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Bad news, Governor: the wage-rise spiral is already raging

19 February 2022

9:00 AM

19 February 2022

9:00 AM

I’ve had the opportunity recently to take part in wage-rise discussions for several small entities in which I’m involved. The conversation has been much the same everywhere. ‘How about we offer them 3 per cent?’ ‘But that’s less than current inflation and they didn’t have a rise when they were on furlough last year.’ ‘So how about 5 per cent?’ ‘Safer to say 7, but they’d still be worse off than before the pandemic. And they’ll get 10 per cent or better if they move anywhere else.’

All of which was perfectly confirmed by official figures this week: annual pay settlements running at 3.7 per cent but (because so many people having been moving jobs for better wages) average pay up by 6.3 per cent in a year and by more than 10 per cent since February 2020. Meanwhile, unemployment is down to 4.1 per cent in an exceptionally tight labour market. Governor Bailey of the Bank of England took flak earlier this month for urging workers to restrain pay demands ‘otherwise it will get out of control’. Ground-level observation says it already has.

Selling our own security

My remarks (15 January and 5 February) on the late bolting of the stable door in terms of foreign acquisitions of UK technologies that have strategic value have been indirectly endorsed by former MI6 chief Sir Alex Younger, commenting in the FT on news that our leading (and indeed only major) microchip designer, Arm Holdings, may end up listed on the Nasdaq exchange in New York. Arm had arguably ceased to be a UK national asset when it was bought for $32 billion in 2016 by Softbank of Japan, which then agreed in 2020 to sell it for $40 billion to Nvidia, a Californian games-tech venture which claimed the merger would create ‘the premier computing company for the age of artificial intelligence’.

But the deal became tangled in multinational red tape and fell through, leaving Softbank in search of a market listing to maximise Arm’s value. So would it really matter if that listing is on Nasdaq, which attracts savvier tech investors and generates higher valuations than the London stock exchange? Yes, says Younger — also citing the 2014 sale to Google of DeepMind, a London–based pioneer in artificial intelligence — because our ‘future security depends on our ability to maintain and develop a strong technology base’ and it’s ‘self-evident’ that ‘we should keep these companies at home’.

Contrary to free-market thinking that may be, but it’s the realpolitik of a world in which games software drives military hardware and there’s no limit to the sinister reach of computing power in hostile hands. Regrettably, the best of our homegrown talent in these fields — so far, at least — has already left these shores.

Digital collectibles

I’m guessing most traditional readers have not yet embraced investing in ‘non-fungible tokens’ alongside their collections of 18th-century watercolours and first editions of Trollope. But the news that HMRC has seized three NFTs as part of a £1.4 million fraud inquiry confirms that ‘digital art’ has truly gone mainstream: experts say sales of NFTs reached $25 billion last year, accounting for one third of the global art market.

But what, you ask, is an NFT? In short, it’s a digital file representing an image or piece of music, accompanied by an encrypted certificate of authenticity and stored on a ‘digital public ledger’ known as a blockchain — which is also the domain of the cryptocurrencies that are often used to pay for NFTs. If that’s all too esoteric, you may wonder whether the pleasure of NFT ownership is anything like the real thing, or more about hoarding assets out of sight while boasting about them to your friends: according to one guide, NFTs are ‘the 21st-century version of a safety deposit box’.

But that also means NFT investors are vulnerable to online versions of the 2015 Hatton Garden heist, when raiders bored through concrete to empty a vault of locked boxes. And now we know they’re in HMRC’s sights too, alongside a variety of crypto scams — all of which rather defeats the dream of digital devotees to occupy a metaverse beyond the reach of the state. Much simpler to hang a painting you love over the mantelpiece until the taxman visits, then quickly hide it in the potting shed.

Putin’s portfolio

Does Vladimir Putin collect NFTs? More likely he orders Moscow hackers to steal other people’s NFTs, just for the hell of it. But whatever he’s popping into his ill-gotten portfolio these days — let’s hope his eye for avant-garde art is better than his taste in Kremlin furniture — western analysts are much more likely to know about it in detail than they were a decade ago.

Back then, I commissioned a Spectator article which estimated the Russian leader’s fortune at £25 billion but which the lawyers wouldn’t let me publish even after we included a response from his press secretary, Dmitry Peskov, that our questions were ‘nothing else but speculations’. Indeed, to be honest, they were — and even Liz Truss’s new ‘nowhere to hide’ sanctions regime may struggle to nail financial assets that are not actually ‘in the City’, as is often reported, but stashed far offshore under pyramids of nominee companies that just happen to have been set up by London lawyers.

Real estate, on the other hand, is impossible to hide — and it will be intriguing to see how many mansions are padlocked in Paris, Biarritz and Monte Carlo (said to be favoured by Putin’s closest connections) as well as in our own capital where his oligarch cronies like to hang out.

Meanwhile, as I alluded to above, military technology has also advanced remarkably in the past decade and it would be good to think that the first Russian missile fired towards Ukraine might be diverted by Pentagon robots towards Sochi on the Black Sea, to land on the nominee-owned extravaganza known as ‘Putin’s Palace’.

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