There's a weirdly upbeat mood in the city

Are we in denial?

No one seems quite certain whether these are the best of times or the worst of times for the City. Well, OK, few think these are the best of times (that accolade still belongs somewhere back in the pre-2008 boom). But while there are still major problems in the banking sector, including what to what to do on executive pay and bonuses and how to deal with the fallout from scandals such as Libor-rigging and the sale of dodgy loan insurance products to SMEs and individual, there is nevertheless an upbeat mood in the air. This is most obviously epitomised by the FTSE 100 share index, which crashed confidently through the significant 6,300 mark last month and with only a few minor blips since has continued to regain heights not previously seen since before the crash.

But there has also been a noticeable upswing in corporate finance activity, with a rash of major M&A deals either done or on the cards.

In the last week there have been announcements about the leveraged buyout of a majority stake in computer giant Dell, the acquisition of Virgin Media by Liberty Global and even rumours of a private equity backed leveraged buyout of a significant chunk of the UK’s largest mobile telecom provider EE (formerly Everything Everywhere, itself formed from a merger between Orange and T-Mobile). All these deals point to a more buoyant start to 2013.

There have been several theories hatched to explain this sudden upswing. It started with a growing belief towards the end of last year (misguided according to the more bearish commentators) that the actions of the European Central Bank (ECB) and others have done enough to make the euro crisis recede, if not go away all together.

Then the US managed to avoid dropping off the fiscal cliff (again the bears would suggest that we’re not out of the woods here either, with a no real budget agreement struck and the pain merely deferred). But all these attempts to rationalize this upswing (which has so far not been matched by any sort of similar recovery in the real economy) don’t really explain it enough. Now, there will be plenty of people keen not to ask too many questions.

So desperate have we become for good news (any good news) that it seems like heresy to even question the source of any optimism.

The rest of this article can be read here, on economia

Photograph: Getty Images

Richard Cree is the Editor of Economia.

European People's Party via Creative Commons
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Ansbach puts Europe's bravest politician under pressure

Angela Merkel must respond to a series of tragedies and criticisms of her refugee policy. 

Angela Merkel, the Chancellor of Germany, is supposed to be on holiday. Two separate attacks have put an end to that. The first, a mass shooting in Munich, was at first widely believed to be a terrorist attack, but later turned out to be the actions of a loner obsessed with US high school shootings. The second, where a man blew himself up in the town of Ansbach, caused less physical damage - three were seriously injured, but none killed. Nevertheless, this event may prove to affect even more people's lives. Because that man had come to Germany claiming to be a Syrian refugee. 

The attack came hours after a Syrian refugee murdered a pregnant Polish woman, a co-woker in a snack bar, in Reutlingen. All eyes will now be on Merkel who, more than any other European politician, is held responsible for Syrian refugees in Europe.

In 2015, when other European states were erecting barriers to keep out the million migrants and refugees marching north, Merkel kept Germany's borders open. The country has resettled 41,899 Syrians since 2013, according to the UNHCR, of which 20,067 came on humanitarian grounds and 21,832 through private sponsorship. That is twice as much as the UK has pledged to resettle by 2020. The actual number of Syrians in Germany is far higher - 90 per cent of the 102,400 Syrians applying for EU asylum in the first quarter of 2016 were registered there. 

Merkel is the bravest of Europe's politicians. Contrary to some assertions on the right, she did not invent the refugee crisis. Five years of brutal war in Syria did that. Merkel was simply the first of the continent's most prominent leaders to stop ignoring it. If Germany had not absorbed so many refugees, they would still be in central Europe and the Balkans, and we would be seeing even more pictures of starved children in informal camps than we do today. 

Equally, the problems facing Merkel now are not hers alone. These are the problems facing all of Europe's major states, whether or not they recognise them. 

Take the failed Syrian asylum seeker of Ansbach (his application was rejected but he could not be deported back to a warzone). In Germany, his application could at least be considered, and rejected. Europe as a whole has not invested in the processing centres required to determine who is a Syrian civilian, who might be a Syrian combatant and who is simply taking advantage of the black market in Syrian passports to masquerade as a refugee. 

Secondly, there is the subject of trauma. The Munich shooter appears to have had no links to Islamic State or Syria, but his act underlines the fact you do not need a grand political narrative to inflict hurt on others. Syrians who have experienced unspeakable violence either in their homeland or en route to Europe are left psychologically damaged. That is not to suggest they will turn to violence. But it is still safer to offer such people therapy than leave them to drift around Europe, unmonitored and unsupported, as other countries seem willing to do. 

Third, there is the question of lawlessness. Syrians have been blamed for everything from the Cologne attacks in January to creeping Islamist radicalisation. But apart from the fact that these reports can turn out to be overblown (two of the 58 men arrested over Cologne were Syrians), it is unclear what the alternative would be. Policies that force Syrians underground have already greatly empowered Europe's network of human traffickers and thugs.

So far, Merkel seems to be standing her ground. Her home affairs spokesman, Stephan Mayer, told the BBC that Germany had room to improve on its asylum policy, but stressed each attack was different. 

He said: "Horrible things take place in Syria. And it is the biggest humanitarian catastrophe, so it is completely wrong to blame Angela Merkel, or her refugee policies, for these incidents." Many will do, all the same.