Motivational Speakers | After Dinner Speakers | Keynote Speakers | JLA Speaker Bureau - JLA

JLA What will it take to stabilise the markets – or will instability become the norm?

RB The markets are facing the most uncertain and probably the direst economic environment since the 1930s. They are bound to be volatile.

JLA How much progress do you see towards fiscal union in 2012?

RB This is a make or break time for the Euro. You can’t just conjure up fiscal union. It will take ages to sort out. The best hope is a holding operation involving governments, the ECB and the IMF while negotiations about a full union take place.

JLA How many Eurozone countries will there be at the end of 2012?

RB I don’t know. My best guess is that two will have left, but it’s possible the number will be much larger, or even that the Euro will have ceased to exist.

JLA What are the dangers (and upsides) of fiscal union from a UK perspective?

RB If fiscal union led to a stronger European economy, that would be good. But on its own, it would do nothing about the competitiveness of peripheral nations and it might entrench current German over-saving. There are also big dangers of isolation for the UK.

JLA What effects would Chinese investment have in the Eurozone – and on the UK?

RB It all depends upon the terms. I don’t believe in the Chinese version of the fifth cavalry. They are not a charity.

JLA Once it drops, do you expect inflation to stay down throughout 2012?

RB Yes. It will drop sharply next year and further in 2013. Deflation is the greater danger.

JLA Do you expect the UK to return to recession in 2012?

RB Yes.

JLA What policy decisions will the Chancellor face in 2012?

RB He’ll have to decide whether to stay the course or try to stimulate spending; whether to sanction more QE, and whether to try to get the pound lower.

JLA What economic shocks might still be lurking on the horizon?

RB The break-up of the Eurozone, wars and instability in the Middle East.

JLA Can protest movements conceivably affect regulatory or economic policy?

RB Yes, if they gel with the public mood and the intellectual climate.

JLA Do you see any prospect of an Olympic, or even a Diamond Jubilee ‘bounce’?

RB No, the amounts are peanuts and they will be overwhelmed by macro factors.

JLA: How much progress do you see towards Eurozone fiscal union in 2012?

FC: None – or at least none that is meaningful. And none that really persuades the Germans to put in sufficient money for the Euro to survive.

JLA: Are there any advantages to the UK in leading those countries outside the zone?

FC: It depends which countries and what such leadership implies. For instance it might be handy if the Irish pegged their currency to sterling again - but that won't imply any British impact on Irish politics. The instability has certainly made the European Free Trade Area look like a better deal.

JLA: How many Eurozone countries will there be at the end of 2012?

FC: It will have lost Greece and Portugal, and probably Italy too. It will lose Spain by 2017. The question will be whether France and Germany can remain in a currency block. I suspect not in the long run, depending on the politics over the next three or four years.

JLA: Once it drops, do you expect UK inflation to stay down?

FC: Yes, simply because of the weakness of the economy, but in the long run it will rise again.

JLA: Do you see any prospect of interest rate rises and a surge in wage inflation?

FC: Not in 2012 - there just won't be the economic oomph behind a surge of wage rises. Interest rates are another matter, and might rise if sterling suddenly got caught in the tail winds of the Euro mess.

JLA: What policy decisions will the Chancellor face in 2012?

FC: How to deal with reducing the size of the public sector in the long term - and how to continue to persuade some people to pay more into the state than they get out of it.

JLA: What new measures might we see to encourage growth?

FC: The best bets would be reductions in regulations on SMEs – especially in employment and health and safety, which cost most small businesses such a lot of time and money.

JLA: What should we read into employment and GDP figures, beyond the obvious?

FC: We should beware of reading much into GDP figures and instead look at employment, purchasing managers' index and housing starts. These get close to the real economy and are more likely to pick up signs of life - or lack of it.

JLA: Do you see any prospect of an Olympic ‘bounce’?

FC: No. The real bounce will come once Europe has disentangled itself from the Euro, and its economies then start to recover (except for Germany, whose exchange rate will rise).

JLA: To what extent will northern Europe seize control of southern Europe’s finances?

SG: A better coordination of budget procedures will take place at European level. The ECB is indeed harmonising monetary policies among member states, but not budgets. Government spending is now approaching 50% of GDP and so far each country has had absolute control on budgetary assumptions and spending levels. This will change. An EU commissioner will probably be responsible for overseeing member states’ budgets. And the so-called Golden Rule (2% inflation, 3% maximum budget deficit and 60% public debt as a % of the GDP) is likely to be imposed by Germany and other AAA countries on their European colleagues.

