³ÉÈË¿ìÊÖ

"I intend to be as challenging as possible, in terms of biting back occasionally": the words of Lena Wilson, preparing for the Scottish public sector job that probably takes more flak than any other, at least outside elected office.

As chief executive of Scottish Enterprise, she's been around for 20 years in economic development agencies, including two years in the World Bank - memorable for being evacuated out of Mongolia and some alarming times in Central and South America, which has at least left her with fluency in Andean Spanish.

The last decade of scrutiny has made the chief executive's office an uncomfortable place to be as well. Jack Perry has not enjoyed the criticism that has come from Holyrood and the media, and his predecessor, Robert Crawford, quit because of the intrusion of the job's public profile into his family life.

Lena Wilson has risen through the ranks to become chief operating officer of Scottish Enterprise and head of its inward investment and exports division, Scottish Development International.

So she ought to know what to expect in the top job she takes on this Wednesday, and how best to "bite back occasionally". She's up for lots of "legitimate challenge", but hopes for less controversy.

"I'm here to listen, to our angriest customers and biggest critics, because that's the only way we'll develop. We shouldn't be sitting in a darkened room with a towel over our head thinking what business wants."

Under the spotlight

The controversy is under way already, over a salary higher than that of the Prime Minister, and the same level as Jack Perry, despite Scottish Enterprise being much smaller than the agency he took on six years ago: no careers service, a sharply reduced budget, more focussed responsibilities and no local enterprise companies.

That £200,000 salary was not for her, but for the board to set independently, she told me in an interview to be broadcast this weekend.

But don't judge a chief executive by the extent of her remit: "Size of budget is a factor, but for me, it's not the determinant factor. It depends on the weight of the responsibility the chief executive has to carry".

Wilson started life in the Partick area of Glasgow, and grew up in East Kilbride, where her father worked at Rolls-Royce.

In the interview, she talks (and she's one very good talker) about what she brings to the job that might be different from her predecessor: "The fact that I'm me means I'll do it differently, with more focus, more clarity, more pace and more customer engagement". She goes back repeatedly to stress that customer engagement:

Yet having been in public sector agencies for 20 years, does she fulfil the remit of Scottish Enterprise to bring a business focus and ethos into government's role in the economy? It was a question that featured in her job interview as well:

"In the past few years, I've been working exclusively with businesses. I get the opportunity to be in the boardrooms of top companies all over the world, understand where they're going, understand their strategies, have an in-depth understanding of their sectors. I am moving in business circles and have a wider experience than some people in business."

You can hear more about her hopes for the Scottish economy and for Scottish Enterprise's role (though she was less willing to talk about her enthusiasm for rock music) on The Business on Radio Scotland. That's at 1000 GMT on Sunday 1 November, and also available by podcast.

• Bookmark with:
• |
• |
• |
• |
• - What's this?

It's one of the worse kept secrets in British finance.

Today we've got confirmation that Lloyds Banking Group has been trying to find a way of avoiding the government's Asset Protection Scheme.

It hasn't yet found that way, but the banking giant is considering a rights issue, and conversion of some assets, so that it increases its core capital balances. And on some scale, reported (though not confirmed) to be £25bn in total.

That could be seen as acting as a safety buffer, or a form of insurance, and the bank today said it could avoid the heavy up-front costs of using the UK government's bespoke insurance scheme.

If it can escape that offer - one which originally looked like it couldn't be refused, given the Government is 43% shareholder - then it will have implicitly had insurance on £260bn of troubled/distressed/toxic assets since the scheme was first announced in March, and at no cost whatsoever.

At the end of this turbulent year, the assets look less risky than they did.

So if anyone knows how to insure a car or home on that retrospective basis, let me know, as it sounds quite attractive to the customer.

A European Commission spokesman has told the ³ÉÈË¿ìÊÖ today it will rule "within two weeks" on the conditions it will impose on Lloyds in return for approval of state aid. The ruling on the Royal Bank of Scotland may take longer, but it's expected by Christmas.

How significant will it be? There's been lots of speculation, but one sentence in today's Lloyds statement stands out as calming down expectations of the maximal impact: based on the discussions to date with the UK government and European Commission, Lloyds "is confident that the final terms of its restructuring plan, including any required divestments of assets, will not have a material impact on the Group".

