BUSINESS WITH PERSONALITY HOW TO BECOME A TRAVEL TOURING GREAT ENTREPRENEUR AMERICA’S WILD WEST IN OUR SIX POINT GUIDE P29 STYLE P30 Issue 1,525 Monday 5 December 2011 www.cityam.com FREE Life science CALLS FOR PM TO firms to get £180m fund ▲ POLITICS PROTECT THE CITY BY DAVID CROW DAVID Cameron will today unveil a ▲ POLITICS new £180m fund to help firms in the BY TIM WALLACE life science sector bring their prod- ucts to market more quickly, as part A RECORD 49 new EU regulations are of a new strategy designed to boost about to hit the City, prompting calls Britain’s biomedical industry. from industry groups, think-tanks and The Prime Minister hopes the fund Tory MPs for David Cameron to do will help bridge the so-called “valley more to protect British interests at a of death” – the period between when European level. a firm conceives a new drug or med- A tidal wave of rules, covering areas ical technology and the moment at from derivatives trading to the loca- which the market is ready to invest tion of clearing houses and short-sell- in it. ing to insurance, will hit the UK The government says that private disproportionately hard, think tank investors want to see evidence that Open Europe warns today in a compre- products will work in humans – hensive report underlining the creep rather than laboratory animals – of European financial legislation. meaning that some of the best inno- John Redwood, the influential vations never see the light of day. Conservative MP, told City A.M. the Cameron is expected to say: “I “onslaught of regulation” would dam- want the great discoveries of the next age the UK and warned there could be decade happening in British labs, the a Tory rebellion if David Cameron does new technologies born in British not do more to fight for Britain. start-ups.” As the City contributed £53.5bn in Small and medium-sized life sci- tax in 2009-10 – around 11 per cent of David Cameron could face a backbench rebellion if he does not do more to fight anti-City regulation in Brussels Picture: REUTERS ence firms will be able to apply to the total revenues – and generated a sub- so-called Biomedical Catalyst Fund, stantial trade surplus, Open Europe and we need an opt-out to protect Luke Johnson, chairman of Risk Meanwhile, Iain Duncan Smith, the as will some university departments. argues it is vital that the UK govern- them,” he said. Capital Partners, said Europe’s pro- work and pensions secretary, has Meanwhile, Cameron is expected ment has a larger say in any new regu- “The government should not try to posed financial transaction tax was called on the Prime Minister to hold a to announce a new early access lation. postpone a renegotiation. Other coun- “particularly damaging” . referendum on plans for greater fiscal scheme for seriously ill patients, “Cameron would be right to use EU tries need us to pass changes, so it is He added: “This is a good chance to union in the Eurozone, it is under- which would see them get access to treaty changes to ask for an emergency time to use our leverage and say the stop these populist, xenophobic pro- stood. new drugs a year before they are fully brake to halt regulation that could relationship doesn’t work any more.” posals before they fully take hold.” The former Tory leader and a stan- licensed. And he will announce plans harm financial services and the wider Redwood believes a majority of The City of London Corporation also dard-bearer for the right of the party to share patients’ NHS records with economy,” said Open Europe. Conservative backbenchers agree with warned against protectionism and said that any “major treaty change”, private health companies, in a bid to Redwood added: “It is vital to protect him, threatening Cameron’s leader- said the financial transaction tax such as the one being devised by encourage greater co-operation financial services. They are a valuable ship if he fails to use this opportunity would cost hundreds of thousands of France and Germany, should be put to between the public and private sec- asset in terms of jobs and tax revenue, to support British interests. UK jobs. a public vote. tors. Certified Distribution FTSE 100 ▲5,552.29 +62.95 DOW ▼12,019.42 -0.61 NASDAQ ▲2,626.93 +0.73 £/$ 1.56 ▼-0.01 £/¤ 1.16 ▼-0.01 ¤/$ ▼1.34 -0.01 03/10/11 till 30/10/11 is 100,123 2 News CITYA.M. 5 DECEMBER 2011 Central bank independence won’t last NEWS | IN BRIEF US denies Iran shot down drone Iranian media reported yesterday that their country’s military had shot down a ageable in a democracy when it was implicit subsidy is involved. Combined ing excessive monetary creation (and US reconnaissance drone in eastern Iran, confined to targeting consumer with QE, central banks are now