JLA: What effects would Chinese investment have in the Eurozone – and on the UK?

SG: China has over $3,000bn in foreign currency reserves, but it’s unlikely that a significant amount of this will be channelled into Europe. Despite several announcements, China remains reluctant to invest in European sovereign bonds. Buying companies or land in Europe will also trigger political and public reactions, as seen in Iceland. Most probably, China will concentrate on developing its domestic market and financing the globalisation of Chinese ‘National Champion’ companies, creating new competitors and new brands in international markets.

JLA: What is the likely impact of elections in the US and Europe?

SG: A characteristic of the elections in the US, France, Germany (and of course Russia) is that the incumbents may be re-elected ‘by default’, because they shan’t meet any serious opposition. In such situations a major overhaul of economic policies is unlikely.

JLA: Do you expect the US / Eurozone / UK to return to recession in 2012?

SG: The conjunction of austerity plans, house price decline and a major credit crunch as banks have difficulties re-financing themselves will create a very adverse environment. Such difficulties will be exacerbated by cost-cutting measures adopted by enterprises in the last quarter of 2011. A ‘great stagnation’ may follow the ‘great recession’ of 2008.

JLA: How many Eurozone countries will there be at the end of 2012???

SG: The same number as today. Europe cannot afford to lose one country without creating a deadly blow to their economies and their credibility. They have to hang together or be hanged separately. The only question is how long it will take before the message sinks in in the minds of politicians.

JLA: How much progress do you see towards fiscal union in 2012?

JG: The Euro countries will finally have to make a decisive move, and will pull together rather than fall apart.

JLA: Are there advantages to the UK leading those countries outside the zone?

JG: Not really – they’re not a coherent group. We can be most influential by attending carefully to each one.

JLA: How many Eurozone countries will there be at the end of 2012?

JG: I expect 17 but Greece is dispensable.

JLA: Once it drops, do you expect inflation to stay down throughout 2012?

JG: It should come down at least to 3% and stay down.

JLA: What policy decisions will the Chancellor face in 2012?

JG: He has to decide whether to stick to Plan A and, if so, show he cares without spending net extra money.

JLA: What should we read into employment and GDP figures? 

JG: So far employment has held up better than anyone expected; I doubt that will continue through the recession of 2012.

JLA: Do you expect the private sector to offset public sector job cuts in 2012?

JG: Even if the Euro area pulls together and averts catastrophe we face a renewed recession. The best we can hope for is some recovery in consumption at the end of the year, when inflation falls back and the squeeze on household incomes abates.

JLA: Can protest movements conceivably affect regulatory or economic policy?

JG: Yes, but in the UK it’s more likely to harden hearts than frighten the government into concessions. Elsewhere in Europe the protests will be fiercer and possibly more effective (- riots are more persuasive than protests).

JLA: Has Russia developed a fully-fledged market economy?

LH: Russia has made huge progress. Since 2000, annual growth has averaged around 5-6%. They have paid off almost all sovereign debt, while building the world’s third biggest haul of foreign exchange reserves. State spending is around 22% of GDP and private enterprise is flourishing – spurred on by the 13% basic rate of income tax. Russia is often portrayed as a ‘statist’ economy, but that view is driven by out-dated clichés rather than a rational assessment of what’s actually going on in the world’s largest country.

JLA: Is Russia’s future economic growth as assured as the other BRICs?

LH: Russia has not grown as fast as China or India, but Russians are much wealthier - with an average income of $11,000. It’s really a middle-income country, rather than an emerging market. Given low tax rates and very low levels of personal debt, consumers have massive spending power: Russia will soon be Europe’s biggest retail market.

JLA: How do you explain their success?

LH: Russia’s resource wealth is unmatched (way beyond hydrocarbons), but the real source of growth and shareholder returns is the non-resource based domestic

economy. The burgeoning service industry is now bigger than the oil and gas sector. The Russian economy will remain subject to outside influences, not least financial instability in the West - but the growth prospects are good.

JLA: What are the rules for doing business with the Russians?

LH: In some ways Russia remains a frontier market. To maximise your chances of success you really do need to be on the ground to develop a deep well of local knowledge and contacts. For all kind of reasons, the Western press continues to

present a very one-sided view, and no-one should rely only on what they read in newspapers or on their Bloomberg screen.