The stock market liked the look of that, along with the statement that Lloyds' performance remains "robust" and in line with previous guidance. Lloyds was up 7.5% on the day.

The speculation on the forced sell-offs and break-ups has included most permutations, including Bank of Scotland and/or Halifax being split from Lloyds, or Scottish Widows being put on the market.

Indeed, the only speculation I haven't read is that Lloyds will sell Lloyds - but if that crops up in a headline soon, remember where you saw it first.

A new variation today suggests Lloyds TSB Scotland and Intelligent Finance, an online division of Bank of Scotland, will be put up for sale.

Intelligent Finance was being pared back already, having stopped doing new mortgage and current account business last July.

Just like Cheltenham and Gloucester, it may be revived in order to sell it off, reducing its market share of current accounts and mortgage below the 30% level - the Royal Bank is looking to do the same in England with its RBS branded branches, bringing back the Williams and Glyn name it dropped in 1985.

Lloyds TSB Scotland is relevant for its branch network.

Anyone who knows the average Scottish high street could see that Lloyds was never likely to keep so many branches, when Lloyds TSB was often as reliably close to Bank of Scotland as docken leaves to nettles.

The process of rationalising has not begun, leaving many staff waiting anxiously, and that delay may be because the bank was waiting for the European ruling.

So just supposing Lloyds TSB Scotland's branches are up for sale, who might be interested? Obviously a group without much of an existing presence in Scotland.

A branch network doesn't look like a priority for the newcoming innovators in retail banking, such as Virgin Money and Tesco Bank.

But what about Barclays, or HSBC - neither of which has significant Scottish networks, but which have been showing increasing interest north of the border?

And what would happen to the trust that has been taking a share of Lloyds TSB Scotland profits since the Trustee Savings Bank was floated in 1986? It has fallen out with its funder in recent weeks, at considerable risk to Scotland's charity income?

Update 30 October 1715 GMT

Perhaps someone at UK Financial Investments, the Government's bank stakeholder arm, has been reading this blog.

Today we've had a solution to that apparently free insurance of Lloyds' troubled assets covering the period from March until now.

In order to get out of the government's Asset Protection Scheme, it has emerged that Lloyds would have to pay the government a "break fee" of as much as £2.5bn.

• Bookmark with:
• |
• |
• |
• |
• - What's this?

It's been a busy day in Brussels. Hebridean ferries have been given a clean bill of state-aid health. Northern Rock has been given the go-ahead for break-up.

The Scottish Power takeover by Iberdrola, and similar Spanish acquisitions of BAA and O2, have been found to have been based on corporate tax breaks which are now being banned.

That comes a bit late for those who fretted nearly three years ago about the loss of one of Scotland's big corporates to raiders from Madrid.

Then there's White Van Man, who is being told that his emissions are being brought into the same tight framework as passenger cars over the next seven years.

You can find a new strategy on advanced use of next-generation internet to control traffic congestion, manage energy demand and improve health care at a distance.

All significant in their own ways. But perhaps most significant is a move afoot by the European Commission to stick its regulatory nose into the food chain.

It has figured that the balance of market power is not properly calibrated.

Or to put it another way, big food processors and supermarkets have disproportionate power over the small producer and farmer.

Most notable among the little guys who have been hard-squeezed are dairy farmers.

They have a separate announcement today that they are being given the green light for governments to offer a one-off emergency 15,000 euro grant.

One solution being targeted for improving the operation of the food market is for EU members to have more transparent price information across retailers.

That's probably not something that will revolutionise food retailing in Britain, which is relatively efficient and competitive.

More relevant in the UK is the power of very few, very large supermarkets, which is more concentrated than you find elsewhere.

Of more relevance still might be the concern about prices going up, with market prices rising, but not coming down at the same pace.

That's a familiar argument to the one used against energy companies, having seen oil and gas prices spike over the past 18 months.

The European Commission wants to force more transparency into food pricing, so that consumers benefit from falling prices.

And that goes for more oversight of the food futures market to curtail speculative bubbles.

The politics has gone out of the economics of food, while food inflation has been relatively subdued.

But there are pressures growing from resurgent Asian economies and poor harvests, and Brussels commissioners are making preparations for the possibility - some might say the probability - that the acute pain of high and fast-rising prices could easily come back.

• Bookmark with:
• |
• |
• |
• |
• - What's this?

