The Saviour of the British Pub - A Frenchman?

Ever heard of Jacques Borel?  No, neither have I, but this 85 year old Frenchman is on a mission – to breathe life back into British pubs by slashing the rate of VAT levied on food and drink.

He has a good track record so far - In Belgium, the Czech Republic, France and Germany, VAT on restaurant food has been cut to around 5%. Before the French parliament slashed VAT, Borel had four meetings with Nicolas Sarkozy.

Borel claims that his campaign has already created 650,000 new jobs and it is his ambition to have launched one and a half million new jobs in bars and restaurants throughout Britain and Europe before he finally calls it a day and retires

 “Before you meet a minister, you must convince junior ministers and their aides that you have a convincing argument,” he says. “If they agree to set up a meeting, they prepare a two-page briefing for the minister, with the key points highlighted, so he will have a summary of the case before he meets you.”

In Britain he is backed by 32 supporters from the food and drink industries (and me) including the Independent Family Brewers of Britain (IFBB), the British Beer and Pub Association (BBPA), and the Association of Licensed Multiple Retailers (ALMR).  The aim is to create 140,000 new jobs in Britain as a result of cutting VAT from 20% to 5%.

The facts are as follows - In Britain there is a 42% rate of tax on beer and Ireland and the UK are the only EU countries where supermarket food is zero rated for VAT. As a result, the supermarkets can subsidise alcohol by selling it at a loss while people who eat in pubs have to pay 20% VAT. 

“Cheap supermarket booze,” adds Jacques “is the cause of binge drinking. The medical profession says that 95% of people they treat for liver disease bought their alcohol from supermarkets. The best way to tackle binge drinking is to get people back into pubs.”

The brewing industry accounts for 1,300,000 jobs if you include pub and brewery workers, farmers that grow the raw materials needed to make beer, and transport companies that deliver the raw materials and the finished beer. Cutting VAT would not only create new jobs in pubs but there would be a knock-on effect in the supply chain. For every 100 new jobs in the pub trade, a further 70 would be added in brewing, farming and transport.

Jacques Borel has had success in in mainland Europe, where the Belgian, Czech, French and German governments have responded to his campaign by slashing VAT from 19% to 5 or 7%. In Finland, where VAT is an astonishing 23%, the rate has been cut to 13% for the restaurant industry. In France alone 21,700 jobs have been created since tax was reduced. 

Now the European Commission has adopted a unanimous decision by the 27 Ministers of Finance to allow each member state to apply a reduced rate of VAT to the restaurant industry instead of the standard rate.

Jacques Borel stresses the impact of a tax cut on trade by pointing to the effect on one French restaurant group. Flo runs steak houses and brasseries and is listed on the Paris Stock Exchange. The reduction in VAT in France enabled the chain to cut prices by 5.2%. As a result, the number of customers rose by 8.5% in just three weeks and the company’s share price rose from two euros before the cut to 4.16 today.

He fully expects a similar increase in trade for British pubs. The money created by a tax cut and increased trade would be used, Borel says, to not only cut prices but also create employment, raise wages, improve training, refurbish pubs and increase profits.

Of course it would! Listen to Jacques and read  Keynesian Pub Economics

Michael O'Leary's Best Quotes

For those who missed this - here is a selection of the most memorable quotes from Ryanair's Michael O'Leary as reprinted in the Telegraph - what a PR dream (or nightmare) he is. 

These are just my favourites...enjoy

On passengers who forget to print their boarding pass: “We think [they] should pay 60 euros for being so stupid.”

On refunds: "You're not getting a refund so **** off. We don't want to hear your sob stories. What part of 'no refund' don't you understand?"

On customer service: "People say the customer is always right, but you know what - they're not. Sometimes they are wrong and they need to be told so."

On overweight passengers: "Nobody wants to sit beside a really fat ****** on board. We have been frankly astonished at the number of customers who don't only want to tax fat people but torture them."

In beginning a press conference to announce the annual results: “I’m here with Howard Miller and Michael Cawley, our two deputy chief executives. But they’re presently making love in the gentleman’s toilets, such is their excitement at today’s results.”

