All in a day's news....
* There's a story in The Times today (paywa££) about Sir/St Bob Geldof, who is still badgering people to give aid to Africa. And good for him. However, when the reporter ventured to suggest that Sir Bob's own tax arrangements might not bear scrutiny, he promptly went off on one: "How dare you lecture me about morality?" I assume the question wasn't meant ironically because really, Sir Bob, what have you been doing to the rest of us for the past three decades? You surely can't imagine that your fame is entirely due to your musical talents.
* Love the response of Charlie Brooks, husband of the flame-haired ex-News Corp. honcho Rebekah, to the news that his missus has been charged with conspiracy to pervert the course of justice -- with Charlie himself similarly accused, it must be added. According to Charlie, this is all a "witch-hunt". Well, given than nobody has shown fewer scruples about hounding the innocent than the newspapers for which Mrs Brooks was responsible, we can at least say that poetic justice is being served here.
* And moving right toward the diabolic end of the spectrum, we find Michael O'Leary of Ryanair. That company's website is to close down for two days this weekend, so if you're flying during that period, you have to print your boarding pass well ahead of time, or face a £60 charge for having one printed at the airport. Can there be any other company, anywhere in the world, that would use its systems upgrades as yet another opportunity to chisel even more money out of its customers?
Wednesday, 16 May 2012
Good numbers, bad outlook
What are we to make of this? Today, the Bank of England released its latest Quarterly Inflation Report, a document of Stygian gloom in which it admitted that inflation would stay above the 2% target for longer than previously expected (well, colour me surprised!), while GDP growth will reach only 0.8% for the year, down from a previous forecast of 1.2%. However, we also learned today of an unexpected 45,000 fall in unemployment during the first quarter -- a quarter during which, it should be remembered, the UK economy supposedly entered a double-dip recession.
Let's look first at the Inflation Report. The prospect of sticky inflation is, as usual, dismissed as something the Bank can't do anything about, even though it's the only part of the economic outlook that it has a specific target for. As for growth, the downward-revision of the forecast is partly a reflection of the problems in the Eurozone, but the Bank acknowledges other factors, including the "squeeze on household earnings", which is apparently in no way related to the fact that inflation has remained above target for so long!
The recent fall in global energy prices and the strength in Sterling, if sustained, hold out the prospect that inflation may fall somewhat faster than the Bank is now predicting, which would be good for domestic demand. However, it would be rash to suggest that the Bank is overstating the risks to UK growth posed by the crisis in the Eurozone, which Gov. King depicted as "tearing itself apart without any obvious solution".
Turning now to the unemployment data, a look beyond the headlines shows a mix of good and not-so-good news. The fall in the unemployment rate and the 105,000 rise in the number employed are of course welcome, as is the decline in the separate "claimant count" measure, which has been rising in recent times partly because of changes in the structure of welfare programmes. There was also a small decline in youth unemployment, though at 21.7%, this remains criminally high.
Less welcome is the fact that part-time jobs accounted for all of the improvement, rising 118,000 in the quarter. There are now signs that an increasing proportion of the part-time workforce is only working shorter hours because of a shortage of full-time jobs: the number of people saying they are in that situation rose by 73,000 in the quarter. (Even so, fully 82% of the people working part-time are quite happy about that fact). The number of long-term jobless (out of work for more than a year) continues to rise. Lastly, average earnings only rose 0.6% from a year earlier. The fact that this is so far below the rate of inflation indicates that even a turnaround in the jobs market may not be sufficient to give a lasting boost to domestic demand.
The fact that the jobs market improved at all during the first quarter suggests that the ONS GDP data, which have already come in for some strong criticism, must surely be flawed. (Compared to other national agencies, the ONS publishes its first GDP estimates much sooner, but spends much longer revising them, with the final story not told until years after the event. Time to rethink, perhaps?) At the same time, it would be wrong to see the numbers as a sign of a return to sustained growth. Even if falling inflation boosts consumers' real purchasing power, the increasingly doom-laden scenario for the Eurozone, and the prospect of renewed turmoil in financial markets, will weigh heavily on the UK for the rest of this year. The Bank's forecast that real GDP will not regain its 2008 peak until 2014 seems all too likely to be accurate.