If you want a haulage firm to shift a pallet of your goods from Manchester to London, it should cost you around £45.

But if you want it trucked from Lanarkshire to London, it will cost you less. Perhaps £38.

Some hauliers may be willing to offer you less than £30, which is below their costs.

This is just to fill up space on the south-bound trip, because while there's still lots of freight heading up the A1 and M74 to supply Scottish businesses and shops, there's far less Scottish produce now available for the return trip.

Yet it's only by filling trucks on all their trips that the freight industry can make its profits.

Those figures aren't good news for the haulage industry, particularly the Scottish businesses that depend on the England-Scotland routes.

Typically small operators, they are up against much bigger hauliers who can cross-subsidise their more northerly destinations with a wider range of English and continental routes.

More widely than that one industry, this tells you a significant story about the state of the Scottish economy.

It's true that many of the most successful manufacturing businesses - for instance, Weir Group, Clyde Union, Aggreko and BVT - shift a lot of their produce by air, train or ship.

Others, in the service sector, can deliver online.

But the lorry remains a vital link for getting Scottish goods to market - not only to England, but to English ports.

And these freight costs show that Scotland is making a whole lot less than it was.

The biggest gap in recent years has come from electronics.

It's not that Silicon Glen has disappeared. Scotland still shifts around £4bn in export earnings from its electronics sector.

But only ten years ago, it was shipping more than £11bn worth.

And from the point of view of the hauliers, it doesn't help that electronic products have become more compact.

The other lesson worth noting is how important the rest of the UK is to Scottish businesses.

The most recent input-output tables tell us that 42% of Scottish added value is accounted for by Scottish customers.

While 10% is investment, and 17% is government expenditure, 31% is exported from Scotland.

Of that 31%, 21 percentage points are accounted for by England, Wales and Northern Ireland, while 10 percentage points are sent further afield.

The Scottish government has policies to develop its links with its major trading partners - notably the US, Germany and China, with more emphasis being put in recent weeks on India's potential.

So what's the policy on exports to England?

• Bookmark with:
• |
• |
• |
• |
• - What's this?

Ouch. So the recession goes on, longer than the forecasting pundits had reckoned. Gross domestic product was always likely to fall around the standstill position, with the forecasting tending towards the upside and a return to growth.

No-one wielding the economists' slide-rule had reckoned on a 0.4% drop in the third quarter - July to September - but that's what we got. And while it's a move in the right direction, that's only a slight improvement on 0.6% in April to June.

You'd be forgiven for being slightly confused with the position in Scotland, where it was reported on Wednesday that Scottish GDP had fallen by 0.8%.

To help clear up that confusion, it's probably worth noting that that Scottish figure was for the second quarter, April to June, whereas the latest UK figure was for July to September.

The Scottish Government takes longer than the UK Office for National Statistics to compile figures and extrapolate the Scottish bits of the UK data. That makes its publication almost exactly three months behind the UK figures.

If we follow through on the growth path from the second quarter, which showed the return of Scottish economic activity lagging behind that of the UK, we could assume the Scottish economy declined by around 0.5% last quarter.

• Bookmark with:
• |
• |
• |
• |
• - What's this?

The man who would be Chancellor of the Exchequer wants to break up those banks largely owned by the UK Government.

That's a much clearer position than we've heard from George Osborne before, and has been sparked by the trenchant views of Mervyn King, governor of the Bank of England, during a speech in Edinburgh this week.

Mr King said there hasn't been enough structural reform of banks, or talk of it, and that it is "a delusion" to think that reform of regulation will be sufficient response to the problems banks created over the past two years.

Gordon Brown made it clear at Prime Minister's Questions that he disagrees. His argument was that it is not clear splitting banks between utility and risky investment elements will have the desired effect:

Northern Rock was a small retail bank without investment risks, while Lehman Brothers was large and an investment bank without much retail, yet both became insolvent.

Mr Osborne's made his views clearer in Glasgow today, (Thursday), where he was taking questions from members of the city's Chamber of Commerce.

For the record, this is what he told me afterwards: "I thought Mervyn King did make a persuasive case in Edinburgh. I thought it was extraordinary that Gordon Brown and Alistair Darling dismissed it out of hand.

"And it's a concern that you've got this dispute at the heart of economic policy making in the UK. We've got to fix the regulatory system, and that means putting the Bank of England in charge.

