The Nation Newspaper

Tag: George Osborne

  • UK wants ‘hard negotiation’ with Pfizer

    Britain is ready for “hard negotiation” to ensure Pfizer sticks to specific promises on jobs and science under the United States drugmaker’s proposed takeover of AstraZeneca, its finance minister said.

    “I think it would be extraordinary not to engage with AstraZeneca or Pfizer,” George Osborne told BBC radio on Saturday.

    He stressed Britain was an open economy that had benefited “enormously” from past investment by foreign companies, such as Tata Motors and Nissan in the car industry, and AstraZeneca itself had grown by taking over foreign firms.

    Although the country’s second-biggest drugmaker AstraZeneca has rejected a $106 billion approach from Pfizer in what would be the largest foreign takeover of a British company, the U.S. group is expected to continue its pursuit.

    Osborne said there was there was “a lot of speculation about another bid coming.”

    Reuters says Pfizer is currently weighing its next move, which could be a higher offer next week.

    “We are an open economy, we benefit from that. But our national economic interest when it comes to a very big takeover like this is who’s going to be providing the science and the jobs and the manufacturing,” Osborne said.

    Pfizer’s past record of cutting jobs after swallowing smaller rivals such as Wyeth, Warner-Lambert and Pharmacia has stirred up a political storm and fuelled concerns among scientists about the impact of any deal on British science.

  • Osborne delivers blow to annuities with ‘radical’ pension changes

    Osborne delivers blow to annuities with ‘radical’ pension changes

    Annuity purchases will no longer be the default option for pensioners retiring with defined contribution pension pots, Chancellor George Osborne has announced.

    His Budget included a host of what Osborne called ‘radical’ tax reforms to help pensioners and savers who have to been hit by low interest rates.

    He said the government was ‘backing a Britain that saves,’ adding that he would scrap a number of tax restrictions on defined contribution pots, putting pensioners in charge of their own finances and bringing the tax treatment of DC pensions ‘in line with the modern world’.

    Under the changes, some of which will take effect from March 27, pensioners will have much more flexibility over income drawdown.

    The income requirement for flexible drawdown is to be reduced from £20,000 to £12,000, while the capped drawdown limit will rise from 120 per cent to 150 per cent.

    In addition, the size of the lump sum small pots is to be increased five-fold from £2,000 to £10,000 and the government will almost double the total pension savings that can be taken as a lump sum to £30,000.

    Osborne said: ‘These measures alone would amount to a radical change. But they are only a step in the fundamental reform of the taxation of defined contribution pensions I want to see.

    ‘I am announcing today that we will legislate to remove all remaining tax restrictions on how pensioners have access to their pension pots. Pensioners will have the freedom to drawdown as much or as little of their pension pot as they want, anytime they want.

    ‘When it comes to tax charges, it will still be possible to take a quarter of your pension pot tax free on retirement, as today.

    ‘But instead of the punitive 55 per cent tax that exists now if you try to take the rest, anything else you take out of your pension will simply be taxed at normal marginal tax rates – as with any other income.’With no caps and no drawdown limits, no one would have to buy an annuity, Osborne said.

    But for those who still wanted to buy annuities he said he would introduce a new guarantee, so that everyone who retires on DC ‘will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have’.

    ‘Those who still want the certainty of an annuity, as many will, will be able to shop around for the best deal,’ he stated.

    The chancellor said he would provide £20million over the next two years to work with consumer groups and industry to develop this new right to advice.

    Responding to the announcement, the Institute and Faculty of Actuaries welcomed the chancellor’s changes as ‘useful immediate steps’ to create a new flexible retirement landscape for DC savers.

    But President David Hare said it was important that the same opportunities for members of defined benefit schemes as well.

    He said: ‘Undertaking this will not be easy. There are a number of issues that need to be addressed by any proposal to extend the flexibility to those in DB, including making sure that DB members realise what they could be giving up (e.g. longevity protection) in exchange for increased flexibility.’’

