Методическая разработка по дисциплине «Профессионально-ориентированный перевод»

16 March 2013 Last updated at 15:27 GMT

Cyprus may be one of the eurozone's tiniest economies - its third smallest - but for the next 48 hours or so, it may be the single currency area's most important.

The point is that there could be serious repercussions for other financially over-stretched economies, such as Spain's and Italy's, from the nature of Cyprus's 10bn-euro (£8.7bn) bailout - which includes, for the first time in any eurozone rescue, losses imposed directly on depositors in banks.

These losses, running to almost 6bn euros, stem from an emergency levy of 9.9% on bank deposits over 100,000 euros (£86,600) and 6.75% below that.

The levy serves as a caution to lenders to banks that they should take care where they place their funds and avoid banks which overstretch themselves - as Cypriot banks did.

But precisely the same arguments - for what is known as a "bail-in" by private-sector creditors - were put by liberal-market purists at the peak of the banking crises in Ireland and Spain.

In the end, eurozone governments were terrified that if lenders to Spanish and Irish banks were punished, there would be a devastating domino effect of withdrawals of funds from banks in other weaker economies - a domino effect that would jeopardise the survival of the eurozone.

So, reckless lenders to Spanish and Irish banks were not punished.

Fragile confidence

Why has the precedent been set with lenders - many of them Russian - to Cyprus's banks?

Partly because there is a widespread view that if caveat emptor should apply to well-heeled lenders to banks, then the lesson has to be taught some time.

And partly because of the hope and expectation that sufficient confidence has returned to economies with weakened banks, especially those of Spain and Italy, that those with big deposits in such banks will not immediately ask for their money back (even if the Cypriot levy could one day turn out to be a very painful precedent for them).

Now, it is true that the European Central Bank's deeds and words over the past year - the provision of emergency longer-term loans to eurozone banks and an offer of support to governments with clear plans to restore financial credibility - has staunched the worrying drain of funds out of Spanish and Italian banks.

But investors' confidence remains fragile. The ECB is regarded as having provided a sticking-plaster rather than a cure for what ails the eurozone. Italy is some way from having a stable government with a plan to fix its finances and uncompetitive economy. Many believe that Spain's banks have still not owned up to the full scale of the losses they face on reckless lending to property developers and businesses.

It is possible that Spanish banks, in particular, could be hit by an outflow of deposits. That would reinforce their dependence on emergency funding from the European Central Bank, which would act as further brake on the ability of Spanish banks to provide vital credit - and would represent a serious setback in the stabilisation of the currency union.

But if such an increase in financial stress is not caused by the spanking of Cypriot bank creditors, perhaps that should be seen as evidence that the acute financial phase of the euro crisis is over.

UPDATE 14:20: A well-placed official rings to tell me why investors should not be panicking that the punishment of Cypriot depositors is a precedent, or that lenders to Spanish and Italian banks will be spanked as well before too long.

He says the structure of the Cypriot bailout has been determined by German politics. (Aren't all eurozone bailouts fixed in that way?)

Here is the logic behind imposing a hefty levy on Cyprus deposits, according to this official:

1) Regulators and politicians are convinced that a vast amount of cash in Cypriot banks belongs to Russian money launderers.

2) Few German politicians of any persuasion would have voted for a Cyprus rescue that simultaneously rescued these launderers.

3) So the only way to get the bailout through the Bundestag is for the launderers to be taxed to the tune of almost 10% of their allegedly ill-gotten cash. And if innocent savers are hurt too, that is the way this particular "Keks" will crumble.

On that analysis, private sector lenders either to Spanish banks or to the Italian government - as two topical and relevant examples - need not fear that it is their turn next to take a write-off.

That may be seen as comforting by investors, up to a point.

Except that if we are to see the Cypriot rescue as a very public statement that "hot money", which might be deemed to be laundered, has no place in the eurozone, then this money may well be withdrawn from wherever it sits in the currency union.

And although that might be a great thing from the point of view of the ethical standing of the banking system, it is never nice or easy for any bank to see a vast amount of cash walking out the door - especially since, as I mentioned earlier, that can increase its dependence on emergency replacement finance from the European Central Bank.

Cash does not know where it comes from. But it is a toss-up for any bank whether it is preferable to be kept alive by laundered cash or cash lent by the state via a central bank. Being dependent on either source is not a sign of health.
Текст 8.

How pretty is the UK without the "bad bits"?

14 March 2013 Last updated at 09:54 GMT

Article written by Robert Peston Business editor

One of the things that companies routinely do is state their financial results without the bad bits.

They typically call this presentation "underlying" profit or the profit of "continuing activities".

The respectable reason for showing these figures is that they give shareholders and the world some idea of what the relevant company would look like, once it has chopped out all the rotten bits.

The disreputable reason is that some boards hope that investors will forget that the bad stuff is real, still inside the company, and shrinking the owners' wealth.

You may have noticed, for example, that on the basis of the activities RBS wants to keep, it has been looking in rude health for some years (well almost).

But once the losses on rotten assets are included, bargepoles spring to mind - and for the avoidance of doubt, I am only citing RBS because the scale of the rot it needs to cut out is so great. I am not suggesting it is trying to cynically manipulate perceptions (in fact occasionally I've wondered whether some of its top people actually enjoy wallowing in the red ink they've spilled).

All of which has made me wonder what UK PLC would look like on a "continuing" or "underlying" basis, without the bad stuff?

I am not talking about wishing away the household, business, financial and public sector debt that has been bearing down on economic activity since 2007.

What interests me is what UK output would look like if big sectors in long term decline were excluded.

Here is the thing. For some decades, the British economy has been disproportionately dependent on financial services and North Sea oil and gas extraction - both of which are in serious decline.

Of course not all of the City and finance is shrinking. What has been disappearing is an industry in which we were a world leader - the manufacture of what the FSA chairman, Lord Turner, called socially useless financial products, or the sort of complex derivatives that did the opposite of what they said on the tin (they were supposed to augment investors' wealth, but were a fast route to ruin).

Meanwhile, as banking around the world has reverted to becoming more national and less international again, the City - as the world's most open and global financial centre - has suffered.

Also there are pockets of the North Sea still gushing. And who knows whether, in time, we will become big frackers?

But if we assume that we had too many eggs in the energy and finance baskets, and these sectors will continue to shrink for years as a proportion of the economy, what does the UK look like without them?

Now as it happens, the Treasury has sent me the work it has done on this.

It has adjusted UK gross value added, a measure of economic output, to exclude energy extraction and use, and also financial and insurance activities.

