Hope for a post-Brexit world?

18 Jul

Oxford Spires

‘Remainers’ have been somewhat short of hope post the 23rd June referendum – chortling at the collapse of the leadership ambitions ‘the Oxford set’ (Johnson, Gove) not withstanding. But now an Oxford man has come forward with an intelligent way out of our self-induced morass . George Yarrow (Hertford College and the Regulatory Policy Institute) has called attention to the potential to use the European Economic Area as a way of retaining the benefits of the single market while using its safeguarding provisions to deal with immigration pressures (see http://bit.ly/2a3FQ43).

There are strong similarities between his approach and elements of ‘Flexcit’, which Richard North et al have been advocating (see http://bit.ly/2a6bPA7, or the Youtube movies – http://bit.ly/29P3Ftj, but skip the first 8 minutes).

Whilst tempted to write a longer post on the technicalities, I will forebear. It’s the sunniest day of the year so far, and I didn’t create this mess (stand forward D Cameron plus the Eurocrats pushing for ‘A Country called Europe’). So read the pieces, see the movie, and pray that the new occupant of 10 Downing Street is doing the same!

The EU Referendum – a guide for the perplexed

16 Jun

So here’s a paper written originally for my children trying to explain what the EU is all about and why we need to remain:EU Referendum – A Guide for the Perplexed v2 I’m sharing it here as there is clearly a lotto misinformation out there from, inter alia, the Murdoch press.

Brexit – are there any economists left in favour?

27 May

OECD Brexit Cover

I have just finished reading the OECD’s report on the the economic consequences of Brexit (see http://goo.gl/mezune). It’s a damning piece of work for anyone who believes Brexit won’t damage the economy or who follows the line ‘well, we can just negotiate our own trade deals can’t we?’ Not surprisingly, it chimes in closely with what the head of the World Trade Organisation (WTO) has said about the difficulties of the UK trying to ‘go it alone’ in seeking new trade agreements (see https://goo.gl/YfW21F).

The OCED report also provides a useful summary of other studies done (see Table 5, p36 of the OECD Report). All show big negative effects of Brexit – larger for the UK, but significant also for the remaining EU members.

A key Brexit argument against these studies seems to be that they are just produced by an ‘elite’ group of economists who failed to forecast our last recession. In fact, the main institutions weighing in against Brexit – the IMF, the OECD, the WTO – are the bodies set up after 1945 to ensure we never had to endure again the ‘began my neighbour’ trade wars and competitive devaluations of the 1930s. They have played a major role, whatever their mistakes, in creating the postwar prosperity many of us enjoy.

A more reasoned challenge would be to say that aggregate figures can hide important distributional impacts. If we vote to remain, as I hope, we need to look more carefully at this, and the impact of net EU migration on specific communities. If there are gains from remaining in the EU, the gainers can afford to compensate the losers, and should so so.

So to return to the title – have we any economists left who favour Brexit?

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Bank-based mobile payments

5 Apr

Looks as if there is lot of interesting stuff happening in Copenhagen at the Money 20/20 conference – #Money 2020Europe on Twitter. Auka (formerly mCASH) for example has an interesting White Paper out on bank-based mobile payments (see http://auka.io/#/money2020 for your copy).

Auka’s cloud-based solution is offering banks a white label variant of Paym and ZAPP in the UK –  P2P smartphone payments and an alternative for merchants to card payments and PayPal. It will be interesting to see how they (and their competitors) fare. Customer and merchant uptake will be the problem – why would customers use this rather than Apple Pay (or the Android alternative when it lands in Europe)?

 

 

EU Referendum – it’s all about trade

2 Apr

I recall an English teacher remarking that there were so many grammatical mistakes in his local newspaper – the Bucks Free Press as it happens -that ‘he needed a bowl to be sick in’ when he read it.

I have much the same reaction reading (or listening to) the Brexiteers’ views on leaving the EU – brought into sharp relief this week by an article in the FT by Peter Sutherland. He points out how difficult it will be for the UK to negotiate new trade agreements if it were to leave – and notes that when we leave the 22 EU trade agreements with the UK’s Commonwealth partners will cease to apply. The full article is worth a read – see https://goo.gl/7HheeZ

Now it is true that the EU institutions are overdue for reform, and that some of the Remain arguments are tenuous too (difficult to see what staying or leaving has to do with sharing intelligence on terrorism, for example). But effectively our decision in the 70s to join and remain was about trade. We had options then as to what we should do – much more difficult to see that we have a realistic leave option now.

Time to rejoin some old colleagues

23 Oct

CockburnGroom

In case you are wondering why you have seen fewer posts of late…

Since March this year I have been working on a couple of payments-related projects with CEPA (see http://www.cepa.co.uk, now added to the blogroll on the right). The projects have gone well, and I’ve enjoyed the interaction with the CEPA team. So I’m now joining them (on a part time basis) as a Senior Adviser to develop their work in financial services.

One of the great aspects of CEPA is their recruitment of ‘bright young things’ with up to date economics and quant skills. So there is a trade to be done – they can keep us up to date on the latest thinking in economics while we pass on some of our painfully-acquired knowledge of how management consulting works.

Cash ain’t King in Greece!