     

    • Culled from TheActuary

  • Mark Carney: A Canadian who governs Bank of England

    Mark Carney: A Canadian who governs Bank of England

    Ibrahim Apekhade Yusuf with agency reports recalls the intrigues that led to the Canadian-born Mark Carney as the popular but surprise choice for governor of Bank of England (BoE) in 2012

    BRITAIN is perhaps one of the countries that have had to outsource the job of the governor of their central banks to an outsider.

    Of course, the decision was taken as the Chancellor of the Exchequer, George Osborne, said was in the interest of the economy.

    When, for the first time, the position was advertised in early 2011, leading to a shortlist of five persons being interviewed, the advert called for a candidate who could: “successfully lead, influence and manage the change in the Bank’s responsibilities, inspiring confidence and credibility both within the Bank and throughout financial markets.

    “The successful candidate will have experience of working in, or with, a Central Bank or similar institution; or will have worked at the most senior level in a major bank or other financial institution. He or she will demonstrate strong leadership, management and policy skills; will have an advanced understanding of financial markets and good economic knowledge. He or she will be a strong communicator, have good interpersonal skills and will be a person of undisputed integrity and standing.”

     

    Headhunting abroad

    But what many Britons probably didn’t know at the time was that Osborne was carefully headhunting for Mark Carney, who was then serving as Governor of Central Bank of Canada.

    Osborne had been chasing Carney since early 2011, when he first floated the idea with the Canadian at a G20 summit in Mexico.

    He had asked him officially in mid August 2011. Carney said no. He still had 18 months left in the job. He didn’t want to do the eight-year term Osborne was stipulating. And that was before one even considered the notion of becoming the first non-UK Governor in the Bank of England’s 318-year history.

    But then, Osborne made another approach. This time around, he sold the prospect more aggressively. He said that if Carney insisted, he would reduce the term to five years after all, the main principle was to have a single term rather than opening up the messy question of reappointment as had happened after Sir Mervyn’s first term.

    This time around, Carney didn’t say no. Outlandish as the prospect of the appointment was, he was interested. Expectedly, Carney was reported to have made a surreptitious visit to London, in time to be interviewed by the Treasury/Bank of England panel and by Osborne himself.

    Carney, a Canadian, whose home town is Fort Smith, in the northwest territories, which is on the banks of the Slave River, has a population of 2,500, where he lived there till he was six years old, when the family moved to Edmonton.He attended Harvard University, where he was the reserve goalkeeper of the ice hockey team.

    His wife, Diana, whom he met at Oxford, has joint Canadian-British citizenship as do their four daughters.

    Critics say he wears his Oxford doctorate on his sleeve and is less than self-effacing. They speculate that his 13 years at Goldman Sachs, which took him to London, Tokyo, New York and Toronto, inspired his smart dress sense and air of authority. Yet, he is not brash, preferring to make few public comments and he rarely agrees to interviews.

    But he made the headlines in the financial press in 2011 when he came under attack from JP Morgan boss, Jamie Dimon, during a meeting of the then G20 Financial Stability Board, set up to tame the banks in the aftermath of the financial crisis.

     

    Vote of confidence for Carney

    Shortly after the choice of Carney was announced as head of the Old Lady, a euphemism for the Bank of England, many Brits and their counterparts in Canada expressed optimism over Carney’s choice.

    To Mr. David Cameron, Prime Minister of Britain, who described Carney as ‘exceptional’ choice, he said he was delighted that Mark Carney has accepted the chance to take the controls at Threadneedle Street.

    The PM said: “I am delighted that Mark Carney has accepted the job as the next Governor of the Bank of England. He takes up the role at an important time, as we put the Bank of England back at the heart of financial regulation, so that we do not repeat the mistakes of the past.

    “His distinguished record on economic policy, the high regard of his international peers and the leadership he has shown on the global economic crisis make him the exceptional person for this job. I very much look forward to working with him from next summer.”

    Carney isn’t the only central banker with a stint at Goldman Sachs on the CV either — Mario Draghi, head of the European Central, also spent several years there.

    And Draghi, of course, was Carney’s predecessor as head of the Financial Stability Board.

    Alistair Darling, the former Chancellor of the Exchequer, also added his voice to the chorus of people hailing the arrival of Mark Carney at the time.