What this shows is that the rest of the economy is in better shape than many might believe, if not in the rudest of health.

So, for example, on the basis of conventional GDP, UK output is still 3% below the peak it hit at the beginning of 2008 (making this, as Stephanie and I have said many times, the longest depression in a technical sense for at least 100 years).

By contrast UK GVA or output without the bad bits, without finance and energy, is almost back to peak output. At the end of 2012, it was 0.7 of a percentage point below its peak in the first quarter of 2008.

That compares well with the euro area as a whole, whose GVA on the same basis is down 2.9 percentage points over the same period.

It is a better performance than the Netherlands and a similar performance to France's. It is miles better than what has happened in the eurozone crisis nations, Italy, Portugal and Spain. And only Germany does a bit better (in its case, output is up by 0.9 of a percentage point).

So on this analysis, UK manufacturing and non-financial services are not doing too badly.

That said, this is not the moment to crack open the champagne.

It is important to remember that the UK has had significant monetary advantages, compared with the more rigid inflexible eurozone, in the post-crash years - a currency, sterling, that could and has fallen to reflect weak conditions here, and a central bank able to price money and create money to meet the UK's challenges.

So British businesses should - and do - perform a good deal better than competitors in countries like Italy and Spain, where the exchange rate and monetary conditions are less accommodating.

Which means there are probably two important points to make. First Britain without the bad bits looks prettier than the eurozone, but uglier than the US.

And unfortunately we can't magic away the bad bits, finance and energy.

They will be with us for years to come, powerful headwinds acting as a brake on recovery.
Текст 9.

Cyprus rescue breaks all the rules

18 March 2013 Last updated at 08:31 GMT

Article written by Robert Peston Business editor

Reform of how to mend broken banks, which has been negotiated globally and in Europe since the Crash of 2007-8, has been based on two central principles.

First, that the savings of ordinary people should be protected, up to a high threshold - or 100,000 euros in the European Union for example.

And that financial institutions which lend to banks by buying their bonds should incur losses when banks are bailed out: bondholders should, to use the jargon, be bailed in, as part of resolution plans.

The logic behind these tenets is simple: financial institutions ought to be sophisticated enough and informed enough to assess the risks of lending to a bank, and therefore deserve to be punished when their judgement is awry; most of the rest of us can't possibly know if our high street banks are making reckless gambles.

The hope is that the kind of big investors which buy bonds would put pressure on banks to stick to the straight and narrow. And that retail savers are so confident that their money is safe that they never feel the urge to behave like the customers of Northern Rock in September 2007 by descending in a mob on branches and withdrawing every last cent.

So what is seen by many as profoundly shocking about the terms of the rescue of Cyprus by the rest of the eurozone and the International Monetary Fund is that both of these principles have been broken.

Retail savers are being punished, by a levy of 6.75% on savings up to 100,000 euros.

And bondholders aren't being touched.

How did this happen? Well as I mentioned on Saturday the German government was determined that the Cypriot rescue should not be seen by German taxpayers as in effect rescuing Russian money launderers with deposits in Cyprus.

But a deal that might just be approved by the German parliament has resulted in serious collateral damage to the credibility of policymakers in the eurozone and the IMF.

The Cypriot deal sets back the cause of the new global rules for bringing order to banking systems when crisis hits. Apart from anything else, in other eurozone countries where banks are weak, it licenses runs on those banks, as and when a bailout looms.

14 March 2013 Last updated at 12:24 GMT

Article written by Stephanie Flanders Economics editor

Talk about lowering expectations. The Treasury really wants you to expect a boring Budget next week, and in one crucial respect, I think it probably will be: the chancellor is not going to stand up and announce that he's decided Ed Balls was right all along.

Borrowing over the next few years is likely to be higher. And the growth forecasts a bit lower. But there will be no big change of direction. Though, behind the scenes at least, I have been struck by a significant change of tone.

When officials and ministers used to make the case against Plan B, they used to talk about the financial markets. Now they talk mostly about the politics of a reversal - and what a change of plan would do to the internal dynamics of the coalition.

Call it the domino theory of deficit reduction: if you let one piece of the programme slip, George Osborne is convinced that the rest of it will start to tumble as well. The moment you reverse one tough decision, every minister will start to think the tough choices in his or her department can be revisited as well. And the public will decide this supposedly tough-minded government has got no spine.

The Treasury has had this mindset since the start of the parliament. It might not have covered itself in glory during the Gordon Brown years, but now the informal motto of its senior officials is "to hold the line against fiscal flakes".

What's interesting is that political folk from Number 10 and Number 11 are increasingly talking the same way, rather than focusing on the City, parts of which are starting to sound a bit "flaky" as well.

You are now hearing respected city economists such as Michael Saunders, who supported Mr Osborne in 2010, suggest that a modest increase in capital spending might be a net positive for the economy, even if it did raise borrowing. We have heard similar arguments from inside the IMF.

There are still plenty of city economists who would disagree. They say it would take quite a big increase in capital spending to make a difference to the economy.

You have to think this would have a massive effect on growth to think it would not have a big effect on borrowing and future debt.

That is probably why business groups such as the CBI and the British Chambers of Commerce are still cautious on the subject. But senior folk I have spoken to from at least two of the major ratings agencies do not seem to think a modest increase in borrowing, linked to higher investment, would be a major problem.

So, you might say that the largest obstacle in the way of Mr Osborne announcing an even slower deficit reduction plan next week isn't the financial market, but the chancellor's lack of confidence in his own side.

In effect, he doesn't think MPs will be able to tell the difference between a targeted stimulus and a free-for-all. And who knows, he might be right.

That doesn't really mean he's forgotten about the financial markets.

He's just mindful that, in the current climate, the ratings agencies themselves are starting to focus as much on the politics of the government's strategy as the economics.

Moody's, for example, said doubts about the political sustainability of future cuts were a big factor that might lead them to downgrade the UK's credit rating even further.

Labour, and many Liberal Democrats, think the argument goes the other way. They think it's the lack of growth (and lack of flexibility in the timetable for borrowing) that will make the programme politically unsustainable, not any lack of fortitude on the part of the chancellor.

But Mr Osborne is credited with being a very impressive political strategist. And that is how he sees it. Which is why next week's Budget will indeed be a bit dull.

It will be full of announcements about the supply side of the economy. And peppered with talk of accelerating private infrastructure projects and making it easier for first-time buyers to get a mortgage.

