Where's all that bank contagion gone?

How far we have travelled.

It is a very telling measure of how far we have travelled down the path to probable Eurozone survival that contagion, and 'bank' contagion specifically, has become much less of a problem. Despite last month’s chaotic, and briefly almost disastrous, Cypriot bank bail-in, and the horribly inconclusive Italian elections in February, there have been virtually no negative consequences for the fortunes of the wider European financial community. A year or so ago either of these events could have been reasonably expected to have raised real fears that queues would form outside banks all over Europe.
An illustration of this is that the Euro Stoxx Banks index is now trading at around 100, the same level as last October, and way above last year’s low of 73.06, seen in July.

The most important reason for this new-found sanguinity is the European Central Bank’s, (ECB), Damascene conversion under Draghi from Trichet’s Bundesbank poodle to a central bank which is focused on the needs of all seventeen states in the union, the completion of which was epitomised by Draghi’s Clint Eastwood moment last September when he warned the markets that, 'we'll do whatever it takes, and it will be enough' and announced Outright Monetary Transactions. This virtually guaranteed that Eurozone nations would always have access to liquidity, hence breaking the potentially lethal ‘dance of death’ of over-indebted states and their under-capitalised banks, who are in turn laden down with massive investments in their national governments’ bonds.

Of almost equal significance has been Chancellor Merkel's extraordinarily dexterous performance in persuading her people of the manifold benefits of the Euro, (i.e. it's a highly effective export finance scheme for Germany-who are the ultimate, unchallenged Currency War victors), and therefore that bailing-out profligate southern neighbours is absolutely in Germany's interest. I’m happy to predict that this will continue, and indeed go into hyper-drive after she has won September's elections, (hardly in question in the absence of any credible Euro-sceptic opposition), as she will then feel free of the political imperatives that have thus far prevented her from allowing Germany to acquiesce to the issuance of jointly and severally liable Eurobonds, (with all Eurozone nations, including Germany, equally on the hook), and a proper banking union.

These measures will ultimately save the Euro, for another 5 years, say.

Photograph: Getty Images

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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