Saturday, 18 June 2016
Thursday, 16 June 2016
Tuesday, 14 June 2016
Monday, 13 June 2016
The 'Brexit effect'
It is intriguing that, this month, the entire UK will vote on whether to remain a member of the European Union (EU). Naturally, opinion polls have swung back and forth between the “Vote Leave” and “Stronger in Europe” campaigns. As the June 23, 2016 date draws closer, expectations are that the polls will become tighter and tighter.
Just like the Scottish Independence vote, there is a two year negotiation period between the UK and the EU should Britons support the “Vote Leave” campaign. Nevertheless, despite that negotiation period, the uncertainty that exists surrounding the likely impact of Brexit, the phrase coined if Britain exits the EU, is real. Hence, the next few weeks and days may see some turbulence on financial markets.
This is not dissimilar to the lead-up to the 2015 general election in Britain when, again, there was considerable uncertainty as to whether there would be a definite result. This referendum will be the third vote taking place within Britain in the last three years where the impact will be felt way beyond its borders and ought not to be taken lightly.
In my view, Scots appear to have a preference for Europe despite the NO vote in 2014 while the English do not. I must admit though that I’m not sure how the Welsh feel about being either British or European. History might play a significant role in the psyche of these three countries that make up Great Britain which may very well be playing out for all the world to witness.
I have sought the views of many Barbadians who
either live or have lived in the UK as to which way they will vote on June 23. Views are starkly mixed within this group with the older folks wanting Britain to exit while the younger persons want Britain to stay. I’ve had some rather frank conversations and the perspectives shared were quite surprising.
either live or have lived in the UK as to which way they will vote on June 23. Views are starkly mixed within this group with the older folks wanting Britain to exit while the younger persons want Britain to stay. I’ve had some rather frank conversations and the perspectives shared were quite surprising.
No one knows at this time what the full impact of Brexit from the EU would unleash. What is real is the uncertainty that the negotiation period might usher in thereafter. Brits might still come and vacation in Barbados. Barbados will still maintain ties with Britain, particularly in the Commonwealth setting. What perhaps is my concern more than anything else is exactly how our government would likely respond.
I would imagine by now that the High Commissioner for Barbados in the UK and our Ambassador in Brussels and their respective staff will be actively engaging the attention of the British Government and the EU as to the potential ramifications of Brexit. Not to mention the local engagement with the British High Commissioner and the EU Ambassador currently in Barbados.
This is the kind of leadership I would expect of the Minister of Foreign Affairs reinforced by the Prime Minister himself. Of course, after all, this consultation between these stakeholders ought to be followed up by clear and decisive communications not only with Barbadians residing in Barbados but also those currently in Britain as well as across the EU.
Perhaps I might be overreacting but the reason that governments are in place is to make certain that, at a minimum, our bases are covered. I digress to come back to my point. I was living in the UK in December 2006 when Gordon Brown announced what turned out to the restructuring of the Air Passenger Duty (APD) which was to come into effect in 2009 and was able to identify that it would significantly impact travel to Barbados in particular.
In November 2009, when the APD was finally implemented, readers may recall that it appeared as if the current administration was hearing about it for the first time. One would then have to conclude that they spent 2007 almost exclusively on the campaign trail and, having assumed office in January 2008, clearly did not effectively engage the British government on this issue for some time, perhaps until the current Minister of Foreign Affairs was appointed.
I do hope that if Britons decide to exit the EU, that the focus of the current government during much of the two year negotiation phase would be to fully engage both Britain and the EU rather than just focus on winning the next general election in Barbados. The potential fall out for Barbados is too great for our elected representatives to only think of themselves and forsake the country.
If what I’ve suggested isn’t already happening diplomatically, then I implore the powers that be to
ensure that Barbados has the best opportunity in the event that Brexit is successful. We must deploy all available resources to ensure that any and all opportunities that may arise is well documented and executed to the benefit of every citizen.
ensure that Barbados has the best opportunity in the event that Brexit is successful. We must deploy all available resources to ensure that any and all opportunities that may arise is well documented and executed to the benefit of every citizen.
Diplomacy is often understated in its importance to the functioning of an economy. I hope we have learnt the lesson from the APD debacle. The Barbados Labour Party is engaged on these matters in the event that we are called upon to serve the people of Barbados.
Instead of our government blaming international events and circumstances for our current predicament, we must engage and seek out the best in the interest of Barbados.
Ryan Straughn is an UWI Cave Hill and Central Bank of Barbados trained economist and an endorsed BLP candidate to contest the next general election. Email: straughn.ryan@gmail.com
Sunday, 12 June 2016
Wednesday, 8 June 2016
Bad timing - Interest rates cut bad for the poor (by BarbadosToday)
CIBC FirstCaribbean International Bank has announced that effective June 1, the interest rate it pays on regular savings, savings plus and senior savings will be cut to 0.25 per cent from an already record low 0.5 per cent, which the commercial banks applied after the Central Bank of Barbados lifted the 2.5 per cent minimum interest rate.
However, Straughn said CIBC’s timing was poor and “really not a very good strategy” to get people to spend the money they have in the bank.
“It is very bad timing for the depositor to be experiencing 0.25 per cent interest rate at this point in time given that we had to go through a two per cent cut last year. I think it is ill-timed,” he insisted.
“It certainly isn’t a very good time for anybody to have a little change in the bank. The reality of the situation is that households, in order to be able to manage their finances, need to have some incentive to save, and that incentive to save often . . . relies on being able to attract some kind of interest rate or returns on those deposits.”
Straughn, a former president of the Barbados Economic Society and a candidate for the Opposition Barbados Labour Party in the next general election, argued that the average balance on a bank account had significantly declined over the last few years due to increased taxation, increased cost of living and a wage freeze.
He acknowledged that the credit union was an option for savings, but insisted that “very poor people” needed banking services now more than ever.
Straughn also suggested that with interest rates at a record low, the banks ought to offer relief on fees and charges.
“If they are not going to pay for the deposits the ordinary Barbadians are going to trust them to keep on our behalf, then they ought to do something about the fees that they are charging because the reality of the situation is that for very poor people who have very low balances on their account the fee structure that exist at the moment would mean that it is very expensive to be poor and have a bank account in the country,” he added.
Meanwhile President of the Barbados Bankers Association (BBA) Glyne Harrison has defended CIBC, telling Barbados TODAY its decision to cut interest rates was based mainly on market conditions and the high levels of liquidity in the banking system.
Harrison said that other commercial banks would not necessarily follow CIBC’s lead since they had different levels of liquidity, different internal structures and incurred different costs.
“So the interest rate is also driven by what the bank’s liquidity is at the point in time [and] what their demands for loan are at the point in time. So it is a combination of factors,” Harrison explained.
The BBA head insisted that the banks were not engaged in profiteering, but simply examined their own environment and cost structures to determine what made sense.
He further explained that commercial banks were now constrained in the level of interest they could offer because the lending side of the business was low.
Harrison predicted if the demand for loans were to increase interest rates on savings would also rise.
However, Straughn said he was not buying the liquidity argument, contending that the banking system had been liquid for a long time.
“The reality of the situation is that the economy is still quite very soft and as such the kinds of lending that one would like to see isn’t taking place – lending for new investment, lending for businesses to start up
“So I think the reality of the situation is that banks and other financial institutions are still looking to lend people to buy motor vehicles and those types of loans rather than to invest those funds looking for viable opportunities in which to invest in,” Straughn reasoned.