Let's look first at the Inflation Report. The prospect of sticky inflation is, as usual, dismissed as something the Bank can't do anything about, even though it's the only part of the economic outlook that it has a specific target for. As for growth, the downward-revision of the forecast is partly a reflection of the problems in the Eurozone, but the Bank acknowledges other factors, including the "squeeze on household earnings", which is apparently in no way related to the fact that inflation has remained above target for so long!
The recent fall in global energy prices and the strength in Sterling, if sustained, hold out the prospect that inflation may fall somewhat faster than the Bank is now predicting, which would be good for domestic demand. However, it would be rash to suggest that the Bank is overstating the risks to UK growth posed by the crisis in the Eurozone, which Gov. King depicted as "tearing itself apart without any obvious solution".
Turning now to the unemployment data, a look beyond the headlines shows a mix of good and not-so-good news. The fall in the unemployment rate and the 105,000 rise in the number employed are of course welcome, as is the decline in the separate "claimant count" measure, which has been rising in recent times partly because of changes in the structure of welfare programmes. There was also a small decline in youth unemployment, though at 21.7%, this remains criminally high.
Less welcome is the fact that part-time jobs accounted for all of the improvement, rising 118,000 in the quarter. There are now signs that an increasing proportion of the part-time workforce is only working shorter hours because of a shortage of full-time jobs: the number of people saying they are in that situation rose by 73,000 in the quarter. (Even so, fully 82% of the people working part-time are quite happy about that fact). The number of long-term jobless (out of work for more than a year) continues to rise. Lastly, average earnings only rose 0.6% from a year earlier. The fact that this is so far below the rate of inflation indicates that even a turnaround in the jobs market may not be sufficient to give a lasting boost to domestic demand.
The fact that the jobs market improved at all during the first quarter suggests that the ONS GDP data, which have already come in for some strong criticism, must surely be flawed. (Compared to other national agencies, the ONS publishes its first GDP estimates much sooner, but spends much longer revising them, with the final story not told until years after the event. Time to rethink, perhaps?) At the same time, it would be wrong to see the numbers as a sign of a return to sustained growth. Even if falling inflation boosts consumers' real purchasing power, the increasingly doom-laden scenario for the Eurozone, and the prospect of renewed turmoil in financial markets, will weigh heavily on the UK for the rest of this year. The Bank's forecast that real GDP will not regain its 2008 peak until 2014 seems all too likely to be accurate.
Monday, 14 May 2012
Dim(on) and dimmer
Supposedly, Jamie Dimon of JPMorgan Chase has the distinction of being President Obama's favourite banker. (Who knew that accolade existed? And what does it say about Obama? A favourite basketball player or a favourite rapper or even a favourite Marx brother, maybe, but a favourite banker??) Anyway, being near the top of Barack's Christmas list doesn't seem to have curbed Dimon's behaviour very much. As we have learned over the last few days, JPM has racked up monster losses ($2 billion and counting) by continuing to indulge in the kind of trading practices that regulators have been vowing to curb ever since the financial crisis hit.
The exact details of the loss-making trades are not known, but they seem to have involved large positions in structured derivatives, including credit default swaps (CDS). The very name "credit default swaps" seems to imply that these are an instrument for hedging risk, but once you recall that the volumes of CDS outstanding far outstrip the volume of underlying bonds, you soon realise that the role of the market has moved way beyond risk hedging and into outright speculation.
In seeking to reform financial sector regulation in the aftermath of the crisis, the Obama administration's underlying principle has been that low-risk transactional banking activities should be kept separate from investment banking -- the so-called "Volcker rule". Despite his apparent closeness to the administration, Jamie Dimon has been among the leaders of Wall Street's steadfast opposition to the Volcker rule, or even to less stringent regulatory reform. The revelations of the last few days show that JPM has been flouting the spirit of the Volcker rule on a massive scale, booking gargantuan speculative trades in London while attempting to maintain the fiction that they were being undertaken for risk management purposes.
It's instructive that the announcement of a $2 billion loss has wiped $15 billion off the value of JPMorgan Chase's shares, while hitting confidence in banks generally. Dimon has admitted that the losses could well end up much higher, and markets are well aware of the oft-proved cockroach theory: there's never just one, and who knows whether the next one or six will crawl out at JPM or at one of its competitors? Meantime, all the hedgies on the other side of JPM's disastrous trades will be seeking to maximise their own profits by making it as hard and expensive as possible for JPM to unwind its positions. Thus does the financial services industry add to the sum of human happiness, or as Goldman's Lloyd Blankfein put it, "do God's work".
