UFO Info Week-End

There has only been one previous occasion when the forecasts seemed to

There has only been one previous occasion when the forecasts seemed to be in doubt, which was during the Russian debt default of the autumn of 1998. In the end the Chancellor exceeded them by a country mile.No such turnaround is likely this time, which leaves the Government having to fall back on the parlous state of the world economy by way of excuse. For some reason, the Chancellor never alludes to his own particular contribution to our downwardly mobile growth performance, which is constantly to load the private sector up with more tax and social legislation. Nothing is guaranteed to do greater damage to business investment and jobs than an unduly onerous tax regime, and the Chancellor is already perilously close to it.The 1 percentage point increase in the employers’ rate of national insurance, which kicks in next April, is a particularly pernicious tax hike which many employers will chose to pay for by shedding 1 per cent of their workforces. It is textbook stuff that governments should borrow more to spend in a downturn, thus partially offsetting the private sector slump, but to raise taxes to spend more is not what Keynes would have ordered That’s just robbing Peter to pay Paul.

The public sector is always less innovative and less efficient than the private sector, so there is no chance of it improving economic or productivity growth.Six ContinentsSix Continents is the silly name that Bass alighted on for the purpose of disassociating itself from its roots in the beerage when it flogged off its breweries to Interbrew a couple of years back. Now it is abandoning all ties with the past by demerging the pubs business as well, leaving the company as a pure international hotels group, together with a small and superfluous soft drinks operation. This is the sort of “focus” that investors are supposed to like, but they can hardly be expected to give it an overwhelming vote of confidence when it also results in an effective 38 per cent cut in the dividend.The truth of the matter is that Bass’s transformation from brewer to hotelier has been an almost complete waste of time and money, benefiting no one other than the investment bankers who did the deals. Sir Ian Prosser, the Bass chairman, got a good price for his breweries For that at least he cannot be faulted. Interbrew payed a monopoly price in the naive belief that competition regulators would allow Bass to be crunched together with Whitbread.

Sir Ian Prosser, the Bass chairman, had spent years trying to bring about a similar consolidation, and learned to his cost that it could not be done. He was happy enough to let the Belgian brewer try and fail again.Even so, the transformation from beer to hotels looks a pointless and value destructive one. Bass had nowhere to go in the mature British beer market, but other brewers have addressed similar constraints by expanding internationally. Interbrew, Scottish & Newcastle and SABMiller have all achieved varying degrees of success as pure international brewers.