Norman Lamont’s political career was effectively over when as Chancellor he claimed to see the green shoots of recovery – only to be met with derision. History is now repeating itself. The default mode for economic and financial pundits is unalloyed gloom. Anyone who suggests things are not so bad is treated with disdain. But the economy will be better in the next year.

Of course there are things that could go wrong - with the impact of government cuts, the need to fund the national debt, the squeeze on incomes caused by tax rises, inflation and personal indebtedness, and problems in the Eurozone. But most of these are manageable.

We have managed much larger national debts without difficulty in our past, the squeeze on incomes is offset by rock bottom interest rates and stability in the housing market. Germany has the resources to support the Euro and the weaker peripheral nations. She also has a strong reason to do so: the cheap currency makes German exports much more competitive.

British companies have come through this recession far better and faster than earlier ones. Exporters are benefitting from a 25% devaluation of sterling. Even modest inflation is a good thing: a price rise of 4%pa halves the real value of the nation’s debts in nine years. Meanwhile unemployment is lower than predicted (perhaps because the immigrant workforce has taken some of the strain), and house prices have fallen far less than people expected - underpinning personal spending and financial security.

History is on our side. Both the 80s and 90s recessions were followed by six years of growth at 3.5%, significantly above the long-term trend. The policies put in place by Ken Clarke in 93 were almost identical to those of today: devaluation, a public sector squeeze and a VAT increase - endowing Tony Blair’s incoming government with sound public finances and buoyant revenues.

If the recovery continues as I think, add in the regeneration and sale of the banks and a positive boost from the Olympics, and as the next election approaches the Coalition could be popular to an extent most people cannot currently imagine.

JLA: How well do you expect the economy to withstand public sector cuts?

WH: There are two tiers to the British economy. The first, based on the knowledge economy and strong world growth, will do well. The second (more than half the country) will fare poorly - hit by cuts and falling house prices.

JLA: Do we face a return to the North/South divide?

WH: Without doubt, smaller cities outside the South East are in profound trouble.

JLA: What do you make of localism?

WH: Localism without government funds risks becoming a pseudonym for cuts.

JLA: What shocks might still be lurking on the horizon?

WH: There’s a great risk of a second financial crisis sparked by a) bankrupt US municipalities, b) Chinese banks exposed as loss making by a slowdown in Chinese economy, and c) restructuring of euro debt by distressed peripheral states. And there could easily be a second oil shock, caused by the political situation in Korea and Iran.

JLA: How much progress do you see towards fiscal union in 2012?

RL: Little if any. The Germans will press for treaty change, the French will drag their feet - and the British will make a nuisance of themselves on the sidelines. What we can expect, though, is more conditionality in ECB and EU support for troubled Eurozone members, and that will mean much closer intervention in fiscal policies.

JLA: Are there any advantages in leading those countries outside the zone?

RL: Lord Owen’s idea that the UK should set itself up as leader of the ‘outs’ is not at all attractive. Britain’s interest lies in sustaining the single market, which means playing as full a part as it can in the debates of the 27 - not setting itself up as an official outlier.

JLA: What policy decisions will the Chancellor face?

RL: The key challenge will be to reconcile his plans for fiscal consolidation with the continuing downturn in the economy. His original decisions were based on the assumption that the economy would grow above trend by 2012, which is clearly not the case. His numbers no longer add up, and he will miss his target of balancing the budget in the lifetime of this parliament.

JLA: What should we read into employment and GDP figures?

RL: Both numbers show that the economy was damaged more seriously in the recession than we thought at the time; that the banking system is still impaired; that household budgets have been squeezed between rising inflation and stagnant earnings growth, and that our major export markets are heading towards a recession. Unemployment now stands at a 15-year high, and will be higher still in 12 months time.

JLA: Can protest movements conceivably affect regulatory or economic policy?

RL: Yes, if they are sustained over time. The ‘Occupy Wall Street’ movement is a symptom of a more general disquiet about the way the market economy has been working in recent years. With rising income inequality, slow growth and high unemployment, these pressures will build up further during the course of the year.

JLA: How much progress do you see towards fiscal union this year?

