In the Sunday Telegraph recently Jeremy Warner observed that all three major Western central banks – the Federal Reserve, the European Central Bank and the Bank of England – have continued to tighten policy regardless of the latest turbulence in the banking industry, writes David Little, a partner in our Corporate and Commercial Law team, who also handles Sports Law cases.
Resurgent inflation, not financial instability, is the main problem, they all say, “Confirming the old truism that central banks are forever doomed to look backwards at the last mishap, rather than forward to the next one.” Belief in the resilience of the European banking system is naive. It doesn’t matter how much capital and liquidity a bank may have – it’s finished if depositors lose faith.
This week Andrew Bailey told the Treasury Select Committee that he had been “taken by surprise” by the speed of the depositors’ run on Silicon Valley Bank, exacerbated he suggested by the concentration of customer firms from a single industry.
His suggestion that British banks are very strong and that the market has merely been testing out the likes of Deutsche Bank rings rather hollow when he omitted to say months ago that all the warning signs that Credit Suisse was a failing bank were simply ignored.
No bank, nor any major institution come to that, is really too big to fail, in spite of Central Bank’s assurances. Regardless of a bank’s size if all its depositors decide to flee contagion will spread across the whole of the financial sector. Still Mr Bailey seems to think we’re all willing to hang on his every word.
Easter is not too far away, and neither would it seem is the demise of the Royal Mail postal service. Incredibly the Commercial Workers Union is still playing chicken with senior management and recently rejected a 9% pay deal. The CWU rejects management’s demands that modernisation is essential and working practices must also change.
Who will win. And frankly who cares? When did you last post an ordinary 1st class letter or a 2nd class postcard? These days important legal documents are invariably sent recorded or special delivery. Email, as we know has superceded the postcard and letter. And for good reason, do you know what a first stamp costs these days?
From the 3rd of April 2023, the price of a First Class stamp will increase by 15p to £1.10p, and the price of a Second Class stamp will increase by 7p to 75p.
Meanwhile the CWU thinks a 9% pay rise is unacceptable.
David Little is a Partner at Bishop & Sewell in our expert Corporate & Commercial team. If you would like to contact him, please quote Ref CB389 on either 020 7631 4141 or email firstname.lastname@example.org.
The above is accurate as at 04 April 2023. The information above may be subject to change during these ever-changing times. The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.