Mr Osborne will also have to announce that he will be borrowing a bit more, between now and the election, than the OBR suggested in December, and at least £65bn more than he expected in June 2010.

But that is as far from Plan A as he seems willing to go.
Текст 11.

BMW sees 'most successful year' in its history

14 March 2013 Last updated at 12:34 GMT

BMW Group said 2012 was the best year in its history after the German company posted a rise in profits and revenue.

The owner of the Mini and Rolls-Royce marques saw pre-tax profits rise 5.9% to 7.82bn euros (£6.76bn), on revenues up 11.7% to a record of 76.8bn euros.

The carmaker said total group sales in 2012 were 1.84 million vehicles, an increase of 10.6% on 2011.

BMW chairman Norbert Reithofer said: "The past year has been the most successful year in BMW history."

"We are again targeting further sales volume growth worldwide in 2013 and hence a new record level for deliveries. However, economic conditions are likely to remain challenging in many markets."

The increase in profits and revenues was helped by a boost in Asian sales.

Sales volume in Asia jumped by 31.4% to 493,393 units, including 327,341 BMW and Mini cars sold in China. It was the first time that BMW sold more than 300,000 vehicles in China in a single year. In Japan, the number of cars sold rose 19% to 56,701 vehicles.

Worldwide Mini sales broke the 300,000 threshold for the first time in a single year, with the number of cars sold up by 5.8% to 301,526 units.

Rolls-Royce sales rose 1% during the year to 3,575 vehicles, up from 3,538 in 2011.

French carmaker PSA Peugeot Citroen has reported a net loss of 5bn euros ($6.7bn; £4.3bn) for 2012, compared with a 588m euro profit a year earlier.

The loss was mainly due to asset write-downs which Peugeot took to reflect the worsening state of Europe's car market.

The carmaker said the write-down on assets totalled 4.7bn euros.

Last year, Peugeot announced a programme to cut its costs by 1bn euros in response to falling sales, including the closure of one factory.

French unions have succeeded in stalling the closure plans in the French courts, but Peugeot said it had succeeded in cutting 1.2bn euros over the past 12 months despite that.

"The results of the cost reduction and asset disposal plans have exceeded our targets," said chief executive Philippe Varin, claiming that, "the foundations for our rebound have been laid".

Group revenues were down 5.2% on 2011, at 58.4bn euros, and income from new car sales fell 12.4% to 27.8bn euros.

The company blamed "the deteriorated environment in the automotive sector in Europe" for the poor results.

Like other manufacturers, Peugeot's sales have been hit by the continuing economic problems in the eurozone.

Car sales across Europe fell by 8.2% last year, according to the Brussels-based car industry group ACEA, while sales in France dropped nearly 14%.

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A new report by video games industry trade association Tiga has found that both employment and investment in the UK sector increased in 2012.

By the end of the year there were 118 more studios and 336 more creative staff than there had been in 2011. Studios also invested £427m in games.

The rise in employment figures followed a three-year period of decline in staff numbers, said the report.

Tiga said the rise of mobiles and tablets had provided a boost.

"The sector's return to growth has been driven by three factors," said Tiga chief executive Richard Wilson.

"Firstly, the increasing prevalence of mobile and tablet devices have created a growing market for games: studios are setting up to meet this demand. Secondly, the closure of big console-based studios has been followed by an explosion of small start-up companies.

"Thirdly, the advent of games tax relief, which Tiga was instrumental in achieving, is already stimulating growth."

The games tax relief initiative was introduced in the March 2012 budget and is due to be implemented next month.

A similar scheme already exists in the UK film industry and is due to run until 2015.

British productions with a budget of £20m or less can apply for a 25% rebate on any expenses which are deemed eligible for tax relief.

The research, carried out for Tiga by Games Investor Consulting, also found that in 2012 the sector contributed £947m to the UK Gross Domestic Product, an increase of £35m year on year.

However Mr Wilson also warned about the vulnerability of start-ups, pointing out that 21% of small companies established in 2010 had not survived.

"Our challenge now is to help build sustainable independent games development and digital publishing businesses," said Mr Wilson.

15 March 2013 Last updated at 16:59 GMT

Ina Drew, a former JP Morgan bank executive whose department suffered multi-billion-dollar losses, has said she was not to blame for them.

Ina Drew, who was chief investment officer, said the bank's risk models were flawed and that some London-based staff hid information from her.

She was one of several people giving evidence to the Senate Permanent Subcommittee on Investigations.

The bank lost $6.2bn (£4.1bn) in what was nicknamed the London Whale trades.

Bruno Iksil, the trader at the heart of the incident, was dubbed the London Whale because the positions taken were big enough to move markets.

Ms Drew said that she believed her oversight of the department was "reasonable and diligent". She said she had no knowledge that some trades were inflated or "not reported in good faith".

"Some members of the London team failed to value positions properly and in good faith, minimised reported and projected losses, and hid from me important information regarding the true risks of the book," she added.

Mistakes made

On Thursday, the subcommittee issued a report which said that JP Morgan had ignored risks, misled investors and fought with financial regulators.

"We found a trading operation that piled on risk, ignored limits on risk-taking, hid losses, dodged oversight and misinformed the public," said Carl Levin, the subcommittee's chairman.

In a statement released on Thursday, JP Morgan said: "While we have repeatedly acknowledged mistakes, our senior management acted in good faith."

After the trading loss came to light last year, Ms Drew resigned after 30 years with the bank and voluntarily paid back two years' worth of salary.

The chief financial officer at the time, Douglas Braunstein, also testified before the committee. He said the bank had made a number of mistakes, which he deeply regretted.

As a result, he said, "a number of employees have had their contract terminated and compensation has been reduced for selected individuals".

When pressed by Senator John McCain, he admitted that his pay had been cut from $9.5m in 2011 to $5m in 2012.

Chief executive Jamie Dimon is not testifying today. The incident raises questions about his future, according to William Cohan, author of House of Cards: A Tale of Hubris and Wretched Excess on Wall Street.

"This report is very damning and there is plenty of email traffic in there, which shows that these guys[management] knew exactly how bad things were getting and that they basically covered aspects of it up," he said.

"This incident shows that we need more regulation and existing laws do not solve the problem."

12 March 2013 Last updated at 10:02 GMT

Article written by Robert Peston Business editor

If it wasn't tragic it might be comic, that there is so little consensus among politicians, bankers and economists about whether the weakness in the economy stems more from inadequate supply or weak demand.

This uncertainty is most acute in the debate over why banks are lending so little, especially to businesses.

