Results tagged “economics” from Birmingham Post - Business Blog

(blogged by David Bailey, John Clancy and Alex de Ruyter)

Henry Paulson on October 14th 2008 believed that he spoke on behalf of the American people that the "Government owning a stake in any private U.S. company is objectionable to most Americans - me included". That was before he proceeded to instruct the Treasury to make $250 billion in capital available to U.S. financial institutions in the form of preferred stock.

In the UK, where the Chancellor and Chief Secretary to the Treasury frequently state that they are not bankers and do not want to be in the banking business, there is an as yet undawned, but imminent realisation that the government is now a bank (whether it likes it or not) and the government officers are bankers. As Larry Elliott has noted (see link here) "... it is still unclear whether the chancellor and his team fully comprehend the fin de siecle nature of what has happened over the past month."

Indeed, we are all bankers now. What is perhaps not realised - except by the likes of Will Hutton - is that this may well be the case for the long term. Once Paulson and Darling both realise that this is a pretty permanent state of affairs with very little chance of going back to a completely hands-off banking system, the best long-term decisions will be made for the economy.

Yesterday I was interviewed by BBC Midlands Today about the state of the region's economy.

These things are always tricky to gauge. You may be interviewed for ten minutes, but you know that only a few seconds of what you said will get into the report.

I was trying to strike a balance: I didn't want to come across as the next Alistair Darling and be talking the region into recession, but I also didn't want to be overly positive and come across as naive.

I'm not sure the end result achieved that objective, what do you think:

News in the Post today (read Duncan Tift's article here) that Shanghai Auto (SAIC) remains committed to the Longbridge site comes as welcome news given the uncertainty created in the wake of the recently announced StadCo pullout from MG TF production.

That MG TF production will finally restart in July this year also comes as some relief after lengthy delays given concerns over the quality of parts coming from China.

Let's get things in perspective, though. The TF is basically a 15-year old design with nearly all of the parts brought in from China. It is not a sustainable project beyond the very short term. And with StadCo leaving, we now basically see a screwdriver operation with very few linkages into the local economy and fewer benefits than we'd hoped for in terms of economic development.

That Shanghai are going ahead at all is the crucial thing, though. This keeps them interested in a site whether further production and R&D may come in time. It's here where the case needs to be made to SAIC. And there is a strong case to be made.

Things don't look too positive over attempts to restart MG car production at Longbridge. The announcement last week that StadCo is pulling out of producing car bodies (probably because of delays, unecrtainties and limited volumes if and when cars are ever actually made), has left other suppliers wondering what is going on and whether production is now feasible at all.

I'm sure that there have been some people at Nanjing who have been genuine in wanting to restart small scale MG car production at Longbridge. However, it is a small firm with few resources and doesn't really have much of a track record in developing and producing quality cars. It has had 3 years since it acquired MG Rover and has yet to get its act together at Longbridge. Little wonder people are growing increasingly sceptical of it really making a go of this.

Its takeover by Shanghai at the start of this year raised hopes that the bigger firm could now commit resources and bring R&D back to Longbridge. Well, the StadCo pullout has blown a big hole in that plan and urgent answers are now needed as to what is going on.

Ideally, of course, we'd like to see car manufacturing and R&D come back to Longbridge. It's just that many are wondering if this will ever happen.

I'm having a quick gelato in between lectures at the University of Bologna and hopefully have enough time for a quick blog...

I'm awaiting exit polls as the polls shut here just a couple of hours ago. Yesterday I accompanied my Italian in-laws down to the polling station and was bowled over by the site; hoards of people queuing up to do their civic duty and to vote. And this is meant to be a low turnout; maybe as low as 80% (yes, eighty percent! Politicians back home would die for that).

Maybe the more proportional electoral system has something to do with it, or maybe having the polls open on a Sunday also helps (I never quite why understood why we have to do it on a Thursday). Or maybe it's just the Italian zest for life (whether football, clothes, cars or ice-cream) that makes them want to go and vote... they certainly do it often enough; they're voting for what will be their 63rd government since the Second World War.