The upgrade from “negative” to “stable” was the first time UK high street banks have been given the all-clear by a ratings agency since 2008, when we first fully started to realise lenders were built on sand and the tide was going out.
The credit ratings outfit opined that the UK’s general economy was stable despite expectations that growth will remain low for the foreseeable.
Other positive signs to have cropped up this week include a rebound in commercial development activity according a report by property consultancy Savills, an improving housebuilding sector, boosted by government help schemes, and a tweak by the International Monetary Fund (IMF) to its economic growth forecast for the UK this year from 0.7 per cent to 0.9 per cent – the first time it has turned up the notch since April 2012.
We’ve heard reports from optimists in recent gloomy times claiming to see green shoots of recovery, only to have these fragile tendrils hosed away by more bad news – from sovereign debt crises ad nauseam in Europe to a bank that claimed to be super nice wiping out pensioner bondholders after swallowing more dodgy lending than it could chew (here’s looking at you, Co-operative Bank).
But let’s not forget Moody’s caveats. The banks’ long-term debt and deposit ratings remain on a negative outlook because the agency expects the government to try to shake off the burden of responsibility if they mess up again. The lenders will also face higher costs of regulation under beefed up regulators – an employment boon perhaps for all those now ex-bankers who can meaningfully apply their skills to making life difficult for their previous employer.
But the upsides Moody’s points to include the fact that unemployment has remained low – thanks to those “zero hours contracts” no doubt, as well as the general economic mood music preventing staff from asking for a pay rise for five years running. We also know – thanks to the new governor of the Bank of England, Mark Carney – that interest rates are going to amble along at historic lows for a while, which means mortgage borrowers and small companies will be able to keep paying their debts. No wonder banks are feeling a bit happier.
Cable confirms open secret of postal float
UNSURPRISING to anyone, Business Secretary Vince Cable yesterday confirmed the plan to float Royal Mail, allowing the Treasury to pocket something just short of £3 billion. That figure, of course, depends on market demand as well how much the government will sell – Cable said that it plans to retain a minority stake.
Some 10 per cent of the company’s shares are going to be handed to employees for free. The giveaway could be worth between £2,000 and £3,000 to each postie, albeit they won’t be able to sell the shares for three years. It’s undoubtedly a sweetener for a workforce that has been even more hostile to the notion of privatisation than audience reaction to the latest cinematic version of The Lone Ranger.
The Communication Workers Union (CWU) pledged to hold a strike ballot at the end of the month unless a “legally binding” agreement on staff terms and conditions can be agreed ahead of any new owners coming on board. Unless staff decide to give up on a difficult cause and take Cable’s bright penny.