On apologies: "Are we going to say sorry for our lack of customer service? Absolutely not."

On Ryanair's image: "One of the weaknesses of the company now is it is a bit cheap and cheerful and overly nasty, and that reflects my personality."

On environmentalists: “We want to annoy the ******* whenever we can. The best thing you can do with environmentalists is shoot them. These headbangers want to make air travel the preserve of the rich. They are luddites marching us back to the 18th century. If preserving the environment means stopping poor people flying so the rich can fly, then screw it.”

On turbulence: "If drink sales are falling off we get the pilots to engineer a bit of turbulence. That usually spikes up the drink sales."

On travel agents: "Screw the travel agents. Take the ******* out and shoot them. They are a waste of bloody time. What have they done for passengers over the years?"

On ordering aircraft from Boeing: “The message to Boeing today is: ‘You keep building them, we’ll keep buying them’, and together both of us will kick the crap out of Airbus in Europe. We love Boeing. **** the French.”

On transatlantic flights: "Ryanair will never fly the Atlantic route because one cannot get there in a Boeing 737, unless one has a very strong tail wind or passengers who can swim the last hour of the flight."

On the airline industry: "There's a lot of big egos in this industry. Most chief executives got into this business because they want to travel for a living. Not me, I want to work."

On European expansion: "Germans will crawl *******-naked over broken glass to get low fares."

On charging passengers to use the loo: "One thing we have looked at is maybe putting a coin slot on the toilet door so that people might actually have to spend a pound to spend a penny in the future. If someone wanted to pay £5 to go to the toilet I would carry them myself. I would wipe their bums for a fiver."

On upright seating: "I'd love to operate aircraft where we take out the back ten rows and put in hand rails. We'd say if you want to stand, it's five euros. People say 'Oh but the people standing may get killed if there's a crash'. Well, with respect, the people sitting down might get killed as well"

On the in-flight experience: "Anyone who thinks Ryanair flights are some sort of bastion of sanctity where you can contemplate your navel is wrong. We already bombard you with as many in-flight announcements and trolleys as we can. Anyone who looks like sleeping, we wake them up to sell them things."

On low fares: "I don't see why in 10 years' time you wouldn't fly people for free. Why don't airports pay us for delivering the passengers to their shops?"

If you can't find a low fare on Ryanair: "You're a moron."

On publicity: "I don't mind dressing up in something stupid or pulling gormless faces if it helps. Frankly, I don't give a rat's arse about my personal dignity."

On Ryanair passengers: "Do we carry rich people on our flights? Yes, I flew on one this morning and I'm very rich."

On BAA: "BAA want to spend £4 billion on an airport which should cost £100 million. £3.9 billion is for tree planting, new roadways and Norman Foster's Noddy railway so they can mortgage away the future of low-cost airlines. This plan is for the birds. BAA are a glorified shopping mall."

On breaking up BAA: "A break-up of BAA would be the greatest thing that has happened to British aviation since the founding of Ryanair. Then airline customers would not be forced to endure the black hole of Calcutta that is Heathrow or the unnecessary, overpriced palace being planned at Stansted."

On new routes: "Sometimes there is not even a road to the airports we fly to. It is immaterial."

On expansion: "We would like to base more aircraft here in Belfast and are working with the City Airport to get the runway extended. Let's get the planning permission through and let's ignore the mewling and puking from local residents which is a load of nonsense. If you don't like living beside an airport, sell the house and move."

On flying to Cornwall: "Newquay is the surf and dope capital of Britain. There's next to frig-all way of getting to Cornwall unless you fly. It's a ******* impossible nine-day hike. Closing that airport would be a disaster for surfer dudes, but also to loads of wealthy types who use us to commute up and down. I tell you, we'll have a bloody dogfight with the RAF. Watch out for those 737s on your wing, flyboys!"

On pilot's wages: "People ask how we can have such low fares. I tell them our pilots work for nothing."

