Letter from the Editor

Central bankers took centre-stage this week as stronger-than-expected global manufacturing data brought tough decisions on interest rates ever closer. The Bank of England reacted to the new economic reality by suspending its quantitative easing programme, following the European Central Bank’s exit from “credit-easing” last year.

Spain has felt the pain of the end of ECB-supported bond purchases by banks that funded its budget deficit and announced an austerity programme to calm the nerves of rattled investors following Greece’s recent travails. One of its main banks, Santander, was forced to boost provisions as bad debts increased after the liquidity taps were turned off. But at least it avoided the fate of its US counterparts, which face caps aimed at their share of deposits and total liabilities, or buyout barons, who may see an end to the special tax treatment of carried interest in the US and UK. 

Meanwhile in the corporate world, the UK energy regulator’s decision to join the recent free-market backlash in favour of state-directed enterprise signalled new challenges for energy giants. BP, whose problems with refining and marketing operations led to disappointing results, and Royal Dutch Shell, which has an even greater exposure in the same divisions, may have to learn to act like their much larger state-owned cousins such as Saudi Arabia’s Aramco, a company with 40 times Shell’s market capitalisation on Lex’s calculations. Meanwhile, another Anglo-Dutch giant, Unilever, may have a brighter future as its volume-led turnround strategy began to deliver growth. Newly enriched Cadbury investors looking to retain exposure to consumer goods would be well-advised to have a closer look at the brand-conglomerate.

John Casey, Lex publisher

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