"You also need to look at the scale of these banks, and as we come to sell the big government stakes, we need smaller banks, we need a more competitive banking sector, and we need to protect the taxpayer from really risky investment banking activities which sit uneasily with taking deposits on the high street. Mervyn King has a lot of sensible points."

Mr Osborne went on: "We've seen what's happening to the Scottish banking sector over the past two years. It's probably suffered more than any other banking sector in the world, and I want to see if there's a Conservative government that these mistakes are not repeated".

So is he in favour of bringing in more competitors, or in breaking up the banks we've got?

"You need to do both. You need to allow more people to come into the market.

"You need more competition in the sector. We've lost a lot of players. HBOS and Northern Rock have gone.

"We need to create more competition by allowing new people to come in, offering services to Scottish business. They're currently struggling to get that, because the credit crunch is still happening, and that's costing jobs.

"We also, when we come to sell the big stakes the Government owns in Lloyds, HBOS, RBS and the like, that we look to have a more competitive banking sector, that there are smaller banks. That's good for the UK, for the UK financial services sector, good for the customer".

One suggestion is that a Tory government could sell off its stakes in the banks with a share offering aimed at small investors taking small stakes, as the Conservatives did in the 1980s privatisations.

Says Osborne: "We haven't reached that point yet. The first thing is to get the banks nursed back to health. We've got to have a strategic plan. You can't just sell when it looks like a good price. You've got to have a plan for the banking sector".

Taking questions from Glasgow business folks, Mr Osborne also stressed his commitment to high-speed rail connection.

It won't be in the early stages of his intended crackdown on public spending, but he made the point that spending squeezes should not fall only on capital projects. Even if "full guns" are applied, he said it won't be 2015 until the first tracks get laid.

• Bookmark with:
• |
• |
• |
• |
• - What's this?

With everyone looking for green shoots of growth, one of them has come unexpectedly from the demographers. And it should mean more to the economy than the cost of building more maternity wards.

Population experts like to take recent trends and project them forward, which may make them the only people in Britain not to realise how much things have changed with recession.

One effect of subdued growth will likely be that Britain becomes a less attractive place for people to migrate to, so the main driver of recent immigration growth is at least shifted down from fifth gear. Recession can also lead to an increase in out-migration.

But let's suppose they're even partly right when they say population increase is on track for rapid growth over the next 20 years, up by around 10 million to 70 million. By that same reckoning, Scotland's population would stop hovering above 5 million, and add another quarter million.

That raises significant challenges - in housing, for instance, and transport, skills, employment, and areas of social policy around immigration.

Heat map

This is already a busy island, and lopsided to its south-east, in both population and economic terms. And news of the supposed population surge comes along with evidence that the economic map of Britain spreads the benefits of growth unevenly, and does the same with recession.

Experian has compiled a 'heat map', showing the ways recession, and the consequent public spending squeeze, is going to impact differently across Britain's council areas.

It probably won't surprise the people of Blaenau Gwent, Kingston-upon-Hull, Glasgow and Inverclyde to find they are the ones who will experience the worst of the financial stress on households. That includes unemployment, income, debt and savings.

Looking at council finances, Experian forecasts services in the south of England would be least affected by the looming squeeze, the north of England would take the worst of the impact, while Scotland would be somewhere in between.

And looking at prospects of recovery, Experian makes it look good for London, Edinburgh and Leeds. But the list of those with the slowest recovery prospects looks odd, at least from a Scottish perspective, in that it includes East Dunbartonshire, Argyll, and Dumfries and Galloway - either prosperous or benefiting from in-migration.

Hit harder

Add to that a further piece of research, this time from the Institute of Public Policy Research North, based on Tyneside. It has found that recession has hit poorer northern English towns and cities hard because unemployment, already relatively higher, has become disproportionately worse.

It argues that necessary regeneration is stalled because of the slump in housing. And just as Experian finds, those communities most dependent on public sector spend are going to be the communities worst affected by a squeeze.

There's a connection between these forecasts, and it probably matters more to the north of England than it does to Scotland.

If population growth suggests the need to "concrete over" the remaining verdant bits of south-east England, and if this recession is worsening the impact of past ones in exacerbating a north-south divide, then isn't it time to think again about the neglected subject of what Whitehall likes to call "regional policy"?