NL: I don’t see the Eurozone becoming a fiscal union in the sense of a European Finance Minister, a unified tax system and a federal budget. There will be more attempts at peer pressure, with a group of ‘wise men’ or a Commissioner examining members' budgets and judging whether they are compatible with the operation of the euro. I don't expect this system to work but I doubt there will be any moves beyond it in the short term. Full fiscal union is a logical outcome from monetary union but the public in many countries are rightly not prepared to accept that decisions on tax and spending should be taken away from democratic institutions.

JLA: Are there any advantages to the UK in leading those countries outside the zone?

NL: The UK is the most important EU economy outside the Eurozone, so it would make sense to play a leading part in the deliberations of any group that is formed. I think it is important that the President of the EU Council, Mr Van Rompuy, should chair both Eurozone and non-Eurozone meetings.

JLA: How many Eurozone members do you think there will be at the end of 2012?

NL: I think the Euro will eventually fracture, but not in 2012. I expect Greece to drop out of the Euro possibly in 2013 or 2014.  

JLA: Once it drops, do you expect inflation to stay down?

NL: I believe inflation will fall quite rapidly in 2012. I see no sign of money supply increasing, far from it. What we have seen in the last few years has been a consequence of the fall in the exchange rate combined with a rise in commodity prices. These, I believe, are relative changes in prices, rather than inflation.

JLA: What key policy decisions is George Osborne facing?

NL: He needs to stick firmly to his budged deficit reduction plans and retain his credibility. He also needs to be careful that we don't so swamp the banks with demands for new capital regulation and deleveraging that they can't lend to small businesses.

JLA: What should we read into employment and GDP figures?

NL: Until late 2011 unemployment figures didn’t increase as might have been expected. That may indicate that employers were hoarding labour in anticipation of recovery, but it also indicates decreasing productivity. Now employers are letting people go.

JLA: Do you see any prospect of an Olympic, or even a Diamond Jubilee bounce?

NL: I would expect some rays of economic sunshine.

JLA: Will the BRICs continue to provide the engine for growth?

PM: More important than the BRICs are the commodity-producing BRACSS: Brazil, Russia, Australia, Canada, South Africa and Saudi Arabia. So long as banks hold back lending, marginal suppliers’ capacity will diminish and the supply-side shock in assets extracted from the planet will persist. Money is pouring into speculative trading in foodstuffs, raw materials and oil – rather than production.

JLA: And this will feed inflation?

PM: Commodity price rises spell inflation in Emerging Markets almost immediately, because half their income is spent on food and energy. It devastates the poor and low income workers, which is why protests, riots and coups begin. When the price of an onion goes up 100% in India, it’s not surprising to see wage demands jump. In China inflation is leading to demands for 50% increases from unskilled workers (according to real businesses, not government numbers).

JLA: So we should be wary of investing in emerging markets?

PM: It’s ironic that Western investors have most of their portfolio allocated to emerging markets. Top line growth might look attractive, but costs are pushing inflation up which means higher interest rates. Meanwhile higher costs squeeze productivity leading to lower returns, and civil unrest generates uncertainty that is bound to cause market volatility. 

JLA: So where are the investment opportunities?

PM: There will be innovations in the delivery of medical services in the emerging markets. Defence is also interesting; budget cuts will bite into traditional capital-intensive equipment, but governments will spend on satellites and cyberspace.  Meanwhile new gas finds in the US have the capacity both to reduce America's dependency on imported oil, and create the next ‘Silicon Valley’ type boom. The site of the largest gas field might make Pennsylvania the next big thing. 

JLA: How do you see the macro picture in 2012?

DMW: We start from a basis of more than usual uncertainty. One of the issues is binary: will the Euro be fixed or not – and does fixing mean breaking it up? Other questions are, can the US economy continue to outpace its critics in an increasingly dire global context, and can China engineer its attempted soft landing? Anyone who’s certain they know the answers probably doesn’t understand the questions well enough.

JLA: What do you see happening in Euroland?

DMW: The probability of a disruptive Euro scenario has increased to something near 50%. Because we think a break-up is inevitable in the end, due to lack of competitiveness in peripheral countries, we suspect that an early collapse – though painful – would be the least damaging outcome in the long term.

JLA: And what would be the consequences?

DMW: It would cause a much larger banking crisis than the Lehmans collapse, requiring bailouts across Europe but especially in France where three major banks will be wiped out. Hence the paranoia of the French political class, who now have to face 10 years of lost growth to pay for their expensive Euro gamble.

JLA: So do you see a pretty horrific year for everyone?