So, as the FT reports this morning, the Lib Dems in the coalition want the Bank of England's cheap Funding for Lending scheme (FLS) extended beyond the end of January 2014, when it expires, and - in some nebulous way - to provide even more attractive credit to smaller companies.

But those who run our biggest banks tell me that the FLS will never on its own either lead banks to increase their net lending to the real economy or in a significant way contribute to economic recovery.

For them, the shortage of credit is not the underlying reason why the UK economy can't wake from its torpor (although the the credit crunch sent the economy into its torpor five years ago).

They say that the businesses they deem to be creditworthy simply don't want to borrow right now - because these small businesses don't see the demand for their respective goods and services, so they are neither increasing their working capital or investing in enlarged capacity.

On this view, providing cheap credit to small businesses could never create a recovery, and the flow of credit to these businesses will only start to gush as and when the economy is independently recovering (perhaps, the likes of Vince Cable would say, when government increases its own spending on infrastructure - or when Britain's customers in the eurozone start to spend again).

In that sense, the FLS is an example of the proverbial pushing on a string, in an economy. You can take the gee-gee called Small Business to the pond called Cheap Loans, but you can't...

Certainly the available data seems to underwrite the gloom of the bankers about the FLS rather than the optimism of the Treasury and government about it.

To remind you, in the six months since the FLS was launched in the middle of 2012, net lending to UK households and non-financial businesses fell by £1.5bn - and the contraction of credit provision in just the last three months of 2012 was £2.5bn.

Within these figures, there is a bifurcation between the experience of individuals and of businesses. There does appear to be an increase in the provision of mortgages for house purchase, which looks as though it will be sustained throughout 2013. The take-up of loans by companies remains flatter than a very flat pancake.

All that said, the provision of loans to banks by the Bank of England at an effective interest rate of 0.75% has brought down the cost of mortgages and the cost of small business loans. Which has increased the spending power of households and companies, and presumably has had some positive economic impact.

But the fundamental problem remains - that the companies to which the banks want to lend do not want to borrow.

So here's the question. Should the Treasury redesign the scheme in a way that pushes credit to the weaker and riskier companies that the banks are shunning?

Should the taxpayer, in other words, take on some of the credit risk of lending to businesses, so that banks can lend to the businesses they don't regard as credit worthy, but perhaps ought to be supported - in the hope that some of these unbankable companies will turn into fast-growing winners.

Before answering this, let's shove to one side what you might call the RBS and Lloyds paradoxes - which is that, as semi-nationalised banks, the Treasury could simply instruct RBS and Lloyds to increase their appetite for risk, irrespective of the red ink that might flow.

For better or worse, the Chancellor wants to maintain the conceit that RBS and Lloyds are normal commercial operations. And therefore on his watch at least there is no chance of them being converted into arms of the state, whose lending is directed for public policy purposes.

Is there any likelihood however that George Osborne and the Treasury would indemnify the Bank of England and all the banks against losses on a certain portion of their business lending, so that the banks could lend to younger and more ambitious companies without exposing their owners to the losses?

The answer, I am told by government sources, is firmly negative - for reasons of practice and principle.

The practical objection is that it would be seen as state aid, and would therefore be blocked or impeded by the European Commission.

And the more ideological objection is that it would be a de facto statement that the banks have no idea what they're doing when lending - and that's quite hard to sustain for a government that wants to privatise RBS and Lloyds at the earliest opportunity.

All of which suggests that although the life of FLS will almost certainly be extended for another year or so, and perhaps access to cheap loans from the Bank of England will be widened to lenders that aren't technically banks or building societies, it won't be "put on steroids" (to use the resonant phrase from this morning's FT headline).

That said, there is a different set of dice that could be rolled, by the Bank of England's Financial Policy Committee (FPC).

The FPC might yet conclude that the underlying cause of inadequate credit creation is that banks have barely enough capital to support potential losses on their current portfolios of loans.

So on March 19 it could decide that banks need to be over-capitalised, for the health of the economy - in the hope and expectation that banks forced to raise tens of billions of pounds of additional capital would then feel powerfully motivated to lend, to earn a return on that new capital.

This would be a very bold decision for the FPC to take. And, rather like the FLS, it would be policy forged in the crucible of hunch and optimism, rather than scientific certainty.

Such an ordinance from the FPC would certainly lead to conflict between Sir Mervyn King, the retiring governor of the Bank of England, and Mr Osborne. It would oblige taxpayers to inject more funds into Lloyds and RBS, and that is the very last thing (literally) that the Chancellor wishes to do, and could be career-terminating for him.

But for the banks and perhaps for small businesses too, that FPC meeting could be rather more important than the budget on the following day (though, in theory, we will have to wait till March 27 to know what the FPC has ordained).
Текст 4.

Investors want to buy RBS's Williams & Glyn's

7 March 2013 Last updated at 08:34 GMT

Article written by Robert Peston Business editor

Royal Bank of Scotland has received an approach from 17 of the biggest investment institutions to buy 315 branches and their associated 2m customers for around £1bn - with a view to creating a serious new player in small-business banking.

I've only been back for four days, and this is the second time I am banging on about Royal Bank of Scotland.

Now I don't know whether that says more about the bruised largely nationalised bank or about me, but either way it may not be healthy.

What has been brought to my attention is an interesting new way to hive off the 315 RBS branches, which the bank was on course to sell to Santander, before the UK arm of that Spanish giant dropped the deal.

RBS is not allowed to keep the branches and their £20bn-odd of deposits and loans - together with 1.7m retail customers and 230,000 small-business clients. The European Commission has ordered the disposal, as a remedy for the state aid received by RBS when British taxpayers bailed it out in 2008.

And here's the thing: the deadline for the sale is November 2013 - though, arguably through no fault of its own, RBS has acknowledged that it is going to miss that deadline.

Or perhaps it might not, if it and the government like the look and smell of a proposal being put to it by 17 very substantial investment institutions, including Schroders, Threadneedle, Foreign & Colonial, Henderson and Invesco Perpetual.

I have learned that together with a sovereign wealth fund, a substantial hedge fund and so-called family money, they've been brought together by Baden Hill and Canaccord to make an offer for the branches.

They've collectively committed £700m, which in a sense was the entry price for getting access to confidential data about the branches, assets and liabilities. And they would expect to eventually make an offer of around £1bn - which is less than Santander had put on the table, but probably more than any other current proposal.

