Timing matters a lot in determining political success. Gordon Brown could hardly have become prime minister at a worse time because in the summer of 2007 the UK economy had been growing for 15 years, the financial crisis was just around the corner and the only way was down.



For Cyril Ramaphosa, by contrast, the only way is up. The new South African president has taken over an economy that should be a regional superpower but has been seriously underperforming in recent years. The growth rate has been on a downward trend since the initial bounce back from the “great recession” and is close to zero. Unemployment is above 25% and the poverty rate is higher than in other large emerging market economies.

Under South Africa’s president Jacob Zuma, jobs were created in the public sector to make up for the lack of entrepreneurship in the private sector. Inflation is well above target and corruption has been rife.



Zuma’s resignation has meant South African shares having their best day in more than three years. Financial markets think Ramaphosa will be an improvement on his predecessor. That, in all honesty, is not saying much.

The immediate focus for the new president will be an anti-corruption drive designed to inspire investor confidence. But he also needs to find a way of nudging South Africa’s central bank into reducing interest rates, and that will require tough tax and spending decisions.

Finally, a big programme of structural reform is required, including redeploying money spent on public-sector salaries towards higher investment in South Africa’s infrastructure.

None of this is easy and it will be deeply unpopular with those who did well under Zuma. Ramaphosa will be given time to get results, but his honeymoon will not last long.

Is it time for the UK to create a sovereign wealth fund?

It should have happened 40 years ago but finally Britain is starting to get serious about creating a sovereign wealth fund, an idea that has its fans on all parts of the political spectrum. Had the UK followed Norway’s example and saved the proceeds of its North Sea oil bonanza, it too could have a trillion dollar SWF.

The fact that Britain blew its oil and gas windfall is a matter for profound regret but interest in a SWF has been prompted by a number of recent developments. One is that many Britons are ill-prepared for a rainy day – with half the population having £1,000 or less saved. A second is that the coming robot revolution will require people to adapt and retrain. A third is that historically low interest rates make it feasible for the government to borrow money cheaply to establish a fund.

The RSA (the Royal Society for the encouragement of arts, manufactures and commerce) is the latest outfit to come up with a proposal for a SWF to help workers cope with the challenge of automation and artificial intelligence.

It wants every citizen under the age of 55 to have access to a universal basic opportunity fund (UBOF) – a £10,000 payment spread over two years that would allow a low-skilled worker to retrain for a new job without suffering a loss of income. This is an interesting idea, with the added bonus that it would act as a trial run for a universal basic income – another idea that is bang in vogue.

A UBOF would not come cheap, with the RSA putting the cost at £14.5bn a year. It says there are a number of ways the money could be raised, including a wealth tax, government borrowing of £200bn and levies on company assets.

Most eye-catching of all, though, is the suggestion that the money for a SWF could come from the big technology companies such as Amazon and Facebook. As the RSA rightly notes, these companies generate considerable profit from the data of UK citizens. Some of it should be claimed back for the public benefit

Falling dollar

The prospect of higher American interest rates normally leads to a stronger dollar but the greenback has been getting a real caning on the foreign exchanges. The pound touched $1.41 on Thursday but what is worrying some is the fall in the dollar against the Japanese yen below a long established trend line. This is the relationship to watch.