That could mean proactive means to push both economic opportunity and population growth out of the south-east. It could be done with spending programmes and with tax incentives - even with devolved tax powers.

It's doubtful, however, that the gigantic spend on the Olympics in east London is such a clever place to fire the starting gun.

• Bookmark with:
• del.icio.us |
• Digg |
• Newsvine |
• |
• Reddit
• - What's this?

It's not often I get to talk about "dimensionalising the emotional connection" with Buzz Lightyear, or the merchandising potential for a Winnie the Pooh healthier brand of honey pots.

And it's rare to have the privilege of meeting someone close to the extraordinary phenomenon that is Hannah Montana.

But such a man is Andy Mooney, native of Whitburn in West Lothian. It's hard to imagine any Scot with more marketing clout, having grown Disney Merchandising gross retail sales from $12bn in 2000 when he became its president to $30bn last year. That was after a stellar job heading up Nike apparel.

While his end of the Los Angeles-based business goes from strength to strength, helped by the acquisition of 5,000 superhero characters with Marvel comics, the rest of the vast Disney empire hasn't been finding recession a happy experience. Several films have badly disappointed, and the head of its studio has just been replaced.

New stories

The new approach to the movie business is for what they call "tent-pole" projects - fewer huge projects around which the rest of the business clusters. Those coming up include another Toy Story, another Cars, another Pirates of the Caribbean and another take on Alice in Wonderland.

You might feel the sequel and re-working of past commercial success displays a lack of creative thinking. But according to Mooney, Disney's business is now 60% non-American. That helps explain why they've got creative teams working on new story lines in Japan, India and China. "We want to see ourselves as global story tellers, moving those characters around the world," says Mooney.

As for the merchandising end of things, Mooney is into a lot more than cuddly toys and pyjama sales. He talks of having "tribes" of his staff working across toys, fashion accessories, home products, stationery, consumer electronics,health, beauty and food.

Mickey prints

Disney food? "You'd be surprised," says Mooney. "We're even managing to brand fresh vegetables [around] Winnie the Pooh and Mickey Mouse. We made a conscious decision to exit some of the unhealthier food categories about five years ago, and in turn put an emphasis on getting the kids to eat a little healthier, and that would require more fruit and vegetables. So we've been working with retailers and their private label brands, to introduce the characters into those categories and create ways to help mom get kids to eat these products - through sticker campaigns or collectibles."

Dimensionalising that emotional connection - that is, making a connection with Buzz Lightyear and then finding ways to continue that in different dimensions after you've left the cinema - isn't just driving towards profit from next Christmas' stocking.

Not that they don't want lots of that. But the Disney business model can afford to think long-term. That connection goes on until parenthood and grandparenthood. One part of the Mooney empire is in high value reprints of Mickey Mouse original sketches.

Hear more from Andy Mooney on today's edition of The Business on Radio Scotland, available on iplayer and podcast.

• Bookmark with:
• |
• |
• |
• |
• - What's this?

Three hundred more Scots joined the dole queue last month. Does such a small statistic represent another green shoot of economic recovery? Let's hope so.

But it doesn't look so good if you're one of those affected.

It was a personal story from someone who signed on this week that brought a sobering jolt on Wednesday as ³ÉÈË¿ìÊÖ Scotland hosted its Big Debate about the nation's economic future - one of the series of broadcasts trying to discern the path from recession to recovery.

Angela Robson from Erskine worked for 25 years in finance, most recently for Lloyds TSB.

But the credit crunch hit home when the bank started axing jobs.

Her husband, also in the finance sector, lost his job in January.

So they've gone from two comfortable salaries and a company car, with one daughter at university and the other at school, they've burned through most of their savings, and they now face getting by on £100 per week.

Of course, it's no surprise that unemployment continues to rise even as the growth figures show signs of turning the corner back into positive territory. Recessions tend to do that.

But this is an unusual recession. Never in modern times has the contraction been so sharp.

And never before have governments and central banks acted with such vigour to spend their way out of trouble.

If those green shoots are any evidence, then that splurge may just be working - and we can worry about paying off the nation's giant credit card bill when it comes in later.

But there are other unusual aspects to this recession.

The threat of a postal strike is a contrast to the rest of the British economy, where there's been remarkably little industrial strife.

It's been for the French to occupy factories, take bosses hostage and, in several companies, to have employees respond to workplace stress with spates of suicide.