The reason any of this matters is that what is being sold is largely a small-business bank - almost two-thirds of its loans are to businesses, especially smaller ones - and right now one of the alleged great scandals of the British economy is the great shortage of choice for small businesses in the provision of vital finance.

Now you may wonder how on earth these investment funds would propose to run this hived-off bank, which - by the way - would trade under the famous Williams & Glyn's name (many of the branches being sold originally had that moniker).

Well they've recruited the man who set up Tesco's fast-growing bank, Andy Higginson, who was finance director of Tesco for years, as their Williams & Glyn's chairman. As for executives, and risk controls and technology, RBS has already committed to provide all of that.

However, right now Williams & Glyn's is in no fit state to be separated from RBS. And it may take a couple of years for the systems to be in place for it to be detached from the mother ship.

This is how RBS puts it, in its recent results statement:

"RBS is creating a standalone banking entity supported by a bespoke technology solution that would facilitate a trade sale now or at some point in the future, or an IPO (flotation on the stock market)."

It seems to me that the best way of seeing what the investment institutions are proposing is as a short cut to something that's not a million miles from an IPO - since these are exactly the kind of funds that would buy the shares in a stock market flotation.

And the advantage for RBS of their plan is that it can have most of the money almost immediately, rather than having to wait two or three years for the IPO.

The disadvantage of course is that the business could be worth a good deal more, as and when it was floated - and that matters to taxpayers, since we own more than 80% of RBS.

I suspect it may come down to politics, and whether early privatisation of a strategically important part of RBS were to appeal to the chancellor.

6 March 2013 Last updated at 15:13 GMT

Article written by Robert Peston Business editor

Mervyn King's remarks that he wants to see RBS's poisonous and low quality assets hived off into a new so-called bad bank matter - but probably not in the way that seems most obvious.

Because that's not going to happen. My sources at the Treasury tell me that they are happy with RBS's current proposals to mend itself, which involve shrinking its investment bank and floating a share of its US retail bank, Citizens, on the stock market.

However within a matter of days, Sir Mervyn and his colleagues on the Bank of England's Financial Policy Committee, or FPC, will determine how much additional capital all Britain's banks have to find, to protect themselves against future losses on loans to business and to personal customers who are only just keeping their heads above water (and see one I prepared earlier).

What the governor signalled is his concern that RBS remains too weak to provide the credit needed for economic recovery. So it seems highly plausible that he will instruct RBS to raise more capital than it is currently planning to do.

Since George Osborne has set up the FPC with independent authority to minimise the risks in the financial system, he would not find it easy to over-rule or ignore it on the first occasion it makes a big decision.

The words "back" and "rod" are probably on Mr Osborne's mind a good deal, in these Sir Mervyn's last weeks in the job.

That said, the idea that taxpayers will end up putting more money into RBS is for the birds. Such would be a short cut to political ruin for Mr Osborne, since Tory MPs would not tolerate even an extra penny of our money going into RBS.

The far more plausible alternative is that RBS will end up having to sell even more assets than it currently plans, including - perhaps - the Queen's bank, Coutts.

Текст 6.
Who can boss the banks?

13 March 2013 Last updated at 10:47 GMT

Article written by Robert Peston Business editor

Over the past few weeks and months, Andrew Bailey of the Financial Services Authority - and soon-to-be boss of one of the FSA's successor bodies, the Prudential Regulatory Authority - has been ambling around the City, agreeing how much additional capital the big banks need to raise, to protect themselves from losses on loans to customers barely keeping their heads above water, and as insulation against fines and compensation for past misdeeds.

You may have noticed the results. For instance, the bank 80% owned by taxpayers, Royal Bank of Scotland, has announced it is floating some of its US business, Citizens, on the stock market and selling a further stake in the insurer Direct Line.

Those actions will boost the numerator in its capital ratio. And at the same time, it will be shrinking its investment bank, thus cutting the denominator in the ratio, its loans and investments.

The net result is that its capital ratio becomes bigger, and the bank - all other things being equal (that ghastly qualification again) - becomes stronger.

It is all pretty technical stuff, not the kind of news to set the pulse racing. And similarly useful and dull capital-enhancing plans have been agreed with RBS's rivals.

The issue, which is a little bit more substantial, is whether all this diligent chivvying by Mr Bailey will be deemed by the Bank of England's Financial Policy Committee to be adequately filling the hole in bank's balance sheets - a hole described by Sir Mervyn King in late November as "material" (see my previous pieces here and here).

Sir Mervyn, the outgoing governor of the Bank of England and inaugural chairman of the FPC, rather upped the stakes last week when he signalled - in evidence to MPs and Lords on the Banking Standards Commission - that he fears RBS remains too weakened and poisoned by its stocks of poor loans and investments to provide the credit essential for economic recovery in the UK.

So the explosive question is this one: will the FPC order the banks to improve their capital ratios over and above the plans they've agreed with Mr Bailey, such that RBS and Lloyds would need to ask taxpayers (us) for yet more financial support?

Now the chancellor is hoping and wishing that the answer is no, because his backbenchers would be incandescent with rage if yet more public money were to go into these bruised banks.

As it happens, I think it is likely his wish will be granted. But that's not 100% certain.

Here are some of the relevant considerations for the FPC.

Probably the most important one is that banks have not been providing what Sir Mervyn would regard as adequate volumes of loans to small businesses and households.

As you will recall, in the last three months of 2012, banks benefiting from the Bank of England's cheap finance, from the Funding for Lending Scheme, actually contracted the loans they provide to individuals and non-financial businesses by £2.4bn.

And, as I mentioned yesterday, one possible remedy would be to force the banks to raise so much additional capital that they would feel under enormous pressure to create new credit, so that they could earn an adequate return on this capital.

Which is nice in theory, but it turns out this is not a remedy readily available to the FPC.

That powerful new body, whose mandate is to preserve financial stability subject to not imperilling the government's growth and employment ambitions, could instruct the banks to increase their capital ratios.

But as I explained above, boosting capital ratios can be achieved either by elevating the numerator - the acquisition of new capital - or by diminishing the denominator, through cutting the provision of loans.

To elucidate, an instruction to increase capital ratios yet more could have the opposite consequence desired by Sir Mervyn: it could encourage the banks to lend even less.

Why, you may ask, can't the FPC therefore instruct the banks to leave the denominator alone and simply increase the numerator, by going to their shareholders for more equity capital?

Well, I am told that would run into all sorts of legal obstacles, both in the UK and in respect of EU law, because it would be seen as a significant infringement of their commercial freedom.

It would be a bit like instructing all FTSE 100 companies to build new factories in Britain - not an instruction that would carry much force with private companies.

