15 key issues for the New Year
2015: unfinished business requiring answers
New leaders will emerge, others will depart. Technology will continue to astound us and the consumer will get ever-more control.
There will also be a UK General Election and, before that, George Osborne’s final Budget of the Parliament. Will he ease off on austerity for the sake of re-election?
The new year will also be accompanied by some unfinished business from the last one. Here are 15 key issues that require answers in 2015.
Who will be the new CBI Scotland director?
The organisation has been without a leader since Iain McMillan (left) retired at the annual meeting at the end of September. No reason has been given for not having someone in post, despite McMillan agreeing with his London bosses in January to step down at the agm. There has been no short list, nor any names suggested, leading to speculation that it might be deemed something of a poisoned chalice following the debacle earlier in the year over the CBI’s registration with the Electoral Commission as a supporter of No in the referendum campaign. However, the CBI did tell Daily Business earlier this month that it expected to announce an appointment early in the New Year.
Treasury to sell more shares in Lloyds if price remains buoyant
The announcement just before Christmas that the Treasury will sell up to 15% of its remaining stake in Lloyds Bank over the next six months came as a surprise. Earlier sales raised £7.4 billion and the next issue should contribute another £3bn. Chancellor George Osborne will hope to use the money for a pre-election giveaway and also use the return of Lloyds gradually into private ownership as evidence of his careful stewardship of the bank since it needed bailing out by the Labour government. Shares will not be sold below the 73.6p per share average price paid by the previous government in 2008/09. While Osborne hoped to have the whole of the bank off the Treassury’s balance sheet before the Election, the latest sale will reduce the taxpayers’ stake from 24.9% to about 20%.
What will be the consequences of the Sony/North Korea dispute?
The world watches to see who will blink first as hackers promise another attack following Sony’s decision to allow the controversial film The Interview to be shown in selective cinemas. The dispute over the film, which fictionalises a plot to assassinate the North Korean president, has become a fight over free speech and has reached the highest level of international diplomacy. Sony, which initially withheld release, caved in to pressure from Hollywood actors and the White House. Whatever the political fall-out and commercial success of the film one likely consequence is that cyber security will rise up the list of boardroom priorities.
Will sterling or the dollar be the stronger currency?
In the early part of 2014 there was a strong possibility of a UK interest rate rise. Together with strong economic data, the pound appreciated against the dollar reaching five-year highs of $1.71 in July. The second half of the year, however, has been a different story. The US economic recovery has gathered pace with output much stronger than earlier predictions. The prospects of a rate rise in the US has only added to the dollar’s strength. Respondents to a recent survey predict the sterling/dollar rate to fall below $1.55 by the end of 2015.
Will the Royal High School, Edinburgh, finally get an occupier?
The building on Calton Hill looking majestically over Edinburgh has been unoccupied since 1968 and is falling into disrepair. So it was good news to hear that Duddingston House Properties want to turn it into the city’s first six-star hotel, creating 640 jobs and injecting £27m into the local economy. The company says it is talking to three hotel operators, none of which currently operates in Scotland. However, cynics say Duddingston has owned the building for four year and has owned the former Odeon in Clerk Street without any work taking place.
Will the Chancellor cut taxes in his final Budget before the General Election?
Oil is the top priority, given the severe implications of the price fall on jobs and exploration. The industry notes a new attitude in Whitehall towards the North Sea and in ensuring production continues, whatever the price of a barrel. Osborne announced the first cut in oil taxes for 20 years and there is expectation that he will go further. Meanwhile, the wine and whisky industries have united under a campaign called Drop the Duty to call for a significant cut in excise duties. The campaign is arguing that by cutting the levies it will stimulate demand and help raise taxes which can be used for other purposes.
Will Scotland get more listed banks?
The boy has been crying wolf over the Clydesdale’s future for years, but Andrew Thorburn made it clear that he wanted a sale or flotation of its UK assets as soon as he took over as chief executive of parent group National Australia Bank in August. Once market conditions are right there appears to be no reason why Clydesdale and its Yorkshire Bank sister will not be listed on the London Stock Exchange. While Clydesdale has had its problems and fines to deal with, the re-establishment of an independent traditional Scottish bank is bound to be a huge fillip to the Scottish economy. There is also talk of floating Edinburgh-based Tesco Bank, though this looks to be a couple of years away. Much will depend on the outcome of CEO Dave Lewis’s review of the group (see above).
Will Edinburgh get a tram extension?