In an egregious piece of bad timing, David Cameron last week dismissed any attempts by the new French President, Francois Hollande, to impose curbs on the activities of the City of London, saying that Europeans were just "envious" of the UK's success. I'd say they're worried and angry about the UK's unwillingness to admit there's a problem, rather than envious. In the meantime, back in the US, the events at JPM have given a fresh impetus to the Volcker rule. Here, for example, is a cogent analysis, together with a set of specific proposals, from Eliot Spitzer. It contains one remarkable yet somehow unsurprising fact: Jamie Dimon is a member of the board of the New York Fed!
The exact details of the loss-making trades are not known, but they seem to have involved large positions in structured derivatives, including credit default swaps (CDS). The very name "credit default swaps" seems to imply that these are an instrument for hedging risk, but once you recall that the volumes of CDS outstanding far outstrip the volume of underlying bonds, you soon realise that the role of the market has moved way beyond risk hedging and into outright speculation.
In seeking to reform financial sector regulation in the aftermath of the crisis, the Obama administration's underlying principle has been that low-risk transactional banking activities should be kept separate from investment banking -- the so-called "Volcker rule". Despite his apparent closeness to the administration, Jamie Dimon has been among the leaders of Wall Street's steadfast opposition to the Volcker rule, or even to less stringent regulatory reform. The revelations of the last few days show that JPM has been flouting the spirit of the Volcker rule on a massive scale, booking gargantuan speculative trades in London while attempting to maintain the fiction that they were being undertaken for risk management purposes.
It's instructive that the announcement of a $2 billion loss has wiped $15 billion off the value of JPMorgan Chase's shares, while hitting confidence in banks generally. Dimon has admitted that the losses could well end up much higher, and markets are well aware of the oft-proved cockroach theory: there's never just one, and who knows whether the next one or six will crawl out at JPM or at one of its competitors? Meantime, all the hedgies on the other side of JPM's disastrous trades will be seeking to maximise their own profits by making it as hard and expensive as possible for JPM to unwind its positions. Thus does the financial services industry add to the sum of human happiness, or as Goldman's Lloyd Blankfein put it, "do God's work".
In an egregious piece of bad timing, David Cameron last week dismissed any attempts by the new French President, Francois Hollande, to impose curbs on the activities of the City of London, saying that Europeans were just "envious" of the UK's success. I'd say they're worried and angry about the UK's unwillingness to admit there's a problem, rather than envious. In the meantime, back in the US, the events at JPM have given a fresh impetus to the Volcker rule. Here, for example, is a cogent analysis, together with a set of specific proposals, from Eliot Spitzer. It contains one remarkable yet somehow unsurprising fact: Jamie Dimon is a member of the board of the New York Fed!
Saturday, 12 May 2012
Oxymoron
A good few years ago, the great goaltender for the New York Rangers hockey team, John Davidson, was asked by a reporter which team gave him the most trouble. His answer: the New York Rangers.
As we gasp at the crass behaviour of the US "intelligence" community in relation to the latest underwear bomb scare, you have to wonder if the brass at MI6 may be thinking on the same lines. Which country in the "war on terror" worries you the most, Mr Bond? Why, that would be the United States.
As we gasp at the crass behaviour of the US "intelligence" community in relation to the latest underwear bomb scare, you have to wonder if the brass at MI6 may be thinking on the same lines. Which country in the "war on terror" worries you the most, Mr Bond? Why, that would be the United States.
Thursday, 10 May 2012
Mr Yeats peruses the Rich List
A few weeks ago, the Sunday Times published one of those appalling "rich lists" that sends my blood pressure skyrocketing each year. They chose to make it their main front page headline for the day, too: something to the effect that "UK's rich get even richer". Next to that was a political story under the headline "Tories fall to 8-year low in public support". I was watching one of those "press preview" things on TV during the evening, and remarkably enough, neither of the two expert panellists sought to make any connection between the two stories, though that may have had something to do with the fact that one of them appeared to have indulged rather heavily in the "green room" before going on air. Well, it was a Saturday evening after all.
