CITY AND SUBURBAN
We have ways of making you tax, say the. Germans, so please don't mention the euro
CHRISTOPHER FILDES
Don't mention the euro. It's as bad as the war, and more recent. Gordon Brown took this advice and earned himself the headline CHANCELLOR STAYS OUT OF CUR- RENCY CRISIS. How nice for him. Chancel- lors usually find themselves up to their necks in a currency crisis, trying to talk up the pound, blaming wicked speculators and foreign foes. This time the finance ministers of Europe are trying to talk up the euro and blaming him. How could he be so pig-head- ed as to hold out against their plans for a withholding tax? What sort of impression of Europe's finances does that give? It won't do, says Gerhard Schroeder of Germany. There must be agreement this month in Helsinki or — well, er, or else. This master plan to tax interest payments at source is aimed at the tax evaders of Europe but would hit the capital markets of London, which would move to a more friendly cli- mate and be lost to London and to Europe. It has a strange history. When the Germans at last agreed to lift their exchange controls, nine years after us, they demanded a with- holding tax as part of the deal. Nigel Law- son refused, and settled for the idea that this tax should be studied. So it has been, ever since, so why stop? Gordon Brown should now suggest that this study needs to focus on the bank secrecy laws (in Austria, notably) which afford tax evaders the shel- ter they need. That would create a diversion and keep the pot boiling. It might even serve to take the heat off the euro.
Conduct unbecoming
JACK HAWKINS and his brother officers, in The League of Gentlemen, set out to restore their fortunes by raiding a bank. As he gives them his battle plan, one of them murmurs, 'I do hope it isn't the National Provincial. They've been awfully decent to me just lately.' Decency may then have seen NatPro through, but it went on to merge with the Westminster, and now the raiders are back. Two Scottish banks are besieging NatWest and fighting each other to get it, and it is not clear to me that the League's rules apply. What a sleepy old place NatWest is, say the raiders — overstaffed and overstuffed, full of people and build- ings and businesses we would get rid of, just as soon as we can lay our hands on them. Perhaps it has sleepy old customers, too. It certainly has plenty of them — in banking for business, it is the market leader — so some of them must think that they have been decently treated. In that case they will not look forward to seeing their bank turned upside down. They might even go away, which would make NatWest, at the going price of £27 billion, expensive to a raider. Indeed, decent banks are not so thick on the ground that the loss of one would not be a loss to us all.
Advice at a price
THE marble halls of KPMG (in the days when accountants had names, the P and M stood for Peat Marwick) are on the scale of St Paul's Cathedral but less homely, and its senior partner was drawing a million a year before he was carried aloft on the wings of a New Labour peerage, so its advice can only be impressive and expensive. Just now it is trying to make up its mind what it thinks about mergers. It published a report which seemed to show that bids across bor- ders did not enrich the bidders' sharehold- ers. Then it unpublished and now it is thinking of republication. These days firms like KPMG want to be in the business of bids and deals as advisers, and its hotshots do not want to be told by their colleagues that making bids is a mug's game. Less expensive researchers than KPMG's have worked out that bids enrich shareholders on the receiving end, as you might expect and as NatWest's shareholders are finding. What we need now is a report on enriching accountants. Keep Paying — My Goodness.
A warm, cosy glow
J-10W hurtful for President Clinton. He called a boondoggle and nobody came. Well, Rentaprotesta was well represented, but his fellow heads of state and government devel- oped subsequent engagements and stayed at home. Seattle may have its attractions (such as the traffic lights programmed by Bill Gates when he was a lad) but it is a long way to go for the pleasure of sitting in on a meet- ing of the World Trade Organisation. They may also think that the WTO is degenerat- ing into a conventional boondoggle, looking after itself and busy with its own affairs, such as the struggle which only ended when the two claimants for the top job agreed to take it in turns. If the meeting was meant to launch a new 'Seattle Round' of tariff cuts, do not expect to see this good ship whizzing down the slipway into Puget Sound. Free trade has lost some of its impetus, and the French (for example) are finding new ways to resist it. That is bad news for the world's poorest countries, which could feed the rest of us so much more cheaply if we had the grace to let them, and bad news for this country, which exports one third of all it pro- duces and needs to find its markets open but perhaps it will give the protesters a warm glow, which they will need in Seattle.
Happy land, funny money
AN offer I can refuse reaches me from Italy, where the government is raising money by issuing bonds secured on its bad debts. It claims to be owed money by com- panies and citizens who are behind with their social-security payments. In that happy land, the chances of their paying up must be on either side of zilch, but if they ever did, the proceeds would be there to comfort the bondholders. No one in Rome has had such a novel idea since Pope Julius II paid for his wars by pawning his tiara. The ministry of finance cannot wait to try again, and its next bond, next year, will be secured on the overdue premiums owed to the state's industrial insurance scheme. Bondholders can look forward to collecting their security on tours of building sites in Palermo. The ministry's only disappoint- ment is that the proceeds of these bonds will not be allowed to count against the budget deficit. The fusspots at Eurostat are being difficult. (Perhaps someone should make them an offer?) Still, Italy's national debt will come down, as a proportion of the country's total output of goods and ser- vices, from 118 per cent last year to perhaps 114 per cent this year. Under the terms of the Treaty of Maastricht, it is not supposed to exceed 60 per cent, but who's counting? Happy land, happy days.
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