Evidence from America shows loyalty to companies has plunged, and so has trust in bosses.

In Britain, on the whole, the workforce has been remarkably co-operative and compliant - this as 40% of private sector companies froze pay this year.

Bosses have hacked away at benefits such as pensions, holidays and sickness entitlements, while putting staff on part-time work.

But there's also evidence that managers have worked harder than before to draw employees into understanding the problems being faced, with more information and at least a sense of shared pain.

This has been illustrated in an extensive survey carried out by Reed recruitment consultancy, in parallel with one it conducted during the last major recession, 17 years ago.

In that downturn, the groups that took the brunt of the job losses were part-timers, middle managers, and those aged over 55.

Two factors contributed to making sure these categories are not featuring in the current recession.

One is that companies in the early 90s permanently changed their management structures, cutting out those hierarchies that had dominated British business.

So there are far fewer middle managers in the so-called headcount, who can be delayered, structurally adjusted and let go.

The other factor is that laws against age discrimination have been introduced since then, protecting those at the upper end of the working age scale.

So who suffers in this recession? Well, the pain's more widely spread. The good news is for those in the human resource departments, and in IT.

The worst news is for those aged under 25. Not having been around long, they're easier to shed. And not having experience, they struggle to compete for jobs with unemployed older people who DO have experience.

So age discrimination now works against the young.

And there's a sting in the tale of this recession, as we look for ways out of it.

While skilled people are now looking for jobs, the Reed survey has registered a clear warning that employers plan on a post-recession recruitment drive to get skills on board.

Through the recession, and having learned the lessons of past ones, many employers have sought imaginative ways to hold on to the skilled workers they value: from extra training to low-paid gap years.

A significant number are already expanding their IT, sales and marketing forces.

While 24% of firms have shed skilled workers in the downturn, 37% hope to recruit them in the upturn.

In other words, even when we're still in recession, it looks like there's a skills shortage looming.

• Bookmark with:
• |
• |
• |
• |
• - What's this?

The masters seem to think they can take back control of the universe, in that Goldman Sachs is out of US government hock and can pay whatever bonuses it wants.

Not so fast, says Britain's Peter Mandelson. We've got an international agreement to curb bank bonus excess. He's saying that banks that pay with reckless greed (or what some bankers call 'a market rate') can be required by regulators to hold much larger capital deposits.

So while thumbing its nose at public opinion, Goldman Sachs super-brainy financial whizzes are giving the political agreement its first big test. Will the US regulators step in with Goldman?

In other countries, banks are desperate to get out from under the heel of government ownership and at least partial controls.

Consider the argument from Royal Bank of Scotland, for instance. It says it has to pay its best financiers the market rate, even if it has been bailed out with huge amounts of UK government money and is 70% publicly owned.

If that's the case, then the market rate set by Goldman Sachs has a direct impact on the pay bill at Gogarburn headquarters and elsewhere. So we all pay for the consequences of the New York bank's bonus bonanza.

Excess profit

But look at it another way. One reason given today for the astonishingly high pay that bankers expect is that there are so few people capable of doing what they do.

The free market economic theory which they espouse would also suggest that excess profit is a sign of a dysfunctional market. It showed signs of monopolistic behaviour before the crash, and with a lot of competition removed by collapse and merger, that is going to get even more concentrated.

So if the market lacks competition, it's up to government and regulators to make the market function better, to ensure the barriers to entry in the market-place are reduced, so that bankers don't operate as a small, cosy and extremely lucrative global cartel.

So that's another argument for the banks to come under much more regulatory pressure.

Goldman Sachs' largesse to its employees may improve Krug sales for a weekend. But it looks even more short-sighted than the bonus culture was before last year's crash, if it gives governments and regulators that golden opportunity and a new wave of public anger with which to flex their muscles.

• Bookmark with:
• |
• |
• |
• |
• - What's this?

It's what economists call a perverse incentive, and doesn't smack of the kind of prudence banks are supposed to be embracing.

A year on from the bail-out of HBOS, its parent company, Lloyds Banking Group, is telling current account holders about changes it is making to the conditions, whether customers wanted that or not.

Where Bank of Scotland and Halifax previously sold it as a high interest current account, it's not high interest any more. Indeed, balances won't earn any interest at all.