1 Jul

No doubt many of you have been watching this unfolding Greek tragedy. And I’ve tweeted already about the excellent CEPR piece about he background to the crisis and Greece’s (pre-financial crash) economic mess – see goo.gl/v7NLKo

But it occurred to me to wonder how card transactions are faring in Act II (Act III being, I assume, where everyone gets killed, which seems the likely outcome at the moment). Well, according to Visa Europe’s news update from a couple of days ago, not too badly (see goo.gl/wsyZ8u ). Not only is there a distinction between Greek and non-Greek Visa card holders (to whom the €60 daily limit doesn’t apply), but Visa also says that card transactions are being processed as normal, and helpfully hints that some shops are still doing cashback!

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Cash is King in Waterloo!

10 May

It had really been a very pleasant meal. A number of old colleagues from PwC and IBM days had gathered together to celebrate a colleague’s retirement anniversary – he’d retired 5 years ago and very sensibly thought one celebration wasn’t enough.

But time had passed and carriages had to be summoned – so the time had come to pay the bill for the food (Trevor, our host and the quinquennial retiree, was stumping up for the wine).

Now I should explain, in the light of what follows, that this was a highly educated and analytical group of people – a high proportion of Oxbridge, a couple who were running or had run a software business, a senior guy from IBM’s Analytics offering, and a futurologist. By way of parenthesis, I should also say that the futurologist had spent part of the meal explaining to us why his prediction that ‘internet shopping would never take off’ had been so far off the mark.

Anyway back to the bill. This seemed to be a classic situation to try using Paym, the UK’s new mobile payment application available to most people with a bank account and a mobile phone, which allows you to make payments via your mobile.

‘Why don’t we use Paym?’ I said

‘What’s that?’ ‘Never heard of it’ ‘No need, I’ve got the cash here’ were the remarks that followed – a rather deathly combination of zero awareness and zero interest when the concept was explained.

Undaunted, I ploughed on. I might add I’d registered for Paym with my bank, HSBC, when it was launched a year ago, and had been on the lookout for an opportunity to use it.

I had Trevor’s number on my mobile. So I logged into the HSBC website, pressed the Paym button, and put in the details. I pressed ‘Confirm’ – the screen cogitated for a few moments and generated an error message. It had some zeros and an eight in it – which I assumed meant Trevor wasn’t a Paym user.

Meanwhile the twenty pound notes were whizzing round. I could fondly imagine that if the bill (£35 a head plus tip, so two twenties did the trick) had been for an odd amount Paym might have been of use – but somehow I doubt it.

Paym’s issue of course is ubiquity – like the spread of the mobile phone, it’s only useful to you if the chap you want to pay has Paym installed. Mobiles have taken off because of the lack of a close substitute. Paym’s problem appear to be – cash!

Cash is King? – not at a Spanish petrol station!

19 Mar

OLYMPUS DIGITAL CAMERA

So we have been enjoying a well-earned break in Andalusia for a few days following the end of my contract with the new Payment Systems Regulator (http://www.fca.org.uk/psr). We pull in to a petrol station somewhere south of Ronda (definitely worth a visit). I fill up with €31.20 worth of petrol and proffer €32. ‘Un momento’ says the lady – who has noticed another car pulling up in front of us. She leaves us, fills up the new arrival. He proffers a card, which she processes with a portable card terminal – voila, done. He drives off. At which point she toddles off to get my 80 cents. Leaving me feeling very stupid. Good job I didn’t try Bitcoin.

Apple Pay – an iTunes for the card industry?

16 Sep
Credit: Tambako/Flickr

Credit: Tambako/Flick

The headline in the FT is uncompromising – “Apple Pay is poised to do for payment companies what the iPod did for the music industry” – and the piece that follows is an interesting exploration of what Apple’s announcement last week signified. So is this the end of Visa and Mastercard’s dominance of the world of card payments? (see http://goo.gl/YIsvVS for those with FT access.)

Probably not. Buried in the detail of that piece (and in other analysis from, for example, Mobile Payments Insider http://www.mobilepaymentsinsider.com) is a rather different picture, which has a lot more to do with the security features of Apple devices, and the resultant savings in fraud costs, than with the death of the card titans. The latter might usefully paraphrase Bogart :“Reports of our death are greatly exaggerated”.

Tim Cook, CEO of Apple, made much of Apple Pay being designed with the consumer in mind. Be that as it may, the biometric security technology built in to Apple’s devices will serve the more prosaic end of making payments via an iPhone and other Apple gadgets less prone to fraud. Don’t forget that the launch was in the US, a country who leads the world in patent innovation but has, for whatever reason, lagged Europe by a decade or so in the adoption of CHIP and PIN as a method of verifying payments. Apple Pay neatly gets round that impasse. And also ushers in the new era of single-use tokenisati

And at the rumoured 0.15% per transaction, the merchants, card processors and bank issuers look to have acquired something of a bargain – a price Apple is no doubt willing to concede (for now) to secure its seat at the global payments table, and to lure the banking top brass to Cupertino to pay homage.

So what do the card titans lose? Well, the physical plastic card may not be as ubiquitous as heretofore, but that will probably save them in renewals and lost card replacements. Their infrastructure, and charges to merchants for processing, will roll on pretty unchanged. True, their own e-wallet offerings may now be quietly shelved or allowed to wither on the vine – but that again will yield savings on investments. Perhaps the biggest blow will be to their plans to expand their scope. Apple is pushing them firmly back into a payments processing box and saying “leave the customer side to people who know what they are doing.” Which, as anyone who uses Verified by Visa or the Mastercard alternative will testify, is probably no bad thing.

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