oper- its corollary, credit). But central banks but a US official said there was no indica- prices, as it was pre-2008 – the finan- ating a quasi-fiscal policy. No wonder whose job it is to micro-manage the tion the aircraft had been shot down. cial policy committee will be far more pressure for repoliticisation is mount- financial system or who – like the NATO’s US-led mission in Afghanistan said controversial from the start. Already, ing, especially in the US and EU. Bank did in October – bought £16.9bn the Iranian report could refer to an the government is inventing polices Bordo and James don’t pull any in gilts at a time when the govern- unarmed US spy drone that went missing (such as credit easing or subsidies for punches. They worry politicians see ment issued £17bn, monetising the last week. The incident comes as Tehran 95 per cent mortgages) to counteract monetary policy as a free lunch and entire deficit, cannot remain inde- tries to contain outrage at the storming of EDITOR’S LETTER the tightening of its own regulators. increasingly wish to be able to influ- pendent. the British embassy on Tuesday, after As a paper from the Politeia think- ence to whom credit is allocated (to If anything, today’s problem is even London announced sanctions on Iran’s ALLISTER HEATH tank by Michael Bordo of Rutgers and their constituents, rather than more greater than that: it is clear from the central bank in connection with Iran’s Harold James of Princeton points out, globally). Bordo and James compare global government debt crisis that fiat nuclear enrichment programme. SLOWLY but surely, the case for cen- the intellectual shift towards central this to the interwar period when trade money – currencies entirely detached MORE: 20 tral bank independence is being bank independence over the past cou- policy became nationalised, with dis- from any commodity or anchor and undone. It may not look like it, with ple of decades was based on the view astrous consequences. produced entirely at the discretion of Bondholder losses may be eased central bankers being afforded even that their mission was to pursue a My own view is that it never made government agencies – has failed. Its Germany is prepared to soften language in greater powers than before the reces- simple rule: minimise consumer price sense for central banks to focus on adoption has abolished all restraints the Eurozone's permanent bailout mecha- sion, but we are probably at the high inflation. The problem is that this is consumer price inflation – this obses- on governments and has meant that nism compelling bondholders to accept watermark of their influence and no longer what they are being asked sion is what triggered the bubbles. currencies keep being devalued and losses in exchange for much stricter budg- autonomy. At some stage, as it to do. Discretion is back, central banks One could still have independent cen- inflated away. Eventually, we will need et rules, sources have said. The shift would becomes clear that monetary policy are once again taking over financial tral banks tasked with a more com- a new monetary system more in tune not completely remove the possibility of has turned into fiscal policy, and regulation and monetary stability is plex set of rules, aiming at controlling with the principles of capitalism and private bondholders having to accept loss- when the full extent of the macro-pru- much less of a political priority. the growth rate of total liquidity in sound money – until then, expect ten- es in the future, but it would align the dential powers that have been granted Central banks now have to make the economy. Such rules could have sions between central bankers and statutes of the European Stability to officials become apparent, there choices about what types of securities prevented the bubble, which was at its governments to rise and rise. Mechanism more closely with IMF rules, will be a backlash. The independent to take into their portfolio; when core a simple, old-fashioned case of [email protected] creating a more-level playing field for pri- monetary policy committee was man- there is a possibility of a loss, an central banks allowing or encourag- Follow me on Twitter: @allisterheath vate buyers of Eurozone sovereign debt. 4th Floor, 33 Queen Street, London, EC4R 1BR Tel: 020 3201 8900 Fax: 020 7283 5334 City vacancies Email: [email protected] www.cityam.com Editorial Editor Allister Heath Deputy Editor David Hellier News Editor David Crow tumble again Acting Night Editor Marion Dakers Business Features Editor Marc Sidwell Lifestyle Editor Zoe Strimpel ▲ RECRUITMENT were created in November, compared Sports Editor Frank Dalleres BY THOMAS MCMAHON to 3,160 in October.