There surely is some connection, though, isn't there? We seem to be seeing a full-fledged shareholder revolt against "fat cat" pay in the UK. Bob "shine on you crazy" Diamond at Barclays managed to trouser his bonus, at the cost of some embarrassment, but others, including Sly Bailey at TrinityMirror and the CEO at Aviva, have had to bow out in the face of shareholder wrath. Bob and Sly and the Aviva guy may not be in the Abramovich/Mittal/Green stratosphere of wealth, but they're doing OK: newly-released data show that remuneration for FTSE-100 CEOs jumped more than 11% last year, while average earnings across the economy rose barely more than 1%. "All in this together", is it?
It's not just in the UK that this is happening. Even in the US, where greed is still mostly regarded as a virtue, eyebrows are starting to get raised by statistics showing a burgeoning wealth and income gap. Not so long ago, American CEOs used to earn about 40 times as much as their average employee; now it's closer to 400 times. And there can be little doubt that the "throw the buggers out" trend in recent European elections, which has now claimed President "bling-bling" Sarkozy in France, has its roots in voters' sense that the wrong people are bearing the costs of fixing the financial crisis.
There are moral arguments to be made about all this, of course: it is easier for a camel to pass through the eye of a needle than to for a rich man enter the Kingdom of Heaven, and so on. That sort of thing doesn't wash with most people in today's society, sad to say, but there are sound practical reasons to fret about the consequences of rising inequality.
Yesterday on CNBC's morning panel show, one gent (whose name I didn't catch) bravely argued the case that inequality in the US risks causing profound damage. The regular hosts, who never met a plutocrat they didn't like, tried their best to talk him to a standstill, but he held his ground admirably. His fundamental point was that if society becomes more and more polarised between rich and poor, then politics becomes more polarised too, until eventually you reach a point where it's almost impossible to agree on any moderate solutions. You can see how that works in the results of the recent Greek elections. Call it Yeatsian economics:
"Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity."
(W. B. Yeats: The Second Coming, 1921)
A further serious consequence of inequality is that it makes it ever harder to generate economic growth. Putting "a chicken in every pot" will ultimately result in a much greater lift to GDP than building another yacht for Larry Ellison. And growth is important. When overall income and wealth are rising, it's possible (though possibly ill-advised) for people to shrug wearily at the excesses of the plutocrats, but when ordinary people are feeling the squeeze, they get angry very quickly. Then you get riots and looting, and you see headlines like "Tories fall to 8-year low in public support".
Let's give the last word to Yeats and his wrist-slitting "Second Coming", with a question whose answer we can hope we never find out:
"And what rough beast, its hour come round at last,
Slouches toward Bethlehem to be born?"
There surely is some connection, though, isn't there? We seem to be seeing a full-fledged shareholder revolt against "fat cat" pay in the UK. Bob "shine on you crazy" Diamond at Barclays managed to trouser his bonus, at the cost of some embarrassment, but others, including Sly Bailey at TrinityMirror and the CEO at Aviva, have had to bow out in the face of shareholder wrath. Bob and Sly and the Aviva guy may not be in the Abramovich/Mittal/Green stratosphere of wealth, but they're doing OK: newly-released data show that remuneration for FTSE-100 CEOs jumped more than 11% last year, while average earnings across the economy rose barely more than 1%. "All in this together", is it?
It's not just in the UK that this is happening. Even in the US, where greed is still mostly regarded as a virtue, eyebrows are starting to get raised by statistics showing a burgeoning wealth and income gap. Not so long ago, American CEOs used to earn about 40 times as much as their average employee; now it's closer to 400 times. And there can be little doubt that the "throw the buggers out" trend in recent European elections, which has now claimed President "bling-bling" Sarkozy in France, has its roots in voters' sense that the wrong people are bearing the costs of fixing the financial crisis.
There are moral arguments to be made about all this, of course: it is easier for a camel to pass through the eye of a needle than to for a rich man enter the Kingdom of Heaven, and so on. That sort of thing doesn't wash with most people in today's society, sad to say, but there are sound practical reasons to fret about the consequences of rising inequality.
Yesterday on CNBC's morning panel show, one gent (whose name I didn't catch) bravely argued the case that inequality in the US risks causing profound damage. The regular hosts, who never met a plutocrat they didn't like, tried their best to talk him to a standstill, but he held his ground admirably. His fundamental point was that if society becomes more and more polarised between rich and poor, then politics becomes more polarised too, until eventually you reach a point where it's almost impossible to agree on any moderate solutions. You can see how that works in the results of the recent Greek elections. Call it Yeatsian economics:
"Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity."
