Snippets of good news

In the UK it feels line there is no news except for news on Brexit. But there are a few bits of good news around, says Merryn Somerset Webb.


Zombies: not known for their productivity
(Image credit: Copyright (c) 2017 Shutterstock. No use without permission.)

In the UK this week there is no news except for news on Brexit. Unfortunately that rather means there isn't much we can say on the matter. Indicative votes are underway as we go to press so what will be happening when you get your MoneyWeek this week remains a mystery. We'll return to the subject next week (assuming things are any clearer perhaps read our review of Ivan Rogers' new book on why they might not be).

In the meantime we should point to the bits of good news around see Matthew Lynn hailing the great jobs miracle, and Sarah Moore's notes on the beginning of a reckoning for the overly-complacent, taxpayer-supported builders of the UK's mostly substandard new-build houses for starters.

For less good news, one of the columns we digest (by David Smith) refers to the UK's productivity problem and finds a way to blame it on this decade's obvious villains, old people. They are, says Smith, less innovative, less open to new ideas, and overall less productive. It's their fault then that wages and hence living standards in the UK are stagnant. We disagree. There may be a marginal effect here. But the real problem is not pensioners. It is, as we have been saying for some time, monetary policy. John Stepek has written an excellent piece on this on, referencing some work by Noah Smith on Bloomberg that you will want to read.

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But the key points are these: low interest rates allow inefficient "zombie" companies to keep going. They allow big companiesto borrow to expand faster than smallones (hence the rise of oligopoly power in the last decade). They also affect the way people save (more in order to end up with an OK retirement despite low returns) and spend (less for the same reason), something that reduces overall demand. The solution? Not banishing our over-65s back to bingo, and not even looser monetary policy, but tighter monetary policy. You won't get this any time soon: wobbly economies are making central bankers keen to double down on their current policies. But at least the possible reasons for their failures are starting to be discussed outside these pages.

Finally, a few practical things to mention. I am sure most MoneyWeek readers do not need the reminder, but you have only a few days left to maximise your individual savings account (Isa) and pension contributions (the deadline is 5 April). If you have the cash to spare, get it wrapped up fast the risks of the next government having another look at all these allowances are high. Use it or lose it we have plenty of suggestions on how to invest the money if you can afford to do the former.

If you are a freelance or contract worker, David Prosser discusses the matter of Lorraine Kelly not being Lorraine Kelly, but TV persona Lorraine Kelly when she is on the telly. It sounds amusing (and of course it is), but it is also very important. If you are working and paying tax as a contractor you need to be as certain as possible that HMRC will define you inthe same way you define yourself.

This is not clear cut (accountants have been trying to bring clarity to the situation for decades but, if anything, employment is getting harder, not easier to define). But get it wrong and all your Isas might not be enough to pay off your back tax bill.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.