Guy Hands’ View

26 January 2015

UK energy policy is driven by populism and prejudice: Consumers pay the price

I CAN imagine ministers’ horror when they read front-page stories earlier this autumn that the UK could suffer blackouts this winter. The speed with which National Grid promised that generating capacity would meet demand, no matter how low temperatures fall, shows how deep are memories of the political damage caused by the three-day week in the 1970s. What is different, of course, is that it was the power of the unions that saw the lights turned off in Ted Heath’s day. Any repetition this winter would be correctly seen as the result of the failure of successive governments on national energy policy. Read more.

Why German Fears of a Housing Bubble Are Overdone

No matter what our views on the European Union, we like to pretend in Britain that we are different from our continental neighbours. This certainly includes a belief that our housing market is somehow unique whether it is our attachment of owning our own homes or our concerns about rising prices and the dangers of a housing bubble.

No matter what our views on the European Union, we like to pretend in Britain that we are different from our continental neighbours. This certainly includes a belief that our housing market is somehow unique whether it is our attachment of owning our own homes or our concerns about rising prices and the dangers of a housing bubble.

It is, of course, simply not true. In terms of home ownership, the UK is not at the top but towards the bottom of the league table of the 28 EU member states.

The culture of home ownership is far stronger, for example, in Romania (96.6 %), Lithuania (92.3%), Spain (82.7%) and Greece (75.9%) than in the UK where it languishes at just under 68%. In fact, only Netherlands, Denmark, France, Austria and Germany – which all have strong tradition of renting – have lower levels.

Nor does this mean that even these countries escape fears about rising prices. The Netherlands took emergency measures three years ago to cap the amount of money that could be lent to take the heat out of its housing market. The ECB earlier this year singled out France, along with Belgium and Finland, as countries where prices were in danger of getting out of control.

In Germany, too, the Bundesbank has been outspoken in warning of the dangers of an over-heating housing market. Property price rises of 10 per cent in some German cities in the last year have alarmed a country where inflation and debt are viewed as twin evils to be avoided.

The response has partly been caused by the fact that such rapid price rises in housing are unusual in Germany. While easy credit stoked extraordinary increases in property prices across much of Europe in the years running up to the 2007 financial crisis, Germany’s housing market actually fell.

To the alarm of the Bundesbank, this has reversed in recent years. It has pointed the finger at the record low interest rates across Europe and the cross-border flow of money looking for a safe haven as the main cause of this over-heating. When voting against the latest ECB cut in interest rates this summer, Bundesbank President Jens Weidman justified his decision by again warning of the dangers of a housing bubble. Prices in some cities, we are told, are 25 per cent over-valued.

But not for the first time, those in charge of Germany’s economy are being too cautious. The rise in house prices reach a peak 12 months ago and have been steadily slowing throughout 2014.

Viewed, too, against prices in London, German property per square metre remains very cheap. German cities also do not have the influx of the super-rich driving prices for top-end properties in London and the Home Counties which in turns pulls up the entire market.

These pressures do not exist in Germany where, despite the Bundesbank’s well-known caution, conditions continue to be benign in the property market. Looked at the long-run against incomes, housing in Germany remains affordable, not something that is the case in the UK. Nor has there been any significant change in volume of mortgage loans on which Germany retains a very conservative approach.

This is good news for all with a direct interest in the German housing market whether home-owners, renters or investors. Prices and yields should continue to rise without the risks of a corrective crash or threats to the well-being of the German economy. Looking at house prices in the UK, this may be one way the two markets are genuinely different.

This article first appeared in the Huffington Post on the 28th Oct 2014

9 December 2014

UK energy policy is driven by populism and prejudice: Consumers pay the price

I can imagine ministers’ horror when they read front-page stories earlier this autumn that the UK could suffer blackouts this winter. The speed with which National Grid promised that generating capacity would meet demand, no matter how low temperatures fall, shows how deep are memories of the political damage caused by the three-day week in the 1970s.

Read more.

22 May 2014

David Boies delivers 2014 Hands Lecture on the topic of human rights

Earlier this month, I was very pleased to take part in the Annual Hands Lecture, hosted by Mansfield College, Oxford. My wife Julia and I, along with Mansfield’s Principal Baroness Helena Kennedy, welcomed internationally renowned attorney David Boies to deliver a lecture on the topic of “Human Rights and the Rule of Law: Eight Centuries after Runnymede.”

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20 May 2014

Guy Hands: Chelsea Flower Show’s popularity shows gardening business is growing

Our love of gardening – and for Alan Titchmarsh who has designed a garden for the first time in three decades – means tickets for the 101st Chelsea Flower Show are changing hands for £575, nine times face value.

Read more.

14 May 2014

Ukraine crisis shows Europe must not turn its back on renewable energy

If we needed a reminder of how politics and energy are inextricably linked, the Ukraine crisis has done us all a timely service. The price and supply of gas is rapidly becoming a major Russian weapon against its neighbour, and by extension, its European supporters.

Read more.

9 May 2014

This unsustainable tech boom poses a serious risk to the global economy

THE PENNY seems to be slowly dropping. Investors have taken fright at how they have driven up the value of the tech sector. A range of big name tech firms have suffered sharp falls in share prices. Twitter is down over 40 per cent over the last three months. Facebook has fallen by 11 per cent over the same period.

Read more.

17 March 2014

Government is loading SMEs with too many costs and regulations

George Osborne’s Budget speech this week is, as usual, shrouded with secrecy. But I think we can all anticipate it will include a hefty section on the Government’s support for the hi-tech industries of the future and the high-skilled jobs they would provide. This has, after all, become as much part of the Budget tradition as the photograph of the Chancellor posing outside No 11 with his red box.

Read more.

28 January 2014

No matter what the politicians say, GDP is a distorted guide to economic performance and a bad way to measure prosperity

When running a business, you learn that nothing matters more than setting the correct objectives and making sure you keep a very close eye on the balance sheet.

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1 November 2013

Japan’s elderly must get a yen for change

Japan’s recent economic history has haunted Europe ever since the global financial crisis first hit. With every quarter of weak or non-existent growth, the country’s two lost decades of stagnation was seen as a terrible warning of what the future held for Europe and the UK.
Read more.