    Speaking on Channel 4 News, Darling said: “I worked very closely with Mark Carney during the financial crisis…He stuck out from other central bankers in his understanding of the crisis and what needs to be done about it. We had to get the best candidate…this is a very good appointment.”

    David Blanchflower, the economist and former member of the Bank of England monetary policy committee, was also on the same page with Darling, saying, “You hire the best person with the best CV, and Carney’s that person.”

    Back in the UK, Liberal Democrat president, Tim Farron, warmly welcomed Carney’s appointment as his tweets suggested: “He is a great choice though. He is widely regarded as the best central bank governor in the world. Big coup for the government…He has a hard job ahead, but he’s very qualified and experienced.”

    The CBI equally welcomed the news that Mark Carney is the next Governor of the Bank of England.

    Katja Hall, CBI chief policy director, said: “His strong track record as the Canadian Central Bank Governor and extensive experience in international financial regulation mean that he is well positioned to guide Britain through challenging economic times. We look forward to working with and supporting him in his new role.”

    The former governor, Sir Mervyn King, who many pundits thought was actually rooting for Paul Tucker, his deputy, cheerfully accepted the decision to appoint Mark Carney.

    In a statement, King said: “He represents a new generation of leadership for the Bank of England, and is an outstanding choice to succeed me. Since Mark became Governor of the Bank of Canada, I have worked closely with him and admired his contributions to the world of central banking, in which he is widely respected.”

     

    Few dissenting voices

    The decision to appoint a Canadian to run the Bank of England was not without some hiccups, as some Brits literally played up the racist card.

    “Why not British? To whom does he owe his allegiance in his heart? Then again, many who sold us off, financially, economically and politically are supposed to be British. Mark Carney is a good choice. However, it is a sad indictment of the UK economics and finance professions that it could not conjure a suitable candidate. Very sad,” as one commentator summed it up.

    Meanwhile, Ann Pettifor didn’t jump on the Carney bandwagon, arguing that his appointment means “more of the same”: “There is nothing in his speeches that indicates that he will help give Britain’s real economy the protection it needs from its over-mighty and still very dangerous banking sector.

    “Nothing, in other words, that indicates the real economy the productive sector will be given priority over the city’s preference for reckless global speculation. Instead, like many others who adopt a “market-based” approach to regulation, Carney prefers to tinker retrospectively with the capital ratios of banks.”

    TUC General Secretary Brendan Barber at the time also reckoned that Carney has an almost impossible task, given the state of the UK economy.

    Barber said: “The Chancellor seems to have outsourced the job of getting the economy moving to the Bank of England but the Bank is now running out of monetary ammunition. Interest rates are about as low as they can get, and quantitative easing, while welcome as far as it goes, is not doing much to boost the real economy.”

    But Osborne replied his critics, saying Carney’s appointment is a sign of Britain’s confidence that we can go and get the best person for the job, across the globe.

    “Canada is a G7 country. It’s one of our allies…it’s hard to think of a closer ally than Canada,” Osborne stressed, adding matter-of-factly that Canada had a rather better crisis than the UK.

    As governor of the Bank of Canada, Carney is thought to have had a “good crisis”.

    Canadian banks weathered the storm better than most, seen in part due to the regulation of the Bank of Canada.

    Osborne adds that Mark Carney is the outstanding, preeminent central banker of his generation, and the right man to take control of the Bank.

    Osborne further revealed that Carney will serve for five years (not the eight years that were advertised), and is keen to appear before the Treasury Committee of the House of Parliament to discuss UK monetary policy, noting that Carney will bring ‘fresh perspective’ to the Bank of England, and help UK businesses and families through the tricky economic times ahead.

     

    How Canadians reacted

    Canadian’s are taking the loss of Mark Carney stoically, up to a point, anyway.

    Jonathan Rose, professor at the Department of Political Studies at Queen’s University at Kingston, Ontario, argued that Carney is taking a backward step: “So sorry to hear about Mark Carney’s demotion to the Bank of England.

