The effects of a fall in the price of oil

Hamish McCrae in The Independent

It looks very much as though 2015 will be a good year for the world economy, after all – and, if it is, that will be thanks to the fall in the oil price. It won't be good for everyone and we have already seen the pressure it puts on the Russian leadership – though, before you conclude that sometimes there is natural justice in the world, remember that the people who are hurt are not leaders such as Vladimir Putin. Other oil- and gas-exporting countries are damaged, too, and I think we will see further fallout in unpredictable ways. But the net impact is strongly positive, more so than most commentators at present acknowledge. The winners far outnumber the losers.

If that sounds overly optimistic, consider this. We have a lot of experience of sudden increases in the price of oil but very little of sudden falls. Oil has tended to go up in big jumps and come down in small, incremental notches. We know that, when the oil price suddenly doubles, this gives world growth a huge blow. The global recessions of the 1970s, the early 1980s and 2008 were all triggered by an oil-price shock. So if oil gives the economy a blow on the way up, surely it must give a corresponding boost when it is on the way down?

How much of a boost? It would be nice to have a ready-reckoner on the lines that x per cent off the oil price would lead to a y per cent rise in growth. But that isn't possible. First, we don't know what the oil price will do in the months ahead. And, second, the fall in price can come about either from an increase in supply or from a broader trend of deflation around the world. If the former, the lower oil price is undoubtedly positive; but if the driver is general deflation (and in Europe and Japan inflation had plunged before the oil-price fall), the argument is more finely balanced.

There is a spectrum of views on this. Here are a couple, from each end of the scale. The more cautious comes from HSBC, which has just put out a paper emphasising deflationary concerns. It notes that the world is saddled with high levels of debt and that years of very low interest rates and quantitative easing have failed to get credit growth moving. It concludes: "It's increasingly difficult to ignore the echoes from Japan."

At the optimistic end is Berenberg Bank, which reckons that lower oil prices will increase demand in Europe and America by at least 0.5 per cent over the next 18 months. It acknowledges that there are losers and that the damage to Russia may spill over into Germany and Italy. But the conclusion is upbeat: "Cheaper oil, if it lasts, should provide a persistent tailwind to growth for oil consumers over the next few years even beyond the short-term boost to real incomes."

My feeling is that the fall in the oil price comes just in time to sustain and broaden an uneven recovery. Continental Europe and Japan have been the two main laggards in the developed world and both depend heavily on imported energy. If the price drop adds 0.5 per cent to eurozone growth next year, that would be enough to double the performance of 2014. We must be aware that cheaper energy cuts headline inflation and it is quite possible that this will go negative early next year in the eurozone.

But the problems of the eurozone go far beyond simple deflation, for they concern the rigidities imposed on Europe by the single currency and the lack of structural reforms, especially in Italy and France. In any case, underlying inflation will pick up once cheaper oil has worked through the system; meanwhile, the dip will nudge the European Central Bank to have yet another shot at boosting demand.

And for Britain? As a net importer of oil, we are a net beneficiary. This is bad news for the North Sea oil industry and for the Scottish economy, but the UK as a whole is a modest winner. If Europe perks up a bit, we become a bigger winner thanks to higher exports. British consumers are clear winners, as we have seen, and the idea that the economy can have another year of 3 per cent growth, maybe a bit more, seems a decent bet. Next year's uncertainties are political, not economic.

We can, as a country, make a mess of things. We know how to do that. But whereas for most of the past five years we have been butting into a global headwind, now we have a tailwind. And that is a huge change that I don't think we fully appreciate.

Tribunal fees deter four out of five employees pursuing claims

From The Independent

Employment tribunal fees have been branded "a barrier to justice", the high charges discouraging four out of five workers from pursuing claims against their employers, according to Citizens Advice.

The charity has found that nearly half of workers with employment issues would have to save for six months in order to afford employment tribunal fees, which in some cases can reach £1,200.

Citizens Advice has called on the Government to align tribunal fees with county court charges in order to widen access. It has also asked for greater promotion of available financial support, and more research to assess what measures could be taken to protect employers without deterring legitimate claims.

Employment tribunal fees were introduced by the Government in July 2013, aiming to transfer the £74m cost of running tribunals and the Employment Appeal Tribunal from the taxpayer to those using the system. Fees range from £160 to £250 to issue a claim, and £230 to £950 for a tribunal.

Before the fees were introduced, Employment Tribunals (ETs) received an average of 48,000 new claims per quarter. However the most recent ET figures for July to September 2014 show that this had dropped to 13,612 new claims.

Last week the trade union Unison, which wants to abolish the fees, lost a second bid to have the fees legally reviewed. Despite the dismissal, the Court of Appeal has granted Unison permission to appeal the decision.

Employment barrister, Harini Iyengar

The Citizens Advice survey found that the fees made more than four out of five workers less likely to claim, or deterred them from claiming at all. Over four in 10 of those with employment troubles had a household income of less than £46 a week after essential bills, highlighting the gulf between the high fees and working wages.

Only three in 10 were aware that financial support is available for those on low incomes. Half of those surveyed believed that they were not eligible for support when in fact they qualified.

Gillian Guy, chief executive of Citizens Advice, said: "The employment tribunal system is imbalanced against claimants. Fees are pricing people out of basic workplace rights and a justice system that is supposed to protect them.

"The Government needs to take an urgent look again at how the fee system benefits those workers who feel the prices are a barrier to justice."

Labour has promised to abolish the fees, and reform the employment tribunal system if the party is elected. Sadiq Khan, Labour's shadow Justice Secretary, said: "At a time when people need support and legal advice more than ever, the Government has slashed legal aid, leaving thousands of people adrift without any support whatsoever … This policy has denied justice to thousands of people, yet all it does is displace costs on to other branches of government. It's a short-sighted policy that has far-reaching and negative ramifications."