Or to put it another way: the FPC's toolkit can't stray too far from the globally agreed Basel capital adequacy tools; and they are about ensuring that capital ratios are above agreed minima, but not about the precise level of the numerator or denominator.

And it is even more complicated for the FPC. Let's just say that in an ideal world, it wanted all the banks to increase their capital ratios beyond levels agreed with Mr Bailey. Well, that could be seen as discriminatory, in that there is an important split between banks that are boosting credit provision and those that are not.

For example, Santander, Lloyds and RBS collectively cut by £7.6bn what the Bank of England calls their certified lending to households and businesses in the fourth quarter of last year. But Barclays and HSBC both increased their lending.

Or to put it another way, ordering all banks to increase their capital ratios could be seen as unfair to Barclays and HSBC.

In fact, there is a perfectly credible theoretical argument that at this stage of the cycle, the FPC should be encouraging the banks to actually reduce their capital ratios by inflating the denominator, the value of their lending.

All of which, I think, leads to two conclusions.

There is no magic bullet available to the FPC to simultaneously strengthen banks and increase credit creation. Probably the best it can aim for is to make sure banks have the capital they need to withstand realistic shocks without impeding the growth of credit.

And if George Osborne agrees with Sir Mervyn that RBS and Lloyds aren't lending enough, then the remedy remains the one it has always been and the one he loathes: he could exercise his rights as their biggest shareholder and order them to increase their appetite for risk.

5 March 2013 Last updated at 09:56 GMT

Article written by Robert Peston Business editor

If company chief executives are being pimped out by brokers to fund managers, as the FT has reported and the FSA wants stopped, it is pretty clear to me that the CEOs themselves (well the ones I've spoken to) are innocent victims (as it were).

What has been going on, apparently on a large scale, is that fund managers have paid brokers for access to the bosses of companies, without the relevant bosses being told that cash was changing hands for privileged access to them.

I have spoken to a number of chief executives this morning about this, who say that if it has been happening, they did not know - and they would be upset and shocked if it were.

There are two reasons for this upset: one ethical, the other practical.

Perhaps the most important point is that when anyone with a commercial interest pays for access, the customer typically believes he or she is getting an advantage over rivals.

And when that happens in financial markets, confidence in the fairness of markets is undermined.

So even if the chief executive does not impart confidential price-sensitive information in the course of the paid-for meeting, the impression created that this might be happening would be seen as putting more moral or less well-heeled investors at a disadvantage.

In practice of course any smart investor will gain an unfair advantage from a confidential chat with a chief executive. And that unfair advantage does not require the chief executive to engage in dangerously loose talk. It just requires the boss to be himself or herself, so that the investor can judge whether he or she is fit for purpose.

But even if you don't believe there is an ethical issue here - and there are plenty of free-marketeers who argue morals have no place in markets - there is another consideration.

Public companies typically want to give as much information as possible to any investor who may wish to put money into them, because cumulatively this would increase their share prices and cut their costs of capital - which makes it cheaper for the companies themselves to invest and grow.

Or to put it another way, some investors have been paying brokers for a service they could have for free, if they cut out the middle man and went directly to the relevant company.

Here is how one CEO put it to me: "Why would they want to pay money to a broker for access to me. If they are a credible institution, all they have to do is ring up my investor relations department and of course I will meet them. I would be a fool to do otherwise."
Текст 8.

Is there good news in HMV's collapse?

15 January 2013 Last updated at 08:00 GMT

Article written by Robert Peston Business editor

Here are two big questions about the collapse into administration of HMV.

Will it go the way of Jessops and Comet? Will all 239 stores be closed, with the loss of all 4,000 jobs?

And is there a rising incidence of corporate insolvencies which could actually be a good thing, in the widest possible sense (please bear with me; I haven't taken leave of my senses or transmogrified into some kind of insane company necrophiliac)?

On the first question, what future holds for HMV and its people, the outlook looks considerably better than for other recently kaput store groups.

And the reason, according to influential sources close to HMV, is that the music industry and the film industry want its survival, albeit they recognise that will have to be with fewer stores and with fewer locations.

Record labels (are they still called that or am I showing my age?) and DVD distributors don't want to be wholly dependent for sales on Amazon and Apple's iTunes.

So Deloitte, appointed as administrators to HMV last night, is working on the assumption that these important suppliers will help the creation of a slimmed-down and viable HMV.

This is unlikely to involve these suppliers actually buying HMV out of administration. Much more likely is that they would provide easy credit terms to a buyer - which will very likely be a private equity group (right now, again, there is too much money in private equity chasing too few deals).

Now on to my hideously heartless question whether the collapse of HMV is good for the rest of us.

First of all, I had better explain what I mean.

The evidence of past recessions is that economic growth doesn't resume at any great velocity until unviable and inefficient businesses are put of their misery and excess capacity in various industries is eliminated.

Now, although there has been a fair old number of retailing collapses in the past year or so (according to FRP Advisory, HMV is the 32nd significant retail chain to go into administration in just over a year), there have been many fewer corporate collapses since the financial crisis of 2008 than was predictable on the basis of past economic experience.

As you will know (don't yawn) if you read this column, this economic malaise has been characterised by many weak businesses being put on life support and turned into the living dead, or (to use what is now a cliche, so sorry) zombies.

This is good for the employees of these companies, for a while at least.

But, many would argue, it is not good for the economy in the long run. Because it preserves excess capacity, in a way that makes it more difficult for new business to grow and thrive, and it also holds back the progress of bigger more successful businesses.

So if HMV's demise signals a rising incidence of banks and other creditors being more ruthless in putting lame companies out of their misery, that might in a fundamental sense be quite a good thing.

And if those rising corporate mortality rates were real, it would also show that banks were feeling increasingly confident that they have sufficient capital to absorb the consequential losses - which would also be a very positive sign, in that banks would also have sufficient capital to extend necessary credit to viable businesses.

Here's the bad news (please forgive).

According to leading administrators, so far the underlying trend of corporate deaths does not seem to have risen much. The number of companies going into administration is still bumping along at a relatively low level.

If it doesn't feel that way, that's simply because recently companies that have gone down - Comet, Jessops and HMV - were so visible and famous.

But there are still plenty - far too many - corporate zombies that are clinging on and holding back job creation by companies with much better prospects.