(W. B. Yeats: The Second Coming, 1921)
A further serious consequence of inequality is that it makes it ever harder to generate economic growth. Putting "a chicken in every pot" will ultimately result in a much greater lift to GDP than building another yacht for Larry Ellison. And growth is important. When overall income and wealth are rising, it's possible (though possibly ill-advised) for people to shrug wearily at the excesses of the plutocrats, but when ordinary people are feeling the squeeze, they get angry very quickly. Then you get riots and looting, and you see headlines like "Tories fall to 8-year low in public support".
Let's give the last word to Yeats and his wrist-slitting "Second Coming", with a question whose answer we can hope we never find out:
"And what rough beast, its hour come round at last,
Slouches toward Bethlehem to be born?"
Monday, 7 May 2012
Pole position
Shamelessly squeezing one more post out of last week's trip to Warsaw....
Back in the dark days of the 1980s, when the martial law regime of General Jaruszelski was pitted against Lech Walesa's Soildarity movement, there was a joke doing the rounds about how Poland could solve its problems. Supposedly, an expert committee had been set up, and had come up with two solutions: a practical solution and a miracle solution. The practical solution: the Virgin Mary would come down from heaven and turn all of Poland's coal reserves into gold. The miracle solution: the Poles would stop fighting among themselves and get back to work.
It wasn't fair, of course. Even under the yoke of communism, the Poles had managed the almost superhuman task of reconstructing the major cities that had been laid waste by the Nazi occupation and the scorched-earth tactics of the fleeing Wehrmacht. And it's still not fair. Poland's coal is still black, yet the country is developing rapidly. The politics may be as fractious as ever, but that hasn't stopped Poland from being one of Europe's success stories of the past decade.
Warsaw bristles with construction cranes. The hideous Palace of Science and Culture is no longer the only skyscraper. The city's airport is spanking new. There's a subway, with a second line on the way. Roads that were potholed just a decade ago are now in excellent repair. There are new hotels and restaurants everywhere. There's a new national stadium, ready and waiting for the European nations tournament next month. There are benches in the parks that play Chopin when you sit on them.
As with the reconstruction in the 1950s, the Poles have done most of the hard work themselves. There has, however, been a big assist from the EU, partly in the form of hard cash, but more importantly in the opening up of markets, both for goods and for financing. Much of the impressive development that has taken place over the last decade or so has been a direct result of Poland's admission to the EU. And of course, it's not just Poland -- there are similar stories to be told all across eastern and southern Europe.
It's worth keeping that in mind as the Eurozone crisis enters its next phase. The Euro may look doomed -- though that's the fault of dissimulating and deal-making politicians, rather than of the technocrats who designed it -- and the Brussels bureaucracy may be oppressive and unaccountable, but the "European project" has still done a great deal more good than harm*. It would be very sad if a few feckless politicians and a bunch of greedy hedgies and bond vigilantes were to bring the whole thing to a screeching halt.
* UPDATE, 9 May: Wonder of wonders, the FT agrees!
Back in the dark days of the 1980s, when the martial law regime of General Jaruszelski was pitted against Lech Walesa's Soildarity movement, there was a joke doing the rounds about how Poland could solve its problems. Supposedly, an expert committee had been set up, and had come up with two solutions: a practical solution and a miracle solution. The practical solution: the Virgin Mary would come down from heaven and turn all of Poland's coal reserves into gold. The miracle solution: the Poles would stop fighting among themselves and get back to work.
It wasn't fair, of course. Even under the yoke of communism, the Poles had managed the almost superhuman task of reconstructing the major cities that had been laid waste by the Nazi occupation and the scorched-earth tactics of the fleeing Wehrmacht. And it's still not fair. Poland's coal is still black, yet the country is developing rapidly. The politics may be as fractious as ever, but that hasn't stopped Poland from being one of Europe's success stories of the past decade.
Warsaw bristles with construction cranes. The hideous Palace of Science and Culture is no longer the only skyscraper. The city's airport is spanking new. There's a subway, with a second line on the way. Roads that were potholed just a decade ago are now in excellent repair. There are new hotels and restaurants everywhere. There's a new national stadium, ready and waiting for the European nations tournament next month. There are benches in the parks that play Chopin when you sit on them.
As with the reconstruction in the 1950s, the Poles have done most of the hard work themselves. There has, however, been a big assist from the EU, partly in the form of hard cash, but more importantly in the opening up of markets, both for goods and for financing. Much of the impressive development that has taken place over the last decade or so has been a direct result of Poland's admission to the EU. And of course, it's not just Poland -- there are similar stories to be told all across eastern and southern Europe.