The opening of the line in May this year brought much relief to all involved and affected by the disruption during the building work. Trams director Tom Norris says it has beaten its budget and passenger forecasts and is hopeful that three million passengers will have used it by the end of this month. But the price of reviving the project after the enforced delay and budget overspend was to truncate the route. Enthusiasts on Edinburgh Council are itching to extend the service into residential areas, principally to Leith. But resistance remains among those who see it as too expensive and an unnecessary burden on the taxpayer.
Borders to get its railway, but will it get the passengers?
Passenger services will begin running through the Borders in September for the first time since 1969. So far the £294 million project has been delivered on time and amid growing popular support. Trains will serve a route largely running along the old line between Edinburgh and Tweedbank and former First Minister Alex Salmond said it would be carrying a million passengers a year within five years. Critics have questioned the numbers, including the expected economic benefits, but the opening is bound to be greeted with the sort enthusiasm that saw the Edinburgh trams launch to wide public acclaim.
What will be the shape of the Scottish media?
It’s been another tough year for the newspaper industry with circulations continuing to tumble across the board and advertising still in decline. All media groups now have a digital strategy but the delivery of digital news services is patchy and readers find some websites and apps difficult to navigate and use. Jobs continue to be lost and downsizing generally has become an all too frequently used word in the new media landscape. The Scotsman will lay off almost 40 people in the Spring leaving an already threadbare staff starved of further support. Even so, new ventures have emerged, not least Daily Business, the first independent seven-day digital business news service in Scotland, and The National, a new independence-supporting newspaper from the Herald and Times Group. The launch of the latter was a surprise even to many of the staff who were not aware of the project until the last few days before it hit the streets. It was decided to continue printing the paper after a successful week-long pilot run. But it will need to buck an industry-wide trend if it is to have a long term future.
Can Rangers re-emerge as a Scottish footballing power?
It’s hard to believe that the Ibrox club is even thought of as a minnow these days, but dwindling attendances, poor performances on the pitch and the possibility of failing to reach the Premier League this year add to the financial woes and boardroom struggles off the pitch. The club has become a shadow of the one that has dominated Scottish football for so many years, desperately in need of £8 million just to see it through the current season. If any club needed a saviour it can trust then Rangers are that club. Unfortunately, it has been cursed by owners who have failed to fit the bill. Its yearning for success is shared by everyone in football, including (grudgingly) those at Celtic who miss the traditional rivalry of the Old Firm matches, as well as the revenue that it brings to the game in general.
Northern Ireland to get corporation tax powers. What does that mean for rest of the UK?
The Autumn Statement gave a pledge – as forecast in Daily Business – to hand over control of corporation tax powers to the province which came with the condition that the coalition reached agreement on a range of issues that threatened it with collapse. A deal was reached before Christmas, triggering Stormont’s ability to set a corporation tax rate to compete with the Republic which has a 12.5% levy against the UK’s 21%. Scotland had wanted this power in the Smith Commission report and some in the government may agitate for it to be devolved. In the meantime, some firms headquartered in other parts of the UK may look to relocate to Northern Ireland.
Who will lead Business Stream?
Mark Powles left his post as chief executive of Scottish Water’s commercial arm in October, suddenly and without explanation. Johanna Dow, group finance manager since the company was set up in 2007, was installed as interim chief executive. She played a key role in setting up Business Stream in readiness for the opening up of the retail non-domestic water industry to competition in Scotland in 2008 and since then has been instrumental in creating the financial platform to grow the business into new areas. She is obviously in pole position to get the job on a permanent basis.
What will be in chief executive Dave Lewis’s Masterplan for Tesco?
Parachuted in as chief executive from Unilever in September, Lewis’s first task was to make the shock announcement that a £250 million hole had been found in Tesco’s profits. It was the latest in a year-long list of crises including several profits warnings. Lewis has taken charge of key areas of the business and aims to come up with a strategy to revive its fortunes and tackle the discounters who have been biting into the market share of all the top four British grocers. The 49-year-old has given little away about his plans apart from promising to give some details on 8 January. But the contents of his blueprint have not yet even been seen by senior management at the firm.
Will the oil price continue to fall and is it all bad news?
Oil has been hit by a combination of falling demand in emerging markets and higher production from the US and some recovering oil producers such as Libya and Iraq. Forecasters are divided between those who believe it will plummet as low as $20 a barrel and those who expect it to stabilise and recover by the end of the year. The current low price has called into question the SNP’s economic planning, in particular its case for financing an independent state. But a fall in the price is also bad news for the UK, impacting on the Treasury’s own spending and revenue forecasts. Thousands of jobs will be lost if exploration dries up, but many of those workers will move to other industries, mitigating the impact. Furthermore, economies everywhere can benefit from the lower price and it has served as an effective tax cut for millions of consumers.