Sadiq Khan, Labour’s shadow Justice Secretary; Labour has promised to abolish the fees, and reform the employment tribunal system if the party is elected (AP)

Damian Brown QC, a sports and employment lawyer and former chair of the Employment Law Bar Association, said: "Most of the profession believes access to justice should be free … Most businesses have insurance or the opportunity to join an employer's federation for a small fee, so the idea of tribunal fees being a protection against frivolous claims is not a significant problem."

Harini Iyengar, a barrister who specialises in employment and discrimination law, said: "The drop we've seen in employment tribunal cases has been extremely striking; I've not seen anything like it in 15 years of practice … It is important in a democratic country we respect working people and tribunals are essential for the British economy and to a vibrant working community."

Justice Minister Shailesh Vara defended the fees saying: "Small businesses can be hamstrung by unfounded employment tribunal claims and taxpayers should not have to pick up the £74m bill for running the service. We've made sure fee waivers are available for those who can't afford to pay, as well as diverting people away from potentially acrimonious hearings, where possible, through a new early conciliation scheme which has already been used by 37,000 people in its first six months."

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Yes, Pakistanis are united against terrorism. But not on terrorists

Militants who target India will always be good Taliban. So an alleged architect of the Mumbai attack can be released two days after Peshawar

• 
• • Cyril Almeida
  • theguardian.com, Thursday 18 December 2014 20.10 GMT

Zaki-ur-Rehman Lakhvi, one of the alleged architects of the 2008 Mumbai attack, has been granted bail days after the horror of Peshawar. Photograph: Reuters

On this Pakistan is united: the men who killed 132 children in a Peshawar school are terrorists. On this too Pakistan is – temporarily – united: terrorism must be defeated. After that the trouble begins. With something as seemingly innocuous as who, exactly, is a terrorist. Pakistanis can’t seem to agree.

Neither can the media. A day after the Peshawar carnage, after the Pakistan army had announced that the slaughter in the school had been operationally coordinated by Afghan-based Pakistani militants, an outraged analyst on local TV asked what the world’s response would have been had India been attacked by militants from Pakistan.

India, the analyst claimed indignantly, would be contemplating bombing Pakistan and the Indian army would already have been mobilised on the Pak-India border. The world at large, the analyst continued, would have pounced on Pakistan for its terrible behaviour. But, the analyst lamented, because Pakistan is weak, it could do no more than send its army chief to Afghanistan and politely seek the Afghan government’s cooperation.

For many in Pakistan, the analyst’s anger would have resonated. His fulminations against the international community’s perceived discrimination against Pakistan would have garnered much sympathy. To much of the outside world, the analyst’s comparison would have triggered incredulity.

For exactly that scenario – Pakistanis slipping into India to mercilessly kill civilians in a major city – had infamously already occurred. In Mumbai. In 2008. Had the TV analyst simply forgotten? Surely not.

But there the analyst was, on one of Pakistan’s most popular news channels, suggesting that the world does not share Pakistan’s pain. Unsaid, though not uncommunicated, was a darker theory: Pakistan is a victim of an international conspiracy, an innocent victim of geopolitics, alone and vulnerable in a Hobbesian world full of militant proxies.

Ultimately, Pakistan’s problem with militancy is not denial. It is not even ignorance. It is something quite different. Simply, it is the widespread belief that militants fighting the Indian state, militants fighting to free “Indian-held Kashmir”, militants fighting the Afghan government and militants fighting to “free” Afghanistan are not militants. They are the good guys. The righteous ones brave enough to take on the world in the name of the one true God.

The problem was never denial. The problem is the paradigm. The Afghan Taliban are not militants. Lashkar-e-Taiba – LeT –are not terrorists. And, even more insidiously, there are those within Pakistan who do not believe that Tehrik-i-Taliban Pakistan is in the wrong.

Instead, the belief is that the Pakistani state itself is on the wrong path. A democratic path. A path that keeps it in thrall to American, godless, anti-Islam interests. A path that takes Pakistan far from that of the religion in the name of which it was ostensibly created.

That’s really why it’s possible for Pakistan to stun the outside world – two days after the horror of Peshawar – by granting bail to one of the alleged architects of the Mumbai attack, Zaki-ur-Rehman Lakhvi of the officially banned LeT. That’s why it’s possible for Pakistan to confound the world by rejecting global sympathy over the Peshawar attack and embracing LeT instead.

The Lakhvi bail is not a surprise. In truth, it is the inexorable outcome of recent events in Pakistan. Consider just what happened in Lahore, the provincial capital of Punjab and the heart of political power in Pakistan, on 4 December.

Imran Khan, the leader of Pakistan Tehreek-e-Insaf (PTI), had been trying to oust the government of Nawaz Sharif via street protests since August, and threatened to shut down Lahore that day. But within hours of Khan’s announcement on 30 November, the PTI appeared to realise it had made a mistake: the Jamaat-ud-Dawa, a hardline Islamist organisation, was holding its annual congress in Lahore on 4 and 5 December. And so the PTI quickly postponed its protest.

Pause on that for a moment. The business of toppling a national, elected government had to take a back seat to the annual Lahore pilgrimage of Hafiz Saeed, the chief of Jamaat-ud-Dawa. It was perhaps inevitable. With the Narendra Modi government in India taking a hawkish line on Pakistan, pro-Kashmir, anti-India jihadis in Pakistan were always going to take centre stage.

There is though at least one thing that Pakistan remains wilfully blind to. Every single one of the militant groups fighting the Pakistani state today was once at some point in recent history considered to be a good militant/good Taliban. Just like Hafiz Saeed is today.