    “Canada is losing a super star who could see across political lines for the good of Canada. I’m very sorry to see him go because of his integrity and leadership in the financial world,” said a Canadian.

    Another concurred: “I must say congratulations to Mr. Carney. I am sure that he will be fantastic in his new role. It is sad to see him leave, but love him or hate him; he has done an amazing job.”

     

    Benefits of Carney’s appointment

    Carney’s appointment did not cause any ructions in the financial markets. Amusingly, the pound did hit a two-and-a-half-week high against the Canadian dollar on the news.

  • British PM vows to crack down on ‘preachers of hate’

    British PM vows to crack down on ‘preachers of hate’

    British Prime Minister, David Cameron, is has vowed to launch a crackdown on the preachers of hate blamed by the government for the extremism that led to the murder of Drummer Lee Rigby in Woolwich.

    Sky News reports that the prime minister’s fight back will come with the launch of a taskforce to tackle all forms of radicalisation that can lead to violent extremism and terrorism.

    The group will include the most senior members of the Cabinet, including Nick Clegg, George Osborne, Theresa May, Eric Pickles and Chris Grayling, as well the Muslim Foreign Office minister Baroness Warsi.

    In tackling extremism, the task force will aim to produce initiatives on:

    – Disrupting extremist activities

    – Challenging poisonous narratives

    – Trends in radicalization

    – Tackling radicalisation in institutions (mosques, madrassas, schools, colleges, universities and prisons)

    Supporting faith and community leadership to build strong, integrated and united communities

    Writing in The Sunday Telegraph, Mr. Pickles, the Communities Secretary said: “Our answer to the extremists and preachers of hate is to speak out, to show them for what they are.”

     

  • Love and leadership

    Love and leadership

    •A wise leader is ointment unto a wound but the uncaring ruler is like sharpened glass in the eye.

    Love and leadership. Rarely do these words appear in tandem. Conventional scholarship treats them as if one is fatally allergic to the other. This error visits at our peril.

    A quick survey of the world reveals a smoldering planet. Boiling hatred and cold indifference strut triumphantly. War, strife, economic crises, food shortage, resource battles reveal that life will be less inviting for most people ten years hence than it now is. Old antagonisms remain while new ones become quickly invested with a disturbing permanence.

    Leaders may opt to use the unprecedented reach of the state to change their nations for the better or to impose themselves upon populations in ways dictators of the past would die for and did die for. Unfortunately, most modern leaders have not used the vast instrumentality called government to accomplish much that is great. Generally, they have scarred their people or turned their backs against them.

    Progress in science, technology and economic knowledge has been perverted to segregate global and national societies into extremes of wealth and poverty. The complex apparatus of governance empowers and alienates at the same time. As a leader, a person occupies a world immensely different than the world he is tasked to lead. Unless possessed of keen perception and focus, he becomes trapped in his small but powerful orbit while being alienated from the larger one he must govern. Most leaders are both prisoner in and warden of their unique ambit. They act upon but are not participants in that prosaic world occupied by common man.

    As such, they no longer lead. Leading requires an organic connection with the led. This connection is lacking. They make policies and order things but do not lead people. They are like angry, amoral scientists conducting experiments. The more elaborate and frequent the experimentation, the less empathy they have for the subjects of their tests. Should the subjects deign to wince or moan, the angrier and more amoral the experimenters become. Sadly, these subjects are the decent people you see at work, on the bus, in the store, and in the mirror.

    Leadership has become barren because it has lost humanitarian drive. Few modern leaders talk with passion. Fewer act with it. Yet great passion is needed to overcome the inert, vapid meanness of modern bureaucracy. To counterbalance the dull vastness and expanse of government, leadership must be inspired and be capable of inspiring both the unwieldy government apparatus and a numbed public. Unfortunately, today’s leaders are more driven by political calculation than by conviction or compassion for the people. Lacking the spirit to attempt the noble, they bask in what is base. They do what is palatable for those who inhabit their elite realm yet little ponder how their decisions affect the vast numbers who live in the larger, less stately world. Elitism has become so strong and shameless that it can now be spoken of as bordering on something evil.

