors have been fixated by revenues rather than earnings. For all his blather, Musk’s ownership of Twitter reminds investors that when costs get out of hand, turnover quickly is gobbled up.

Hohn is on to something. But, as he found at the London Stock Exchange, when he sought to keep former chief executive Xavier Rolet in place and eject chairman Donald Brydon, not all activist campaigns end in victory.

Check mate

Among reasons why the value of shares on the Paris Bourse exceeds on one measure that of the London Stock Exchange is the runaway value of France’s luxury brands. such as LVMH.

Today, while we are glued to the Budget, Burberry’s new boss, Jonathan Akeroyd, will seek to convince markets it has what it takes to compete with the Parisian stars.

With due respect to Akeroyd, the answer might be a chief executive with the pizzazz of predecessors Rose Marie Bravo and Angela Ahrendts.

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