Then look at the new bank charges on agreed overdrafts. If you've arranged an overdraft of up to £2,500, then any one day spent in the red will cost you £1. Going over the £2,500 mark puts the daily charge up to £2.

Strange developments

There will be no charges for the privilege of having the bank write to you to tell you that you're overdrawn. No more interest rates to bamboozle you. Couldn't be simpler.

But if Lloyds Banking Group were to advertise the APR, or equivalent annualised percentage rate of interest, for accounts that are only £1 overdrawn, it wouldn't look too good. In fact, it would look something like 36,400%.

And that's where the perverse incentive kicks in, because once you've gone £1 overdrawn, you might as well take out another £2498. It would cost you exactly the same.

Maintaining that overdraft throughout a year, you would pay £365, meaning 14.6% in annual interest.

With such strange developments in personal finance, it's just as well the Money Matters Roadshow is in Glasgow this week, to answer all your questions, and probably some that hadn't occurred to you. Find out more .

• Bookmark with:
• |
• |
• |
• |
• - What's this?

The devastation of an earthquake and typhoons in east Asia have reached the epic proportions where a disaster emergency fund-raising drive is being co-ordinated by the main British development charities.

But there is more going on in Asia that looks set to require us to dig deeper than just loose change for charity.

India is also facing a natural disaster. More than 250 people have died in flooding in the southern Indian states of Karnataka and Andhra Pradesh, and another 2.5 million have been forced from their homes.

It can be hard to grasp that scale, and fits with the foreigners' view of India that its monsoons always bring disaster and suffering in at least one region.

More significant for the world economy and trade is that until last week's floods hit what crops there were, the monsoon had previously been the weakest for 37 years.

During those years, the country has been slow to build up its resilience to poor rainfall. About 60% of its agricultural land is not irrigated. A country with more than 200 million farmers faces a big challenge.

The poor monsoon means this emerging economic giant is being walloped by rapidly rising food prices.

The most recent inflation figures show vegetable prices up 50%, potatoes up 81%, sugar up 44% and rice up 19%, with food prices more broadly up 16% on last year. The Delhi government is taking action to pull back on grain exports, which are important to neighbouring countries' supplies.

The most immediate impact is on the hundreds of millions of Indians who were already struggling to earn enough to feed themselves.

Since the 1960s, India has moved beyond the fear of widespread famine, but instead it handles food shortages with widespread malnourishment.

With East Africa also experiencing severe food shortages and the threat of famine, it's hard to see how this won't push up food prices internationally.

British spending on food has remained buoyant through the recession, as last year's food price inflation has fed through.

Tesco's interim results, out this morning, show that inflationary pressure eased off earlier this year, feeding into reduced supermarket takings.

But don't be surprised if global food supply problems meet increased demand, as economies move from recession to recovery and return us to accelerating food price inflation - and a shopping basket near you.

• Bookmark with:
• |
• |
• |
• |
• - What's this?

More than £100m in European funding could be sunk in the North Sea before too long.

Word out of Brussels has it that a 75 million euro grant is to be recommended by the Commission for voting through by the European Parliament to back a Scottish and Southern Energy project.

This is to place a high-voltage sub-sea transmission line and hub under its planned offshore marine farms off north-east Scotland.

Another 40 million euros is being earmarked for the Wind Deployment Centre - 10 large turbines proposed for sites close to shore off Aberdeen, currently facing some planning opposition.

The project has already been scaled back, and is more for testing kit than for large-scale generation.

This fund is part of the European priority spending on improved renewables, carbon-reducing technologies and energy security, much of which is going into gas supply routes that avoid dependence on Russia.

The North Sea is a focus for Brussels' thinking on renewables.

But it's reported that the Commission has not been sufficiently impressed by prospects for carbon capture and storage based on Longannet power station to put the Fife coal-burner on its shortlist of approved projects.

Instead, Hatfield in Yorkshire seems to have been given the nod for European funding.

The official line is that Hatfield was at an advantage because it includes a new-build power plant.

Longannet is seen as an attractive place to test carbon capture technology because the emissions are already being belched out by the Scottish Power giant. It may have been that the European Commission saw beyond it for that reason.

The bigger prize is a pot of UK government funding that is far in excess of anything likely to come to Britain out of Brussels. Ministers are dangling as much as £1bn in front of projects for carbon capture testing, and they're running a competition to see which should get the funding.