    Adversity is said to reveal the character of a person. This is partially true. Adversity may unveil the strength of a person’s character. If you really want to know a person, don’t pound him with adversity. Laurel him with success. Nothing reveals the soul of a man more than acquisition of money or power. The poor and weak must behave meekly lest they be crushed for contending with the stronger. The weak must appeal to morality and justice for they lack other weapons with which to fight. Turn an average man into a powerful one; he often severs his pursuit of justice and the sense of proportion that comes with it. He joins the behavior he once criticized. In reality, he never believed in justice and morality. They were survival tools employed to help move him toward his immoral objective.

    In short, the poor and weak do as they must. The rich and powerful do as they wish. With money and power at easy disposal, a man reveals his true self; the unbecoming revelation of his vice is no longer a liability because no one dare challenge him. Thus, most politicians cannot remain true to their public word because they prefer to keep fidelity with their selfish designs.

    Most leaders in the western world and in their former colonial playgrounds are more ambitious than compassionate. Nowhere is this imbalance magnified than in economic policy. Few leaders primarily consider the plight of the working class and the poor although the majority of the people. Instead of thinking how they may accommodate the interests of the elite and rentiers of the world within the context of advancing the interests of the common and lowly, they first cater to those who already consider themselves the masters of all. If the concerns of the hoi polloi can be squeezed into a small corner of that large box, they will do the squeeze, lauding it as a populist achievement knowing full well the great herd of people has been dreadfully shortchanged. If they cannot fit in the people’s interests, so be it as well.

    All you have to do is tell the poor they must suffer because government gave them too much in the past. The price for the past generosity has matured and must be paid. Conditioned to suffering and inching by, the people accept this mean, superfluous austerity as the natural order of things. With a nearly religious conviction born of ignorance, they believe they must suffer because this evil japery is what is preached by those in high positions. But many in high positions are possessed of the lowest social morals. Yet this tale has been told so long and convincingly both the liar and victim are deceived by it.

    The poor thus willingly exchange the unfair smallness of their lives for something even less. If you press them, they cannot even remember what precious thing government gave them that they must now recompense at such a cost. They cannot say because there is nothing requiring the steep toll. They have been duped by the misplaced application of the morality of individual frugality to national governance. Yes, individuals cannot long spend more than they earn without falling into bankrupting disaster. However, national governments don’t suffer the same restrictions as individuals since national governments have the unique ability to issue currency. A currency issuer can “earn” as much money as they like. However, the elite have succeeded in imposing a Spartan penalty on those already suffering a Spartan life. Meanwhile the elite gain a libertine’s reward for their already libertine ways. In effect, the elite tell the masses they are politically and morally liable to pay for the excesses of the elite. The common and poor accept the unjust surcharge.

    Nowhere is this imbalance more on display than in the United Kingdom. In the aftermath of the global financial crisis, the Cameron government embarked on a severe austerity program. They treated the nation and its population as villains in a crude morality play wherein the profligate must pay for their errant ways by donning a coarse hair shirt after having endured prolonged and severe economic flagellation. Thus, Cameron and his smug Chancellor of the Exchequer, George Osborne, forced austerity upon a weakened economy.

    They slashed the government’s budget claiming growth would ensue. What they wrought is recession upon recession. Millions of lives have been impaired. Even the global champion of financialism, the conservative IMF, warned the bumbling Brits that they have gone too far off the ledge. The heartless IMF was forced to complain that Cameron’s knife wielding had become so draconian that it imperiled other nations as well the UK. Yet, Cameron and his sidekick stubbornly continued their painful imposition. All evidence substantiates the folly of their actions. In that fine Tory tradition, the two insisted they were right and that objective fact was never a good measure of economic policy.

    The fallacy of this brand of economics has long ago been exposed. The intellectual justification for clinging to this old rag has vanished. Yet, Cameron and his ilk across the world cling nonetheless. Their adherence is not based on rationality. It is based more in the strength of their bile and not on the content of their brains. They did not come to elitist economics as the logical conclusion of an intellectual journey. They embraced ugly economics because it fit their inhumanity, the low opinion they hold of their fellow man. Conservative economics mirages itself as an objective school of thought. It is an intellectual mask used to conceal mean, misanthropic sentiment. Most of those who adhere to classical economics care little about the general public.