DMW: No, it will vary. Eastern countries are still doing pretty well, and although there’s a risk of overconfidence they have plenty of ammunition to fire. The US is doing much better than expected and has achieved a significant lead in many 21st century industries. Weaker oil and lower commodity prices as growth slows will cushion consumers against some of the worst effects of recession – and in those countries with sufficient scope that will also allow reflationary fiscal and monetary action.

JLA: Will northern Europe seize control of southern Europe’s finances?

WM: If the North forces the South into a deflationary adjustment, the process will take a decade and trigger massive political opposition in those countries.

JLA: Will Chinese ride to the rescue?

WM: I don’t see any radical shift in heir position. China will not bail out the Europeans if the Eurozone itself is not willing to do what it takes.

JLA: How do you see the likely impact of 2012 elections in Europe?

WM: A Socialist victory in France is unlikely to have a big impact, unless Hollande were to increase fiscal spending, which I doubt.

JLA: How do the Germans see fiscal union?

WM: A fiscal union would end the euro crisis, but it would require big political change. The main danger from the German perspective is that a fiscal union would not do enough to provide effective control over fiscal policy.

JLA: Are there any advantages to the UK in leading those outside the zone?

WM: None whatsoever. The non-eurozone group is much less coherent, especially since many of them want to join the currency.

JLA: Can the City of London retain its dominant position after fiscal union?

WM: Not for ever - the Eurozone will eventually try to repatriate some of the business it lost to the City.

JLA: What other shocks might be lurking on the horizon?

WM: Political resistance and depression in southern Europe, and breakdown of Monti’s government well before the 2013 elections.

JLA: Do you expect the US / Eurozone / UK to return to recession in 2012?

WM: Maybe not a US recession, but definitely in the Eurozone and probably the UK.

JLA: How many Eurozone members will there be at the end of 2012???

WM: 17. Greece has no rational incentive to leave – though it might default inside the Eurozone.

JLA: What shape recovery do you envisage?
AP: A very long bath tub.

JLA: Are you optimistic or pessimistic about the economic prospects?
AP: Gloomy. There’s a grave threat from ‘a monster bubble’ in equities, fuelled by the wave of liquidity and low interest rates. My fear is that divisions between central bankers and finance ministries, and between China and America, will weaken the co-ordinated response and there’ll be no policy tools left to deal with another systemic failure.
 
JLA: What has recession taught us about globalisation? 
AP: That it can be reversed. Witness China’s fixing of her currency, US protectionism (like the tariff on tyres) and capital controls in Brazil. Protectionism is on the rise, and will worsen with further bouts of currency volatility.
 
JLA: What of the G20’s chances of reaching agreement on regulation? 
AP: The EU/Anglo-American split makes successful regulation unlikely. The Obama administration has failed to learn from the 1930s (and Japan in the 90s), which show the need for a careful sequencing and adjustment of monetary policy, debt management and fiscal policy.
 
JLA: How might we fare in the UK? 
AP: We will fare disastrously if fiscal stimulus is withdrawn and government spending fails to compensate for the collapse in private output - leading to further falls in sterling. And because of the vast liabilities weighing down banks’ balance sheets, further rises in unemployment and home foreclosures pose significant risks to both the housing and banking sectors.

JLA: What movements have you recorded in your famous ‘Skip’ Index?

DS: Two skips in my street represent trend growth, and at times recently there have been three or four. This may be telling us less about the general health of the economy than the fact that people are improving rather than moving house.

JLA: What are the dangers (and upsides) of fiscal union from a UK perspective?

DS: Fiscal union is necessary to make the euro work, so to the extent that a stable euro is beneficial for Britain, it should happen. It will formalise the two-tier nature of the EU, which is something we probably have to live with.

JLA: How can the City retain its dominant position after fiscal union?

DS: People feared for the City when the euro came into being, and those fears were misplaced. The biggest danger now is from an anti-banker, anti-financial services backlash in the EU – which we’re already seeing with a proposed transactions tax.

JLA: How many Euro zone countries will there be at the end of 2012?

DS: 16. I think Greece could and should drop out, with the rest ring-fenced - but the EU will move heaven and earth to try to hold the 17 together.

JLA: Do you expect the UK to return to recession?

DS: No, but it might be close run. When growth is 0.2% - 0.4% a quarter, it doesn’t take much to knock it to negative. A Eurozone implosion would guarantee a recession in Britain.

