Howard Davies: Jakarta welcomes Cara Delevingne

MT DIARY: Floating airport in the Seine, anyone? Time for George Osborne to be very afraid.

by Howard Davies
Last Updated: 28 Oct 2014

Jakarta is not an easy city to love. Without a mass transit system, every major road is a permanent traffic jam. Singapore it is not. There is an atmospheric corner near the port with a few Dutch colonial buildings called Batavia. Sadly, my hotel was about eight miles distant, which was about a six-hour drive or four hours' walk scrabbling over construction sites.

But Indonesia should not be ignored. With 240 million people and a reasonably stable political scene - a calm presidential transition was under way while I was there - it is a huge and attractive market, and UK sales directors should be all over it. The population has an insatiable appetite for British life insurance, which is a start, but the only other prominent British export I saw was Cara Delevingne, whose elfin grunge looks seemed to grace every shopping mall. No sign of Poppy, though, so even Delevingne Plc has work to do.

In Singapore, traffic jams were not the problem. The principal hazard was polite people congratulating me on the fact that the UK had decided to stay as one. When I tried to explain that the extravagant devolution promises made in the late stages of the campaign had left the government, and the loyal opposition, with a nasty hangover, their eyes glazed over. And when I launched into a tirade on the crucial need to answer the West Lothian question, they clearly thought I had finally lost it. Those whom the Scots wish to destroy, they first make mad was the thought that crossed my mind.

So for once it was a relief to return to Europe, but after a short time in Paris the feeling soon passed. I was invited to spend 24 hours at a conference rabbiting on about the eurozone and the future thereof. The (off) keynote speech was given by Michel Sapin, the French finance minister. As I listened, I recalled that, in his diary, Berlioz - who was also a journalist - said the only occupation he could imagine that would be more stressful than being obliged to produce a daily column was being finance minister of a bankrupt republic. Certainly, M Sapin looked like a worried little Socialist.

The French have had to put off meeting their Maastricht-compatible, budget-deficit target for three more years. I asked his economic adviser how the economy looked. 'Flat,' he said, and it has been for nearly four years. There are no signs of light at the end of the Eurotunnel. They want Signor Draghi to help, but with interest rates at zero and the Germans saying loudly: 'QE? Nein danke,' he has run out of autostrada. So Juncker must save them with a huge Euro-investment programme. They want something ginormous to be built, never mind what.

I suggested that if they wanted an extravagant project that could absorb almost any amount of investment, they might consider a huge floating airport in the Seine estuary. 'Ah, you perfidious British with your sense of humour bizarre' was the only response I got.

The situation is, though, quite critical. It is hard to see how the eurozone can escape from its economic doldrums without fiscal expansion somewhere, or a monetary policy that exposes the ECB to the risk of loss. Almost all non-German economists think Germany should try to offset the contractionary effects of budgetary austerity in the high-deficit countries by encouraging more spending at home. But with the rise of the Eurosceptic 'Alternative for Germany' party, Merkel's room for manoeuvre is very limited, not to say invisible.

So once again there are mutterings in dark corners about whether the zone can survive in its present shape. Joe Stiglitz, who did not win his Nobel prize for tact, offered the brilliant insight that the euro was only a piece of paper and could be changed at any time. Yet another example of the new world riding to the rescue of the old.

Back home, the IMF was in town. Mme Lagarde, who will probably be called home to be president fairly soon, was obliged to eat a slice of humble pie. A couple of years ago, the Fund said that the UK would never recover while the government pursued a deficit-cutting strategy. Now it thinks we will have the fastest-growing large economy in Europe. As I discovered in Paris, the French think our economy is only growing because we have let the property market rip, but the IMF can't quite say that.

Given its recent forecasting record, George Osborne ought now to be very afraid. If Mme Lagarde and her team think the weather is now set fair for a while, he should be battening down the hatches for a nasty storm.

Still, why worry about old-fashioned things like growth or productivity or jobs? Shouldn't we all take Sir Richard Branson's advice and take as much time off as we like? There will be no control on the amount of leave taken at Virgin in the future, he tells us. What a brilliant, forward-looking, down-with-the-kids policy. Cue photo op of Branson on his island beach (with added marketing material).

It turns out, on closer inspection, that the new non-rule applies only to his personal HQ staff, not to hoi polloi like air stewards. Furthermore, that you can go only if you are '100%' up to date with all your work, a state of nirvana few of us ever attain. So in practice this grand gesture removes the safe harbour that a fixed holiday allocation gives to struggling workers. But I do think we are overdue for an indefinite holiday from media coverage of content-free Branson marketing press releases.

Howard Davies is the chairman of the Airports Commission. Follow him on Twitter at: @howardjdavies

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