Soap opera shows the ECB’s weakness

If Mario Draghi and the European Central Bank were performing a soap opera, it would have been yanked from television screens months ago. The plot is the same every time: a dance around the subject of quantitative easing (QE) with the performance conducted in code.

In Thursday’s rip-roaring episode, the audience was invited to read great significance into the fact that the central bank no longer “expects” to boost its balance sheet by €1tn but “intends” to do so. On the other hand, ECB-watchers noted, the word “target” was not uttered, which may or may not be meaningful.

A continent scratched its head, not knowing whether full-blown QE is a dead cert for January, a strong possibility for March, or whether the Germans are warming up their lawyers for one last attempt to stop the whole enterprise.

On the subject of the legality of QE – which a functional central bank would have settled a couple of years ago – Draghi answered a question with a question: “Do you think we would discuss something which is illegal?” One would hope not but, with the ECB, you never really know.

Behind the verbal gymnastics, the eurozone economy sinks to its knees. GDP growth in 2015 will be 1%, not the 1.6% expected as recently as September. Inflation is predicted to be 0.9% this year and 1.6% next, but the computers haven’t yet had time to measure the depressing effect of a lower oil price.

These numbers are so weak that, one way or one another, the safest bet is that Draghi will be able to muster a majority to authorise QE soon, and take his chances with German objections. That, at least, is the consensus of opinion among economists.

You have to wonder, though, whether this effort to drag the ECB to the starting line will be the end of the matter. If eurozone QE were to follow the UK and US models, there would be regular meetings to discuss the size and speed of purchases of sovereign debt.

Such a spin-off series, if it produces yet more internal battles and Delphic declarations, might sap confidence even further, thereby undermining half the point of unconventional monetary easing. The eurozone needs a united central bank with a clear sense of purpose. That seems no more likely today than a year ago.

FCA needs clarity

They are a busy bunch at the Financial Conduct Authority. But did it really require nine months to get to the bottom of the cock-up in March that led a plunge in the share prices of all the big insurers?

The result of the inquiry, which was conducted by Clifford Chance (so excuses about an overload of work wouldn’t wash anyway), is due next week. The affair never seemed terribly complicated. Somebody briefed the Telegraph on the subject of old insurance policies and the facts came out all wrong; then the FCA compounded the error by not stating the limited scope of its actual inquiry until mid-afternoon.

In the defence of the FCA, one might argue that the stakes were raised when George Osborne demanded to know where accountability should lie. Even so, nine months? A cynic might suspect the FCA was hoping that the passage of time would dissipate the heat. Maybe it has.

But clarity is still required. Clive Adamson, head of supervision, is reported to be leaving the FCA but his departure is said to be unconnected with the inquiry. Let’s have that possible complication removed by the time the FCA speaks. If Adamson did nothing wrong, the regulator must say so out loud.

Songbird strong-armed

The Qataris’ first bid for Songbird Estates, majority owner of Canary Wharf, was worth 295p a share. Some analysts thought a fair offer would start with a 4. Now the Qatar Investment Authority, bidding with Brookfield Property Partners, has decided to split the difference: the new bid is 350p, or £2.6bn.

It’s also a take-it-or-leave offer directly to Songbird shareholders – the QIA isn’t interested in talking to the board. As a tactic, that’s sensible. The Songbird board reckoned the assets are worth 381p a share so its directors are unlikely to recommend a bid at a lower level.

But these are also strong-arm tactics as the QIA starts with a 28% stake in Songbird. It is relying on investors’ natural worry about being left as minority owners in an illiquid stock. Lowball or not, the offer has a high chance of success.

Corporate hot air

The next time the directors of Centrica indulge in one of their regular bouts of “why, oh why, does nobody trust us?” they should dig out British Gas’s announcement yesterday of its “£11.1m donation to charity”.

The payment is not a donation as the rest of the world understands the term. It is a sum that has to be paid on the orders of Ofgem, the regulator, because British Gas failed to meet its obligations under two government-sponsored environmental schemes, one to install insulation in homes and the other to reduce carbon emissions.

Ofgem’s investigation found that British Gas senior management “did not take appropriate action” to ensure the efficiency measures were delivered on time. The regulator called the failures unacceptable.

Yes, the £11m may go a charity, but even that is yet to be settled. The money must be used “to benefit vulnerable customers”, says Ofgem. The company has merely proposed that the British Gas Energy Trust, which it funds to support worthy energy causes, should be the vehicle. But calling the payment a “donation” – suggesting that British Gas has a choice as to whether to give – is ridiculous.

OK, it’s a relatively trivial piece of corporate flimflammery. But one of these days Centrica will have to talk again about the hot topic of energy bills, and the lagged effect of a falling oil price. The company would help itself by developing a reputation for presenting facts plainly.