On his popularity: "I don't give a ***** if no-one likes me. I am not a cloud bunny, I am not an aerosexual. I don't like aeroplanes. I never wanted to be a pilot like those other platoons of goons who populate the airline industry."

On paternity leave: "We have paternity leave but it's a bloody joke. It is bull**** legislation. You need a couple of days off because you've had a baby, but this nonsensical rubbish that you're entitled to days off for the first six years of a baby's life. Go and get a bloody job - get a life."

On Ireland: "The airline industry is full of bull*******, liars and drunks and we excel at all three in Ireland."

On retirement: "It would be very difficult for me to don a tie and go on to committees. Could you imagine me getting a knighthood? Puke. The weakness of British Airways is that everyone is looking for a knighthood. I plan to go on and on, like Chairman Mao."

On free speech: "I upset a lot of people because I tell them what I think. I'm disrespectful towards what is perceived to be authority. Like, I think the Prime Minister of Ireland is a gob*****."

On politics: "I think the most influential person in Europe in the last 20 to 30 years has been Margaret Thatcher, who has left a lasting legacy that has driven us towards lower taxes and greater efficiency. Without her we'd all be living in some French bloody unemployed republic."

On the European Commission: "They are ******* Kim Il-Jungs (sic) in the Commission. You cannot have civil servants trying to design rules that make everything a level playing field. That's called North ******* Korea, and everybody is starving there. The EU are pursuing some form of communist ******* Valhalla."

On EU Commissioner Neelie Kroes's approval of an Alitalia/Air One merger: "She''ll be rolling over like a poodle having her tummy tickled and rubber-stamping the thing."

On how to keep employees motivated and happy: "Fear."

On British Airways: "BA have got waterfalls in their head office. The first thing I'd do if I were in charge of BA is turn off the waterfalls. The only time we have waterfalls in the Ryanair office is when the toilet leaks."

On the British Airways/Iberia merger: "It reminds me of two drunks leaning on each other."

On Ryanair's pilots: "If this is such a Siberian salt mine and I am such an ogre, then why are they still working for the airline? If any of our fellas aren't happy with the current arrangement then they're free to go elsewhere. Godspeed to them."

On Aer Lingus's pilots: "Overpaid, underworked peacocks"

On employees: "MBA students come out with: "My staff is my most important asset." Bull****. Staff is usually your biggest cost. We all employ some lazy ******* who needs a kick up the backside, but no one can bring themselves to admit it."

On cost-cutting: "We use our own biros and I tell the staff not to buy them, just pick them up from hotels, legal offices, wherever. That's what I do. Recently I did an interview and I was sitting there with a hotel pen I'd nicked from somewhere. I was asked why and I said: 'We at Ryanair have a policy of stealing hotel pens. We won't pay for Bic biros as part of our obsession with low costs."

On Sir Stelios Haji-Ioannou, founder of easyJet: "Those of us who sell the lowest fares just get on with it, and those who do not, write whingeing letters to newspapers."

On intelligence: "easyJet are not the brightest sandwiches in the picnic basket."

On Southwest Airlines: "We went to look at Southwest Airlines in the US. It was like the road to Damascus. This was the way to make Ryanair work. I met with Herb Kelleher. I passed out about midnight, and when I woke up again at about 3am Kelleher was still there, the *******, pouring himself another bourbon. I thought I'd pick his brains and come away with the Holy Grail. The next day I couldn't remember a thing."

On Alitalia: "I would not want it if it were given to me as a present."

To the boss of regional airline Aer Arann: "**** off back to Connemara where you come from!"

On offering advice to other airlines' bosses: "They can **** off and do their own work"

On air marshals: “Air marshals are a complete waste of time. I can’t think of anything that would reduce security more than having a guy on board with a gun.”

On a bomb scare in Scotland: “The police force were outstanding in their field. But all they did was stand in their field. They kept passengers on board while they played with a suspect package for two and three quarter hours. Extraordinary.”

On closing Ryanair's check-in desks: "This isn't the end of civilization as we know it."

