Charles Goodhart has called on the Bank of England’s Monetary Policy Committee (MPC) to stop its quantitative easing programme because it is damaging the economy. Professor Goodhart, of the London School of Economics and a member of The Times’ Shadow MPC, said that instead it should cut interest rates to 0.25%, from lows of 0.5%, and start buying private sector bonds, as opposed to gilts. He also urged the Bank to intervene in the mortgage market “through whatever channels they think would be technically best … I would not increase QE, though I expect the MPC to do so. The damage that this does by distorting long-term interest rates to extraordinarily low levels — to pension funds, those nearing retirement and savers generally — is now beginning to outweigh the marginal benefit to borrowers.” Professor Goodhart is a former member of the MPC, writes The Times.
The Deputy Governor of the Bank of England encouraged Barclays to try to lower interest rates after coming under pressure from senior members of the last Labour government, documents have disclosed. A memo published by Barclays suggested that Paul Tucker gave a hint to Bob Diamond, the bank’s chief executive, in 2008 that the rate it was claiming to be paying to borrow money from other banks could be lowered. His suggestion followed questions from “senior figures within Whitehall” about why Barclays was having to pay so much interest on its borrowings, the memo states. Barclays and other banks have been accused of artificially manipulating the Libor rate, which is used to set the borrowing costs for millions of consumers, businesses and investors, by falsely stating how much they were paying to borrow money, The Telegraph reports.
Virgin Media has accused the Competition Commission of “irrational” behaviour after it scrapped plans to curb BSkyB’s stranglehold on buying movie rights. The regulator ruled in August last year that BSkyB’s dominant market position allowed it to inflate the price of its Sky Movies service, costing consumers up to £60m, and that tighter controls needed to be put on the operator. However, the Commission subsequently claimed that the arrival of online movie rental services such as Netflix and Amazon’s LoveFilm had “materially” changed the competitive landscape, and there was no longer any need extra regulation. The shift in position marked a major victory for BSkyB, whose pay-TV business is built on the rights to premium content, but it has riled competitors who have let rip at the regulator, The Telegraph says.
Manchester United plans to float on the New York Stock Exchange in an initial public offering that will see the Glazer family keep control of the most successful English football team of the modern era. The club will be seeking to raise $100m in the IPO, Manchester United said in a filing with regulators on the eve of America’s July 4 holiday. The figure in the initial IPO paperwork is typically a placeholder and there is speculation that the club will be seeking to raise up to $1bn. The Glazer family, which acquired Manchester United in 2005 for £790m, scrapped earlier ambitions to float in Singapore because of the turmoil in global financial markets. Manchester United may seek to complete the IPO later this summer in New York, it was reported last night, The Telegraph reports.
Air traffic will outstrip world economic growth over the next 20 years, leading to $4.5tn of jetliner orders for 34,000 new aircraft — largely because of a surge in flights around the Pacific. According to Boeing’s annual 20-year market forecast, airline traffic will grow by 5% a year until 2031, with global GDP expected to grow at 3.2% a year., with global GDP expected to grow at 3.2% a year. “By 2031 we believe 50% of all flights in the world will touch Asia Pacific,” Randy Tinseth, the marketing chief of Boeing Commercial Airplanes, said. “Within that timeframe, the Chinese domestic market will be as big as the North American domestic market,” The Times reports.
The acquisitive mining and energy consultancy Wood Mackenzie has itself been sold to a new private equity backer. Charterhouse Capital Partners has offloaded most of its 76% stake in the Scottish company at a £1.1bn valuation to its San Francisco-based rival Hellman & Friedman, which hopes to float the business eventually. Charterhouse will retain a 13% stake and Wood Mackenzie’s partners will keep their share of nearly a quarter of the company, making Hellman & Friedman the majority owner with 63%. Wood Mackenzie has gone on a hiring binge this year, boosting staff numbers by 110 to nearly 800 people globally and it wants to put more money into luring talent from rivals, says The Times.