    The world remains locked in a contest of good versus evil. Enslavement fights enlightenment. Poverty contests prosperity. Indifference opposes compassion. Odium battles love. Evil’s most effective weapon is subterfuge. It seeks to make you believe it is good and that good is evil. Thus, purveyors of this mean economics tells you what they do is morally sound and the only practical alternative. They lie a great lie. Their entire edifice of intellectual thought is founded on an ancient hatred. They believe the poor and humble are inherently inferior. Thus, anything done to better their lot is quixotic and wastrel. The poor are as they are because that is who they are.

    This brings us to a most basic point. Those who embrace this conservative philosophy can never mold or reshape modern society for the better. Their brand of conservatism may have served some utility two centuries ago. Now it manacles human progress. Although we live in an era of born-again conservatism, the challenges we face — those of poverty and inequality — call for enlightened and compassionate leadership. We need visionary leadership. To be a visionary leader, one must love the people such that he considers their plight night and day. Upon awaking, the first thought is of them. Retiring at night, the last thought is what to do on their behalf the next morning.

    A leader must love something greater than himself be it a nation, a company, a church or his family. The love of that thing must also be greater and more intense than the leader’s love of self.

    Those who think more about themselves than about other things and people should forget the quest to lead. One’s thoughts reflect the abundance of one’s heart. A person who thinks more about his narrow interest is not a fit leader. That person will devote the people and institution he leads toward his ambitions instead of devoting himself to the collective good.

    Conversely, love of others begets problem solving because love compels a leader to improve the lot of those for whom he deeply cares. Without love, the poor are perceived as inherently wretched, grubby and ignorant. With love, the wheelbarrow boy becomes a potential CEO. One can see a groundbreaking inventor in the young man constructing toys from discarded wood for his younger siblings. The girl walking along the side of the road in tattered school clothes becomes a future president.

    Leaders must never be satisfied with seeing the people as they are. A leader must believe in them more than they do themselves. If a leader is satisfied with people as they are, that leader will never do enough to exhort them toward what they can become. Nations enter their golden era when they convince even the people of the most humble social station to strive toward their better selves and to pursue their better dreams.

    The blossoming of a nation requires faith. A leader must believe in and act in reliance upon the inherent goodness of the people. He must believe they can improve. Given the chance to work at decent jobs with decent wages, the unemployed will apply themselves with verve and dedication. Given the chance, the homeless would live in a home and the ignorant would love to learn. Given the chance, the poor would seek to prosper and the hopeless would find in their heart a way to rekindle hope.

    In the end, the sun shines on the good and evil, the just and unjust. However, because God is kind to all does not mean we should treat all brands of leadership as equal. The conservative, classical brand seeks to define your place and then confine you to it. Enlightened leadership seeks to identify your better destiny, and then encourage you toward it. I see no close contest between the two.

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  • UK loses top AAA credit rating

    UK loses top AAA credit rating

    The United Kingdom has lost its top AAA credit rating for the first time since 1978 on expectations that growth will “remain sluggish over the next few years.”

    BBC says the ratings agency Moody’s became the first to cut the UK from its highest rating, to Aa1.

    Moody’s said the government’s debt reduction programme faced significant “challenges” ahead.

    Chancellor George Osborne said the decision was “a stark reminder of the debt problems facing our country.”

    “Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it,” he added. “We will go on delivering the plan that has cut the deficit by a quarter.”

    But the BBC says Mr. Osborne now risks being dubbed the “downgrade chancellor.”

    “Worse could follow if the Budget shows borrowing rising… but for most people, what will matter is not credit ratings or statistics but higher fuel, food and other prices and if interest rates go up,” he added.

    The UK has had a top AAA credit rating since 1978 from both Moody’s and S&P.

    Shadow chancellor Ed Balls said the decision was a “humiliating blow to a prime minister and chancellor who said keeping our AAA rating was the test of their economic and political credibility.”