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.

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The NS Podcast #222: Queen's Speech Special

The New Statesman podcast.

Helen and Stephen discuss what was left out, watered down and generally squished around in the Queen's Speech - from prison reform to fox hunting - and what kind of stage it sets for the coming parliamentary term. Will Labour's stance on immigration have to change? And what Brexit deal could secure a parliamentary majority? Clue: it's a royal mess.

Quotes of the episode:

Helen on domestic violence: "The big lesson of the last couple of weeks is that the involvement of domestic violence in Terror has finally made (slightly more men) take it slightly more seriously. As actually now it becomes part of an anti-radicalisation process."

Stephen on Conservative strategy: "If you look at the back end of the Conservative government in the 90s: when your parliamentary situation is rocky, the best way of dealing with that is just for parliamentary not to sit all that much. Don't bring the pain."

Helen on Brexit: "There is an interesting complacency about the dominance and attractiveness of the British economy [...] whereas actually our economy has recovered quite badly and our productivity is still quite low. I wouldn't be that smug about the British economy."

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