Privatisation slows down worldwide

Has the money lost heart, or is it the bureaucrats?

Via Richard Murphy comes this Financial Times piece (£), suggesting that privatisation may be declining globally:

The pace of privatisation around the world has slowed sharply, with an unprecedented number of asset sales delayed or cancelled amid volatile markets and political uncertainty.

Despite governments across the globe continuing to hoist for-sale signs over state-owned enterprises ranging from airports to electricity networks, the number of completed deals last year was less than half the 2010 figure, according to the Privatisation Barometer, a joint project between KPMG and Fondazione Eni Enrico Mattei, a Milan-based research institute.

The report (pdf) offers the explanation that last year was one of "global financial retrenchment", prompted by the Eurozone crisis and the fight in the US over the debt ceiling. It offers, as a "dramatic" example of the former:

The Spanish government['s] forced cancellation, literally days before execution, of what would have been 2011’s largest privatization — the October sale of 30% of the national lottery, Loterias y Apuerto del Estado, which would have raised over €7 billion ($9.7 billion) — and the near-coincident delayed (not yet renewed) sale of the Madrid and Barcelona airports that could have raised more than €5 billion ($6.9 billion).

The explanation leaves something to be lacking, however. If, as the report argues, the Eurozone crisis was one of sovereign debt, then it ought to have led to more, not fewer, privatisations, given that they are one of the most effective ways for a nation to raise in a short period of time the amount of cash necessary pay down debt.

Similarly, the big economic story of the last year has been the flight to safety, which has led to the reverse-sovereign-debt-crisis being experienced across much of the world, as well as little quirks like RORO. That too ought to lead to greater, not lesser, privatisation, since taking control of an established monopoly is a pretty safe investment. So long as a company doesn't completely misjudge how much it can make from a utility (looking your way, GNER), it's hard to fail when buying out the state (hard to fail, that is, from a financial point of view. Very easy to fail when it comes to actually providing services).

I think the best explanation is that privatisation is becoming uncool, not for economic reasons, but for political ones. States simply don't want to take the unpopular move of handing over control of their services to the private sector. Whether this is good or bad depends on the specific circumstances (as with Matt Yglesias, I think a well-thought-out mutualisation of the US Postal Service could do wonders, but the sale of Madrid and Barcelona airports risks creating the nation's own version of BAA), but Murphy thinks there is something to celebrate anyway:

Let’s hope that there might also be a realisation implicit in this that people now realise that it’s not just banks that can be too big to fail, but that much else that we depend upon is also too big to fail, and needs to be state run to ensure it survives as a result.

Barcelona airport, following a protest by cleaners. The airport was due to be privatised this year. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The Lib Dems' troubled start doesn't bode well for them

Rows over homosexuality and anti-Semitism are obscuring the party's anti-Brexit stance.

Tim Farron has broken his silence on the question of whether or not gay sex is a sin. (He doesn't.)

Frankly, this isn't the start to the general election campaign that the Liberal Democrats would have wanted. Time that they hoped would be spent talking about how their man was the only one standing up to Brexit has instead been devoted to what Farron thinks about homosexuality.

Now another row may be opening up, this time about anti-Semitism in the Liberal Democrats after David Ward, the controversial former MP who among other things once wrote that "the Jews" were "within a few years of liberation from the death camps...inflicting atrocities on Palestinians" has been re-selected as their candidate in Bradford East. That action, for many, makes a mockery of Farron's promise that his party would be a "warm home" for the community.

Politically, my hunch is that people will largely vote for the Liberal Democrats at this election because of who they're not: a Conservative party that has moved to the right on social issues and is gleefully implementing Brexit, a riven Labour party led by Jeremy Corbyn, etc. But both rows have hobbled Farron's dream that his party would use this election.

More importantly, they've revealed something about the Liberal Democrats and their ability to cope under fire. There's a fierce debate ongoing about whether or not what Farron's beliefs should matter at all. However you come down on that subject, it's been well-known within the Liberal Democrats that there were questions around not only Farron's beliefs but his habit of going missing for votes concerning homosexuality and abortion. It was even an issue, albeit one not covered overmuch by the press, in the 2015 Liberal Democrat leadership election. The leadership really ought to have worked out a line that would hold long ago, just as David Cameron did in opposition over drugs. (Readers with long memories will remember that Cameron had a much more liberal outlook on drugs policy as an MP than he did after he became Conservative leader.)

It's still my expectation that the Liberal Democrats will have a very good set of local elections. At that point, expect the full force of the Conservative machine and their allies in the press to turn its fire on Farron and his party. We've had an early stress test of the Liberal Democrats' strength under fire. It doesn't bode well for what's to come.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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