Goodwill written off
NO wonder the City has been plunged into seasonal gloom and is purging goodwill from its balance-sheets. Goodwill (this is my contribution to accountancy) is the difference between what you paid a man for something and what he thought it was worth. At the Stock Exchange, this is the Christmas account, when by tradition the big investment managers buy a little more of the shares they have bought already, so as to puff the price up and put a gloss on their performance when it comes to the year-end valuations. (Oh, yes, they do, though in the most high-minded way.) This year I am not sure that their heart is in it. They can see that if the economy is to achieve a soft landing, company profit margins will have to be the cushion. They are less worried now about an economy running away upwards, and more about how hard the landing will be. A high street banker tells me that his personal customers' applications for credit have fallen — and not just mildly, but as though off a cliff. That must quickly come through to the High Street shops, which is one of the things that their present upheavals are telling us.
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