Howard Davies on post-Trump shock and a useful tip for the sauna

MT's diarist casts an eye on the the charms of Sicily and France's forthcoming election.

by Howard Davies
Last Updated: 24 Feb 2017

My first job after university was in the Foreign Office. Or should I say the Foreign Office was my first employer, as to describe what I did as a 'job' stretches the meaning of the word. My humble task was to keep an eye on the bilateral relationships between the UK and Scandinavia, Italy, Austria and the Holy See. As things turned out, 80% of my time was spent on Iceland (a cod war broke out), 10% on the Vatican (Ian Paisley was always spoiling for a fight) and 10% on the rest. We managed to avoid going to war with Sweden or Italy, an achievement of which I felt proud.

But at the time there was one serious bone of contention between us and Italy, as a recent trip to Sicily reminded me. In the mid 70s, Italians liked to talk of il sorpasso. British drivers on Italian roads will be aware that overtaking is an all-consuming passion of Italian men, especially those in clapped-out Fiat Puntos, but at the time the word had an economic meaning. It was meant to indicate the point at which Italian GDP per head exceeded British. Italy experienced quite rapid economic growth in the 50s and 60s, while the UK languished as the Sick Man of Europe, and by the time we joined the EEC they were within touching distance of us in terms of wealth per head, then around $20,000 in each case.

But there are several ways of calculating these figures: some favoured the UK, some Italy. Unsurprisingly the Italian government favoured the latter, which resulted in some unedifying correspondence and public argy-bargy, which developed into a kind of 'stats war'.

Nowadays, the only form of sorpasso on offer is the hair-raising, high-revving game played by drivers in small cars keen to show that their other appendages are grande not tall, in the mysterious Starbucks lexicon. GDP per head in latte land is now around $33,800, while our average is just over $41,000, over 20% bigger. The Italian economy has barely grown in the last 20 years: they have paid a heavy price for the euro. So it is no surprise that some exotic new political parties have emerged. Indeed it is surprising that there has not been more social unrest. I dread to think what would happen here after 20 years of stagnation: our family structures would struggle to cope with unemployed children staying at home with ma and pa through their 30s.

Fortunately, many of Sicily's charms remain unaffected. You can still play chicken at every junction as drivers coming in from the right hit the main road at high speed, you can still have fun guessing which galleries and churches will display a chiuso sign at times when their websites say they are open, you can eat pizzas you would send back if Domino's delivered them to your door, and marvel at the colourful displays of plastic bags and assorted rubbish in every layby. La dolce vita, in short (or should I say tall).

It was a relief to get back to New York, a city exhibiting chronic PTS - Post Trump Shock. There is a permanent strolling protest outside Trump Tower on 5th Avenue. New York's finest insist that demonstrators keep moving which, at minus five degrees, they are more than happy to do. Only Chinese tourists taking Sino-selfies for the folks back home are allowed to pause.

But inside the neighbouring midtown towers, wherever two or three financiers are gathered together, the talk is of how the markets have loved the new president so far, expecting higher fiscal deficits and rising rates, together with a powerful dose of deregulation. So far those factors have outweighed concerns about trade protection and the impact of visa restrictions on immigration. We shall see how that balance is struck as the year develops: it may not be plain sailing. In the meantime, the smart money is investing heavily in tickets for the London production of Hamilton, which looks Trump-proof.

And so to Paris, where a different form of high anxiety reigns. It looked for a while as though Fillon would be a shoo-in for the presidency in May. He seems to have what it takes to beat Mme Le Pen: Catholic, provincial and authentically Gaullist - the reverse of everything the working class hated about Sarkozy. But Fillon's risk managers neglected once important factor: Welsh-wife risk, known to many in the valleys but little understood in Paris. Lady Penelope pocketed close to a million euros as his aide in Parliament, while telling the Daily Telegraph that she had never worked for him on his career. Zut alors!

The National Front, which is of course a family dynasty like the Clintons, can't make hay without falling into a glasshouses trap, but the long sideburned ex-Rothschild banker Macron, who has never bothered with any of that troublesome democracy nonsense, is reaping the whirlwind. His wife, 24 years older, was his lycee teacher, not his assistant, quite another kettle of poissons. France, it is very clear, is another country. Vive la difference.

But in one respect the difference is small. Their GDP per head is just slightly above the UK's. However, with productivity per hour about 30% higher than ours, the French achieve that level of output in four days, leaving three days for la vie en rose. Quite why our newspapers and politicians think that is such a bad idea is a mystery to me.

Finally, a word to the wise. (The editor likes this organ to be useful to thrusting young managers). Beware of fitbitus saunarensis, a rash you get on your wrist if you forget to take your Fitbit off when you go into the sauna. In America, I would sue. Here, I just feel a little silly.

Howard Davies is chairman of RBS


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