14 January 2013 Last updated at 13:22 GMT

Article written by Robert Peston Business editor
There seems to be a prevailing view that it is little short of scandalous that Goldman Sachs in the UK may defer the handing over of shares to its executives, so that they would be liable to next year's income tax rate of 45% on the payments rather than this year's 50% (see this morning's FT for more on this).

Given the size of Goldman's historic bonus pools, the value of these shares would certainly run to tens of millions of pounds, and probably to hundreds of millions of pounds, so the tax saving would not be trivial - perhaps double digit millions of pounds (Goldman won't confirm the quantum).

To be clear, what Goldman is considering in this case is not opaque and highly complex tax planning, designed to bamboozle the tax man. It is not sophisticated tax avoidance, or financial engineering of the sort - arguably - that too many banks and bankers have indulged in.

The global investment bank is contemplating delaying for a few weeks the handing over of shares to staff that they were awarded in 2009, 2010 and 2011 but have not received yet.

This kind of adjustment of payment schedules is neither unusual nor confined to bankers: it is being contemplated right now by all manner of businesses, big and small, as the top-rate income tax cut looms; if that weren't the case, then the basic rules of business behaviour would have been rewritten.

So the noise around Goldman raises two interesting questions.

First, do we now expect a higher standard of behaviour from banks than from other businesses, such as architects or law firms or those in private medicine?

That might be a reasonable expectation, given that big banks such as Goldman have been bailed out by taxpayers in the past and doubtless will be again (for all the current spate of reforms designed to cut them free).

If banks benefit from permanent state protection against collapse, then perhaps we need to make explicit that there is a contract between banks and state that they should never ever take steps to reduce their tax burden.

On the other hand, if Goldman is too big to fail, it is US taxpayers - rather than British ones - that are its main underwriters.

Second, is there a new rule of good corporate citizenship that any business or business person should pay the highest prevailing rate of tax possible, even if there is an easy and legal way of paying less tax?

Apparently when David Cameron had one of his regular meetings with business leaders on Friday, he told the assembled corporate eminences that they had a moral duty to ensure their companies paid the full corporation tax rate, given that the government has been cutting that rate and continues to do so.

According to one multinational boss, he was in essence saying that paying corporation tax is a part of a business's corporate social responsibility (CSR).

This carries two perhaps unfortunate implications.

First is that the prime minister appears to feel more or less powerless to use much more than moral suasion to ensure the biggest, most internationally mobile companies pay the going rate.

And if paying tax is part of CSR, then the public sector is being characterised - in essence - as a charitable good cause.

10 January 2013 Last updated at 12:38 GMT

Article written by Robert Peston Business editor

Royal Bank of Scotland is in the last delicate phase of negotiations with regulators in the UK and US on the fines to be paid for its Libor transgressions and other necessary remediation, including a possible senior resignation.

What is clear is that UK and US fines will run to several hundred million pounds, or more than the £290m extracted from Barclays.

What is as yet undecided is whether RBS will be punished on a similar scale to UBS, which was spanked to the tune of £940m. My understanding is that RBS believes its fines will be less than UBS's.

RBS is braced for substantial humiliation as and when the announcement is finally made.

Emails from traders cited as evidence for the Libor rigging are particularly lurid, according to sources.

Also, the market manipulation continued well into 2010, or long after RBS's management was replaced at the end of 2008 following the collapse of the bank and its partial nationalisation. RBS's board did not become aware of the wrongdoing until notified about it by regulators in 2011.

That said, I have learned that the bank's board does not believe the chief executive Stephen Hester needs to resign: no evidence has been found indicating that he knew about the attempt to make unfair profits by fixing the Libor rates; and he was fully occupied at the time trying to rebuild the bank's shattered finances.

However I understand the FSA is looking for personal responsibility to be taken.

RBS's board will not wait for an instruction from the FSA to change personnel. I have learned that it is considering asking the head of the investment bank, John Hourican, and the head of markets, Peter Nielsen, to quit.

That said, there is no evidence that either of them were aware of the Libor malpractices or in any way encouraged them. But after the financial crisis they were brought in to fix RBS's investment bank, and the concern is that they did not get to grips with the market rigging that continued on their watch.

"There is an issue about why the rotten culture wasn't cut out earlier", said a source.

Also, the FSA is arguing that bonuses earned by executives and investment bankers in the period should be repaid or clawed back. This can only happen in relation to bonuses that were deferred. So at risk are those who were promised bonuses in 2009 and 2010, but haven't yet received all their entitlement.

"The likelihood is that there will be a claw back from the 2009 and 2010 bonus pools" said a source.

As for the fines and penalties, they are set according to a formula based on the magnitude of the wrongdoing in each of Libor's myriad currency categories.

RBS traders tried to manipulate the Libor interest-rate benchmarks for dollars, Swiss francs and yen, inter alia, according to a source. But whether the cumulative impact of its market rigging was more or less great than UBS's is - I am told - still undetermined.

As I understand it, the UK's Financial Services Authority is trying to persuade US regulatory authorities, led by the Department of Justice in Washington, to go for a big bang announcement of punishments for RBS in the week after next.
Текст 11.

Marks and Spencer's premature release

9 January 2013 Last updated at 21:36 GMT

Article written by Robert Peston Business editor

Marks and Spencer did something unusual this evening at ten to eight, which is put out its trading statement almost 12 hours earlier than scheduled.

The reason is there had been a leak to Sky News of a couple of the figures, which showed that - as expected - sales of clothes and general merchandise have been poor in the last three months of the year, which includes the important Christmas period.

M&S's chief executive Marc Bolland told me he was advised by the company's lawyers, public relations advisers and brokers that he had to put out the rest of the three-month figures, because otherwise he would have been unable to respond to overnight media enquiries .

But markets are not open tonight and it is unusual for a business to react to a leak in this way. In 30 years of keeping an eye on the stock market, I don't recall anything quite like it.

Some may argue the incident shows M&S senior directors no longer have the confidence to do their own thing and face down the outside world in the way that was characteristic of the company for many decades.

As for the numbers themselves, the poor clothing sales had been widely anticipated - and new managers of that part of M&S were brought in towards the end of the year.

By contrast M&S Christmas food sales were pretty good, and the profitability of sales in general - or profit margins - improved.

So these numbers are unlikely to shock investors, they don't represent a profit warning, even if the early release of the figures is a bit of a surprise.

Update 09.15, 10 January 2013

It is a tale of two retailing giants, giant ships passing in the night.

Tesco may be sailing into calmer waters, with signs that its expensive rehabilitation of UK stores may be paying off: it has reported a 1.8% increase in like-for-like or underlying sales, its best performance for three years.