JLA: Do you see any prospect of interest rate rises and a surge in wage inflation?

DS: No. I don’t think we’ll see a hike in Bank rate until after Sir Mervyn King steps down – and wage growth will remain subdued by a combination of public sector pay restraint and the impact of high unemployment on private sector workers.

JLA: Do you still expect the private sector to offset public sector job cuts?

DS: Just about. In the first 12 months of recovery, 500,000 private sector jobs comfortably offset just over 100,000 public sector cuts. Since then a bulge in public sector job losses has overwhelmed job creation, but I expect a small net gain in employment during 2012.

JLA: Do you see any prospect of an Olympic bounce?

DS: I hope so.

JLA: When will the markets stop betting against Eurozone countries?

JUS: 17 fiscal/tax systems and one central bank was never going to work, without clear disciplines and rules. Of course they originally had fines and sanctions - but decided to waive them! The alternative is to break up the Euro into a core group (the ‘Neuro’?), with or without a secondary group of weaker nations operating at a sub value - just as South Africa had both a domestic and an overseas Rand.

JLA: How well do you expect the economy to withstand public sector cuts?

JUS: Much depends on a properly functioning banking system with more competition and more lending at the right price. We carried out surgery to get Northern Rock into shape very quickly, but RBS and Lloyds have only had Savlon and sticking plaster - reform and action is needed!

JLA: Are the right policies in place to rebalance the UK economy?

JUS: Remarkably the UK is still the world’s 6th biggest manufacturing nation - not that you’d know from the media. Government initiatives must focus on our strengths as a nation of small companies. For example, why not get rid of Stamp Duty on property transactions, which would generate far more revenue in VAT from people doing up their new houses?

JLA: Is this a good climate for mergers & acquisitions?

JUS: Yes, but unlike the last cycle it wont be based on borrowings and debt. Many companies are cash rich and have paid down debt, so they’re in a good position to pick up weaker competitors.

JLA: What other shocks might be lurking on the horizon in 2012?

JUS: Lots. The rise of protectionism as the US and others put up defensive trade barriers. In a different vein some European banks may have been baled out, but they still have funding to roll over, which could prove fateful. And whilst I don’t see China as one huge bubble, it is rather like a bar of Aero with lots of smaller bubbles - some of which will almost certainly go pop.

JLA: Who will win in Europe – Technocrats or Democrats?

MVW: We’ll certainly see the continuing rise of the technocrats replacing the democrats who borrowed and spent all the money. This is an anti-democratic trend in a region with a chequered democratic history. The constraints are that German voters don’t want control of southern Europe if it means picking up the cost, and second that southern Europeans are not averse to coups and revolutions if pushed to extremes.     

JLA: What effects would Chinese investment have in the Eurozone – and on the UK?

MVW: This has been talked up as a news story, but if you were a Chinese leader why would you buy into Europe now or hold more of your reserves in Euro paper? It’s far more important for China to invest in Africa and Latin America, where the natural resources are, and to maintain good relations with the US. Europe is a sideshow for China.

JLA: How might Eurozone reforms affect UK trading relationships?

MVW: Sensible reforms (a restructuring of the Euro without its delinquent members, and closer fiscal union for the remainder) would help UK trade in the long run by enabling Europe to return to growth and prosperity. However, we’re not looking at a calm process of reform, but stumbling towards it without consensus or clear leadership. So in the short term the impact on trade and trading relationships will be traumatic.  

JLA: Are there any advantages to the UK in leading those countries outside the zone?

MVW: None. We should retain our traditional role and relationships as an independent mercantile nation, a leading Nato member and friend of both the US and continental Europe. But we should co-operate more closely with the Republic of Ireland, which is a very natural partner now that past tensions have been left aside.

JLA: Can the City retain its dominant position?

MVW: Yes (even with a financial transactions tax, if it happens) for all the traditional logistical reasons: office space, time zone, back office workforce, English language, pleasantness and the fact that London is a cosmopolitan place to live.

JLA: Do you expect the private sector to offset public sector job cuts in 2012?

MVW: Yes I expect to see that trend emerging towards the end of the year.

JLA: What policy decisions does the Chancellor face?

MVW: Managing unemployment will be his most difficult challenge. If and when the number passes 3 million, the pressure to ease back on public sector cuts and boost stimulus measures will be intense. But he has no real choice other than to stick to his chosen path.