Transfixed as you were by Westminster chaos, did you also spot the news that Hitachi is about to cancel or suspend construction of the Wylfa nuclear power station in North Wales? The Japanese engineering giant has evidently failed to reach agreement on a guaranteed electricity price and terms for a UK government stake in the project; its decision follows that of its compatriot Toshiba, which in November pulled out of building a nuclear station at Moorside in Cumbria, largely because it disliked the Treasury’s favoured financing model that loads risk on to the contractor.
These two projects between them were intended to keep the lights on in 11 million UK homes, factories and offices.Theresa May’s talks last week with Shinzo Abe, her visiting opposite number from Tokyo, were too consumed by the threat of no deal to cover the question of whether future London trade talks with Japan will have to take place in the dark.
Business Secretary Greg Clark also last year rejected (against independent advice) the Swansea Bay tidal lagoon project, which if replicated at other coastal sites might have provided another useful percentage of national power. So the gap created by continuing closures of carbon-fuelled and old nuclear stations — a long-time theme of this column — looms wider than ever. The only alternative anyone talks about is unreliable offshore wind, and the only major onshore project still claiming to be on track is the most controversial of all: the Hinkley Point nuclear station, being built by the French company EDF with Chinese partners, and using a reactor design that has encountered serious problems elsewhere.
If Hinkley really comes on stream by 2025 as planned, it will sell electricity at a guaranteed price that is double the current market level, with the excess cost passed to every UK consumer. EDF might then move on to a similar new build at Sizewell in Suffolk, or we might find only the Chinese still willing to do business with us in a sector with such a troubled history. But the energy shortage that has been threatening for a decade is coming closer to reality — and when the Brexit hubbub finally subsides, it will be high on the list of issues with which distracted ministers have failed to deal.
Carmakers’ home truths
The popular new narrative for the UK auto industry is that its troubles are only temporarily to do with Brexit and much more to do with misguided policies, wrong decisions and economic swings. There’s a sharp decline in demand for luxury models from pinched Chinese consumers, while diesel sales have slumped because regulators continue to penalise them despite cleaner engines, leaving manufacturers regretting model-range investments. The EU’s new emissions testing regime has caused production problems across the continent; electric vehicle sales won’t take off until governments provide more charging points; and as interest rates begin to rise, motorists are losing the appetite for buying new cars on credit.
Set against all that, the potential for a few weeks’ disruption of supply parts as lorries queue at Dover after 29 March looks relatively minor, and can probably be fixed by stockpiling or (as at the Mini factory at Cowley) a routine maintenance break. Even the pain of new tariffs will recede if the pound falls significantly. So if the likes of Ralf Speth of Jaguar Land Rover were not ‘scaremongering’ when they pleaded for a Brexit that wouldn’t hurt their supply chains, they were at least using the issue as a partial smokescreen.
All this makes a coherent argument that adds useful perspective to current debate. But still I ask: will any foreign carmaker build a new factory in the UK in the next 20 years? I very much doubt it.
Jim Yong Who?
What with everything else that’s been kicking off this week — I refer of course to the early retirements of Andy Murray and the Duchess of Sussex’s unnamed bodyguard — you could be forgiven for not noticing that Jim Yong Kim has resigned, three years ahead of schedule, as president of the World Bank. In an office once occupied by titans such as Robert McNamara and James Wolfensohn, this Korean-American healthcare boffin has made negligible impact since his appointment by Barack Obama in 2012 to run the Washington institution that used to be a major instrument of America’s global economic power. Kim’s chief legacy is a $200 billion fund for action on climate change, but his critics note that China — whose aim abroad is not to save the planet but to secure raw materials for its own hugely polluting industrial base — now lends vastly more to poorer nations than the World Bank does, and wields more and more influence on their behaviour.
The bank’s presidency is traditionally a White House appointment, and Kim’s other legacy, in leaving just two years into his second five-year term, is to give Donald Trump the opportunity to name his successor — possibly one of his coterie of ‘climate-wreckers’ who hate the whole idea of funnelling US taxpayers’ money to Third World governments. But Trump has reportedly asked his daughter Ivanka (who worked with Kim on a women’s entrepreneurship fund, and was briefly herself rumoured as a runner for the job) to help him find the right person: hot tips include her friend Nikki Haley, the rising political star and former US ambassador to the UN.
Meanwhile, leading the field of alternative candidates for the umpteenth time is former Nigerian finance minister Ngozi Okonjo-Iweala, who I salute for her persistence. But let me go one better and propose Dambisa Moyo, a Zambian-born economist who began her career at the World Bank, rose via Goldman Sachs to the board of Barclays, and has written bracingly on the failures of aid, the decline of western economic clout and the rise of China. The Trump family may be unfamiliar with her work, but I think they’ll find she ticks every box.
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