On UK devolution and French ossification
Anthony Peters is betting against a quick UK decentralisation.
Although at 45%/55% the Scottish referendum outcome was pretty clear if not overwhelming, it has opened enough constitutional cans of worms to keep several gross of journalists, commentators and pundits in oats for years to come. I shall try not to become one of them and will therefore, for the moment at least, limit myself to two observations.
The first is that the United Kingdom, by dint of not having lost a major land war in the past 200 years and not having been overrun, occupied and subsequently politically and administratively reorganised is living with a rather arcane political culture. Nothing wrong with that. However, central government has, all the while and especially in the past 35 years, continued to emasculate local government, leaving Britain as the most centrally controlled country in the modern West.
The idea of devolving more powers to England and the English regions is fine and dandy but, for the benefit of those not acquainted with England outside of London, there is not much left by way of regional political infrastructure to which power could be devolved. We might be at the beginning of a journey down the road to greater regional autonomy, but if my instincts are correct, I will be travelling down it in a wheelchair by the time we come close to the destination.
The second observation is that the current system must be broken if the best it can generate by way of leadership is the likes of Cameron, Milliboy, Clegg and – permit me to add in the rather unexpected absence of Alex Salmond – Nicola Sturgeon. Come back Screaming Lord Sutch with your Official Monster Raving Loony Party, all is forgiven. The unconsidered promises pumped out by the leaders of the three main parties in the past 10 days make your own look so much less crazy than they did at the time.
ECB, ABS and France
Onward and upward. If you’re worried that British politics seems to be in disarray on the back of knee-jerk announcements, better not look too closely on what is going on at the ECB. The ABS purchasing programme hasn’t even begun to be implemented properly and some of the big guns such as the Germany’s Jens Weidmann and France’s Benoit Coeure are already sniping at it.
The ECB has, since the height of the eurozone crisis, resisted becoming the whipping boy for sovereign governments which are stuck with legacy commitments they can financially ill afford meet and politically ill afford not to. Spain and Portugal have been top of the class when it came to addressing the issues, Italy and France are bottom. This is not entirely surprising as the entitlement culture is far less well ingrained in the former two, which were until the 1970s poor and backward agricultural dictatorships. France and Italy are socially and politically considerably more ossified. Even if the political will were there – which is doesn’t necessarily seem to be the case – the know-how when it comes to reform would appear to be slim.
I recall admiring the way that Germany approached the problem a decade ago and I well remember commenting on what a quantum leap it was for the political leadership to make the broad population understand that “reform” no longer meant more for less but less for more. It was one hell of a wrench and one which was not always smooth, but it was achieved and Germany is all the more powerful for it.
France, bless it, did get lucky and avoid a downgrade by Moody’s on Friday which affirmed its Aa1 rating, albeit that the outlook remains negative. This made President Francois “Qui? Moi?” Hollande look a bit of an idiot given the way had been taking swipes at the agency before it had published its findings. I was very kindly sent an OECD table by a friendly journo on Friday which showed how hourly output by French workers is higher even than that of their German counterparts. What the table forgot to mention is the French only do it for 35 hours a week as opposed to the Germans who do it for 40. France and its leadership has a mountain to climb and few believe that Hollande has any crampons in his tool-box.
Enter, stage right, Nicolas Sarkozy who yesterday did everything other than to declared his desire to retake the Elysee Palace in 2017. He has decided to don the mantle of national saviour and in a 45 minute TV programme accused the current president of pretty much everything other than of wearing brown shoes with a grey suit. Watch the space, but personally I believe that Sarkozy is too much damaged goods to make it back to the top. If he does, France sports an even more different and opaque political landscape than I had clocked.
Some holy cows will surely need to be taken to the abattoir but they must be taken there by the respective political leaderships, not by the men in grey at the ECB.
The UK, incidentally, was affirmed at Aa1 stable by Moody’s and Fitch affirmed the USA at AAA.
Back to the new issue grindstone this week and back to lousy allocations. As one salesman noted last week when passing me the crumbs of a new issue: “No need to get worried until you get a full allocation.” Harsh but fair.