It has been a slow process. The first plan was for a new power station at Peterhead.

For various reasons, BP lost interest and walked away. Now Scottish Power and Scottish and Southern Energy are among the competitors to win the funding and get ahead with the technology.

The notion is that carbon emissions can be captured, treated and turned into a chemical compound, then pumped out to sea and buried deep under the seabed.

The notion was also that this could fill emptying oil wells, and might even have the by-product of displacing the remaining deposits in old oil reservoirs.

The reality, from research commissioned by the Scottish government, is that the oil wells are not ideal, but that there are aquifers under the seabed that could be used for carbon storage - enough identified so far for 200 years of Scottish coal-burning power generation.

The other factor, which enthusiasts prefer to overlook, is that it currently ranks as the most expensive way of reducing carbon emissions, and by a long way, quite apart from being an unproven technology.

The British intention is to build and operate a test site, in the hope that it will work and can be attached to the next generation of coal-burning power stations.

That test may not be complete until 2020, and a lot of decisions about Britain's energy future will have to be made before then.

The competition to get there first is international, and since the change of regime in the White House, the USA is seeing immense amounts of effort going into carbon-reducing research and development.

It's worth noting that last week saw the first application of carbon capture technology at a commercial coal-burning power plant. It was in West Virginia.

• Bookmark with:
• |
• |
• |
• |
• - What's this?

With the International Monetary Fund claiming that British banks have 60% of their expected credit right-downs still to unravel, the opportunity for newcomers to the sector looks ever more attractive.

So it's worth noting the contributions to the Holyrood inquiry into the way ahead for Scottish finance.

We already know about Tesco Personal Finance, headquartered in Edinburgh and hiring hundreds in Glasgow.

But what about Virgin Money, which recently opened an office in Edinburgh, and announced in June that it wanted to recruit at least 100 staff to set up a mortgage operation in the Scottish capital?

Fourteen years after starting out, it already has more than two million customers across insurance, savings, credit cards and pensions? Mortgages, current accounts and a full banking licence are expected to follow.

According to Virgin Money's chief executive, Jayne-Ann Gadhia, there's quite a bit of work going in to expanding its reach, not least in market research. What Virgin has in common with Tesco is the drive for product simplicity.

In evidence to the economy, energy and tourism committee at the Scottish Parliament, she says: "Virgin Money, like all Virgin businesses, places a strong emphasis on bringing simplicity to a traditionally complex sector.

"We apply a philosophy of making everyone better off by the way we do business by offering good value to customers, making a positive contribution to society and delivering a fair profit.

"Our aspiration is to develop a sustainable, savings-based institution based at its core on matching assets and liabilities."

The 48-year old English Midlander led the unsuccessful attempt by Virgin to take on Northern Rock two years ago, having been head of consumer finance for the Royal Bank of Scotland, just before being recruited by Sir Richard Branson.

She goes on: "There is clear demand for brands such as Virgin to enter the banking market".

And this is where it gets most interesting: "Research we commissioned recently shows that consumer awareness of the Virgin Money brand is now on a par with major UK financial institutions.

"It also suggests that we would be a trusted deposit-taking institution, to whom a significant number of consumers would also be prepared to transfer their mortgages."

The industry is at a turning point, says Gadhia. And following "a serious loss of confidence in financial services providers, particularly the established banks... it is essential that trust is re-established at the heart of the relationship between banks and the wider community".

Barclays Bank is also dropping heavy hints about expansion into the Scottish market.

It has 1,700 branches throughout the UK, but only 23 in Scotland.

A new flagship branch was opened in Glasgow in July last year, and according to its submission to the Holyrood inquiry, Barclays wants to build on a base that emphasises oil and gas and public infrastructure funding, with 1,000 employed in wealth management in Edinburgh, and its stockbroking arm in Glasgow.

"Barclays Commercial is committed to growth within Scotland and is currently expanding its capability to ensure it continues to provide a service to its existing and potential clients in Scotland," says the London-based giant.

"Whilst Barclays focus in the UK has traditionally been in England and Wales, Barclays has been growing its business in Scotland, particularly its commercial business, and believes that it has much to offer to Scottish consumers."

Interesting changes ahead on the financial high street and its online equivalent.

• Bookmark with:
• |
• |
• |
• |
• - What's this?