And its shares are up 2.8%.

So critics of its chief executive, Philip Clarke, will keep quiet, for now at least - though they will want to see a sustained recovery before becoming convinced he should be at the helm for the duration.

Clarke clearly feels more relaxed about what is going on in the core British operation, given that he has handed over the national levers to a new UK MD.

As for M&S, investors seem unimpressed both by its lousy UK clothing and general merchandise performance, and by the spectacle of management mayhem in the form of the premature release last night of its trading figures.

Last time I looked, M&S's shares were down more than 4.5%.

Those investors querying whether Marc Bolland is the right CEO for these challenging times will not be reassured.

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Mar 31st 2012 | from the print edition

EVERYONE knows why oil prices, at around $125 for a barrel of Brent crude, are so high. The long-term trends are meagre supply growth and soaring demand from China and other emerging economies. And in the short term, the market is tight, supplies have been disrupted and Iran is making everyone nervous.

Saudi Arabia, the only OPEC member with enough spare capacity to make up supply shortfalls, is the best hope of keeping the market stable. The Saudis recently reiterated their pledge to keep the market well supplied as American and European Union sanctions hit Iran. Over time, other producers in the Persian Gulf may be able to pump more. Iraq—and Iran itself—have vast oilfields that could eventually provide markets with millions more barrels a day (b/d). All this is conventional wisdom.

Yet these calculations do not take account of the region’s growing thirst for its own oil. Between 2000 and 2010 China increased its consumption of oil more than any other country, by 4.3m b/d, a 90% jump. It now gets through more than 10% of the world’s oil. More surprising is the country that increased its consumption by the second-largest increment: Saudi Arabia, which upped its oil-guzzling by 1.2m b/d. At some 2.8m b/d, it is now the world’s sixth-largest consumer, getting through more than a quarter of its 10m b/d output.

Saudi Arabia is not the only oil-producer that chugs its own wares. The Middle East, home to six OPEC members, saw consumption grow by 56% in the first decade of the century, four times the global growth rate and nearly double the rate in Asia (see map).

Energy use per head is also rising. According to BP, in 1970 in the Middle East it was half what it was in other emerging markets. By 2010 it was three times higher. Global oil consumption stayed at roughly 4.6 barrels a head annually between 2000 and 2010, but the average Iranian and Saudi was getting through roughly 30% more by the end of the decade. The Saudis consume 35.1 barrels each. Overall energy consumption per head, at 7.3 tonnes of oil equivalent, is roughly the same as in America (see chart), which is much richer.

There are three explanations for this growing taste for oil. The first is demography. Populations in the Persian Gulf, and in OPEC as a whole, are growing fast. Tiny Qatar’s population trebled between 2000 and 2010. Saudi Arabia’s grew from around 20m to 27.4m, a 37% increase. Demand for power, water and petrol has risen accordingly. Saudi power-generating capacity has doubled in the past decade. Partly this is to mitigate the fearful heat: according to a report from Chatham House, a think-tank, air-conditioning units soak up half of all power generated at peak consumption periods.

The second relates to economic structure. It takes energy to produce energy: pumps must be powered and vast quantities of seawater desalinated. Aramco, the Saudi state oil company, sucks up nearly 10% of the country’s energy output. Attempts to diversify the Saudi economy beyond oil, gas and petrochemicals have not gone far.

The third reason for rising Gulf consumption is the inefficiency of domestic energy markets. Some 65% of Saudi electricity is generated using black gold, even as successive price shocks and the relative inefficiency of oil generation have seen it all but phased out in rich countries. Oil is used with such profligacy because domestic consumption is massively subsidised. According to the International Energy Agency, global oil subsidies added up to $192 billion in 2010. OPEC countries accounted for $121 billion of the total.

Saudi Arabia has the cheapest fuel in the Gulf and dirt-cheap electricity, too. This has alleviated poverty but it has also encouraged an American-style driving culture (for men) and limited public transport. Only a third as many Saudis own cars as Americans; as they get richer many more will take to the desert highways.

Many oil-producing countries (including Saudi Arabia) have pledged to cut subsidies. But this is hard to do when regimes are terrified of unrest (and often unelected). Violent protests greeted Nigeria’s attempts in January to raise the price of imported petrol. Only Iran, which had the most generous subsidy regime, has managed a big price hike—and it had a handy scapegoat in the form of sanctions.

It is costing Saudi Arabia dear to burn through so much oil. With “lifting” costs of $3 to $5 a barrel the fuel is cheap but the opportunity cost, given a global price of $125, is huge. And like many Gulf oil producers Saudi Arabia has failed to use its abundant natural-gas supplies properly.

Gas does now contribute 35% to power generation, but rock-bottom prices and a sniffiness about gas as oil’s poor relation mean that exploiting its bounty (Saudi Arabia apparently has the world’s fifth-largest gas reserves) has proven hard. Initiatives to attract Western oil companies to get at the gas foundered as low prices and stingy terms failed to attract bidders. Much of the “unassociated” gas that doesn’t spew out alongside oil is tough to extract, and would require prices four or five times higher than now to make it worthwhile. According to BP, oil makes up 74% of the region’s energy production. By 2030 it will have dropped only to 67%.

Saudi Arabia is trying to develop nuclear and solar energy. But its fleet of oil-fired power stations will keep going for years. And as Mark Lewis of Deutsche Bank points out, two more big ones are now being built. On current trends the kingdom would become a net importer of oil by 2038 (unlikely though that is).

This puts big strains on oil markets. In the short term Saudi spare capacity is an important factor in oil prices. As the year progresses seasonal Saudi demand is likely to jump. Last year the upswing between March and July was some 750,000 barrels of fuel a day, according to Barclays Capital. Much of that will be driven by air conditioners working overtime. This will put pressure on the country’s ability to maintain exports and keep oil prices stable.

The longer-term picture is equally worrying. Global demand for oil is projected to rise to over 100m b/d by 2030. The Gulf states of Saudi Arabia, Iran and Iraq, which have vast and easily accessible reserves, are regarded as the obvious sources of new supply. But Iranian oil production will decline as sanctions bite and the country loses access to equipment and expertise. Iraq, currently producing 3m b/d, has the reserves to increase production significantly. But fragile politics, dodgy security and a battered oil infrastructure are deterring the investment required to boost supplies. And Saudi Arabia’s thirst for its own oil shows little sign of abating. The Gulf is usually seen as the answer to the world’s oil problems, but it looks ever more like a question-mark instead.

from the print edition | Finance and economic