Comment: Investment shows long–term spirits are high

By TERRY MURDEN
Published on 03/10/2012 00:00

THE surge in whisky sales worldwide has been a phenomenon that has helped underpin Scottish manufacturing. Latest figures, however, show sales have flattened year on year, perhaps an indication that they have peaked.

Evidence suggests that it is mainly down to problems in the eurozone. Spain is down 24 per cent while Germany is up by 4.5 per cent tells us all we need to know.

But this is an industry that has learned to cope with the fluctations in the fortunes of individual economies. Such is the worldwide appeal of Scotch that producers are able to switch supply to those thriving regions where demand remains high. Latin America and India are among those areas where growth has continued to grow strongly.

The industry will be hoping that once the eurozone crisis has worked itself out that demand will return to those countries, particularly in the Mediterranean, that have been big buyers of Scotch.

That may take some years, but this is also an industry that plans for the long term and the big players currently investing billions in extra capacity must believe that there is plenty of growth yet to come.

Concensus is growing over splitting up banks

THE recommendation from a group of financial experts led by Bank of Finland governor Erkki Liikanen that banks separate their deposit trading from investment banking operations echoes plans already in place in Britain.

Sir John Vickers, who led an investigation into the structure of banks, has created a model that others seem keen to follow.

Just as in Britain, the idea is that by splitting functions and boosting capital reserves failing banks would be less likely to call on the taxpayer to support them.

European policymakers are likewise keen to see reserves bolstered but they are also keen to pursue plans for a safety net, allowing for eurozone countries to work jointly on any rescue measures.

Not surprisingly, this latest report has reopened the debate about the structure of the banks with some in the industry not happy that any further impositions will hamper the competitiveness of the banks, particularly in areas of risk. One concern must be that applying different solutions to a common problem will create a fractured system and once again highlight the divisions that exist in Europe.

First impressions are of continuing doubts

firstGROUP boss Tim O’Toole gave a reassuring update yesterday but beneath the soothing words he is yet to convince UK investors that the firm is on track to deliver its growth plans which depend on taking over the west coast rail line on schedule and selling £100 million of bus assets. Neither can be backed with any certainty.

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• Europe’s troubles water down exports for key whisky sector

  SCOTCH whisky exports flat-lined in the first six months of the year at £1.8 billion as the eurozone debt crisis and a tax hike in France took their toll on Scotland’s national drink.

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