CUTTING ROOM

CUTTING ROOM - Keep an eye on China; trade unions have glass ceilings, too; fast trains, lumbering finances; what's GFC Economics hiding in its name?... Evan Davis at large

by EVAN DAVIS, is economics editor of the BBC
Last Updated: 31 Aug 2010

Keep an eye on China; trade unions have glass ceilings, too; fast trains, lumbering finances; what's GFC Economics hiding in its name?... Evan Davis at large

It was that venerated Guardian editor CP Scott who said: 'Comment is free but facts are sacred.' I'm not sure I agree with him. My predecessor at the BBC, Peter Jay, always said that facts are scattered all over the place; the problem in journalism is interpreting them properly.

Still, never let it be said I don't give you sacred facts in this column. For example, this is one I stumbled on in a Lehman Brothers report. In 1820, China represented 30% of the world economy, but by 1950 produced only 4.5% of world output. It's probably a tad lower than that now. Yet China has about 21% of the world population. If it were producing that share of today's global output, it would have an economy six times the size it is now. No wonder people are putting money there.

Another item from the fascinating fact factory: did you know that a woman is now almost as likely to be a member of a trade union as a man?

Twenty-nine per cent of male employees are union members, with female employees a shade behind at 28%. Of course, this is not so much due to increased union participation among women as decreased participation among men. Ten years ago, 42% of male employees were union members, compared to 32% of women holding membership.

It all raises one obvious question. Where are the women union leaders? I know Britain's boardrooms are pretty mono-gendered, but the unions must be almost as bad.

Not long now until Phase One of the fast rail link to the Channel Tunnel is open. It's about 90% complete, and services will start late next year.

At last, Britain will have its own TGV line, knocking some 20 minutes off the journey to Paris.

Of course, that's the last reason for having a fast rail link. The real reason is simply to eliminate the tedium of having to listen to the inevitable passenger whines on the Eurostar as to how slowly it goes on the English side of the channel.

Anyway, if you are a bit of an anorak, you can sometimes get a surprisingly close look at the pristine new track. A friend and I turned off the M2 on a recent Sunday afternoon and found there was nothing stopping us from driving right up to the track edge. (No power lines had yet been installed, but any children reading this should avoid copying my example.)

It's not often you see freshly laid TGV track in such detail. Indeed, we even felt obliged to dance around a little in the sure knowledge that no such opportunity will ever repeat itself. But while it might be easy to penetrate the security of the rail link, it's not at all easy to penetrate the complex financial structure governing it. It involves London & Continental Railways, Union Railways, Eurostar, the Government, Rail Link Engineering, numerous contractors, Railtrack and Network Rail.

This might not be significant as regards Phase One - which is near completion and costing only pounds 1.9 billion. But work is now under way on the pounds 3.3 billion Phase Two, which takes the Eurostar into London by 12 miles of tunnel, and rests on more dodgy economics.

I'm assured that Phase Two can be paid for if all goes well for the Eurostar.

But there are two key facts about the fast rail link and its finances: first, that Railtrack was expected to purchase the line and run it upon completion, yet that company is not quite what it was when construction started. And, second, the debt of the project is guaranteed by the taxpayer.

So, no prizes for guessing who will probably end up footing the bill for the whole scheme.

At last I've solved a mystery that has perplexed me for quite a while about a small firm of economic analysts, GFC Economics. What on earth does GFC stand for?

The leading lights in the firm are called Graham and Colin, but that wouldn't explain the F in the middle? How about Global Forecasting Consultancy?

Yet that sounds a bit pretentious for the down-to-earth guys who run GFC.

Well, the mystery is solved. It's named in honour of Gillingham Football Club - probably the only economic consultancy to be named in such a way.

As it happens, both GFCs have been doing well in recent years: the football team is in Division One and GFC Economics has found its forecasts of interest rates have out-performed those of the rest of the City. But Gillingham Football Club's star striker, Marlon King, is currently in jail for handling a stolen car. I trust no such fate awaits the leading players in GFC Economics.

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