It's worth keeping that in mind as the Eurozone crisis enters its next phase. The Euro may look doomed -- though that's the fault of dissimulating and deal-making politicians, rather than of the technocrats who designed it -- and the Brussels bureaucracy may be oppressive and unaccountable, but the "European project" has still done a great deal more good than harm*. It would be very sad if a few feckless politicians and a bunch of greedy hedgies and bond vigilantes were to bring the whole thing to a screeching halt.
* UPDATE, 9 May: Wonder of wonders, the FT agrees!
Saturday, 5 May 2012
Pity the poor immigrant
Well, that wasn't so bad after all! Flights both to and from Warsaw right on time, and when we got back to Heathrow last evening, only a minimal queue at the immigration desk for UK and other EU citizens. We spent more time waiting for the steps to be attached to the aircraft than we did in the immigration line. There was a much longer queue for non-EU passengers, but every desk was staffed and the line seemed to be moving quite quickly.
There are suggestions that the Home Secretary, Theresa May, is about to risk embarrassment by scrapping the more stringent passport checks that she insisted on last year, and which seem to be the direct cause of the queues. This possibility has already fired up a few knuckle-draggers to cry foul. One genius warned darkly on the Daily Telegraph website that when we hear the "big bangs", which are apparently coming "very soon", we'll all regret that we relaxed the rules, just to save travellers a few minutes. Ah yes, I thought: how tragic it was that lax passport controls at Luton railway station allowed the 7/7 bombers to pass through unimpeded on that fateful morning back in 2005.
There is, of course, one very important reason why the immigration lines at UK airports are a lot longer than they are in the rest of Europe. The UK has steadfastly refused to join the "Schengen agreement" that allows EU citizens to pass between most countries without any passport or identity checks. If you fly from, say, Paris to Frankfurt, you can get straight off your plane and into a taxi, while passengers arriving from London have to queue up with those from all corners of the globe, usually in a less salubrious corner of the airport, to present their passports. Unless the UK signs up for Schengen, it will always need a lot more passport checkers at its airports than most of its neighbours do, and if it also insists on more rigorous document checks, there will always be a risk of big queues at busy times.
There doesn't seem to be any evidence that the UK's refusal to adopt the Schengen agreement has made the country any more secure than its European neighbours. However, the Telegraph's "big bangs" correspondent would doubtless be vehemently opposed to adopting it now, and would no doubt be supported in that by a good proportion of the population. Remarkably, the subject hasn't even been raised in all the recent carping about queues at Heathrow. It would solve the problems overnight, but it would be a brave politician that would dare to suggest it.
There are suggestions that the Home Secretary, Theresa May, is about to risk embarrassment by scrapping the more stringent passport checks that she insisted on last year, and which seem to be the direct cause of the queues. This possibility has already fired up a few knuckle-draggers to cry foul. One genius warned darkly on the Daily Telegraph website that when we hear the "big bangs", which are apparently coming "very soon", we'll all regret that we relaxed the rules, just to save travellers a few minutes. Ah yes, I thought: how tragic it was that lax passport controls at Luton railway station allowed the 7/7 bombers to pass through unimpeded on that fateful morning back in 2005.
There is, of course, one very important reason why the immigration lines at UK airports are a lot longer than they are in the rest of Europe. The UK has steadfastly refused to join the "Schengen agreement" that allows EU citizens to pass between most countries without any passport or identity checks. If you fly from, say, Paris to Frankfurt, you can get straight off your plane and into a taxi, while passengers arriving from London have to queue up with those from all corners of the globe, usually in a less salubrious corner of the airport, to present their passports. Unless the UK signs up for Schengen, it will always need a lot more passport checkers at its airports than most of its neighbours do, and if it also insists on more rigorous document checks, there will always be a risk of big queues at busy times.
There doesn't seem to be any evidence that the UK's refusal to adopt the Schengen agreement has made the country any more secure than its European neighbours. However, the Telegraph's "big bangs" correspondent would doubtless be vehemently opposed to adopting it now, and would no doubt be supported in that by a good proportion of the population. Remarkably, the subject hasn't even been raised in all the recent carping about queues at Heathrow. It would solve the problems overnight, but it would be a brave politician that would dare to suggest it.
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