For the full story and lots of silly pictures of Michael O'Leary see the Telegraph post

And the Gold medal goes to..Nike

Ambush marketing. The one thing the official sponsors were trying to avoid, with all the talk of 'brand police' at the turnstiles.  And yet, the Gold Medal of Ambush Marketing goes to Nike for their bright yellow-green running shoes.  They were one of the most prominent non-sponsors of the Olympics - and yet Nike managed to hi-jack the greatest show on earth with their amazing neon 'Volt' shoes.

Over 400 athletes wore Nike Volts in competition at the London Olympics and of those 400, 68 athletes won Olympic medals, including 25 gold medals

The man behind the Volt Shoe is Martin Lotti, Nike's global creative director for the Olympics . An industrial designer by education, he has been at Nike for 15 years. Painting Nike's Flyknit shoe Volt in that vivid way , was, he says, his way of creating a kind of "Team Nike."

Previously, the brand had matched the colour of the shoe to the color of the individual athlete's uniforms. Although the problem with that is that it blended in. This year, hundreds of athletes from different countries wore the same vivid colour

Nike used their own marketing assets (their shoes) - that belonged to them alone, and this gave this gave them a unique opportunity to take advantage of the Olympic rules.

Focus groups of amateur, college and professional athletes had been shown the shoe in different colours and, across the board, everybody loved the Volt, Lotti revealed .

There's a scientific reason for that. "It's the most-visible colour to the human eye." said Lotti.

Read the full background story here 

And for more on the running shoe itself...here

Olympic Winners and Losers

Sport has always played a large part in my life; whether it’s playing football in the park or watching Usain Bolt in the 100m final – the power of sport to engage and inspire is undeniable. (My personal favourite was the Brownlie Bros in the men’s triathalon..)

Following London 2012 there is now  a great debate on who won the marketing Olympics - which brands stood and out and which ones didn’t even make it off the starting blocks. But there is one thing that unites all brands involved - that they recognize the importance and power of sport and the passion it inspires in consumers.

So thanks to the BBC for raising the benchmark of sporting broadcasting. From their Olympic Trailer to their multi-channel coverage, the BBC where simply superb and their montages alone worthy of gold medals in editing and compilation.  And thanks also to the Royal Mail for reminding me to send a proper letter next time rather than an email.

It’s a shame then that it is unlikely Britain’s recession-hit economy will receive any boost from the Games that have been a triumph for the nation’s athletes. While Britain’s construction sector benefited hugely before the Olympics, experts have said the 17-day sporting spectacle had not delivered significant financial rewards and neither was it expected to in the months and years ahead.  Visitor numbers to London were estimated to be down 30%

In the run-up to the Olympics, commuters and tourists were warned to stay away amid fears that London’s transport system could not cope with millions of extra people descending on the capital. 

The London Olympic Games had long been heralded as a key boost to the British economy but in fact tourist numbers fell dramatically in the first few days of the Games. Hotels cut their prices and many shopping areas, restaurants, theatres, attractions and entertainment venues saw a significant reduction in business. Businesses complained of being sidelined as tourists headed only for the Games and avoided the capital’s other attractions and shopping destinations, while non-sports fans opted to stay at home or delay their trips.

Of course, we knew all of this already so why are officials now so surprised? 

http://www.fesmarketing.blogspot.co.uk/2011/03/london-2012-therell-be-trouble-ahead.html

Hopefully, the organisers of next Olympics in Rio will from the lessons in London….but why would they when London did not learn from the lessons of previous  Olympic cities and countries that went before them!

A Level Economics Pass or Fail?

As thousands of teenagers receive their A level grades, I am sure many of them would be able to do a better job of sorting out the economy than our present chancellor, who’s qualifications for the job include a degree not in Economics or Maths - but History..

We hear now that half of the economists who strongly supported the George Osbourne’s deficit-reduction-austerity plans are now asking for a rethink and urging the Treasury to take advantage of low borrowing costs to boost spending on infrastructure projects. 

Unlike George Osborne (and David Cameron) economists can see that the evidence now points to the need for a change of course. They know that without growth we can't get the deficit down – George Osborne is already forecast to borrow £150bn more than planned.

Output is now lower than it was when the coalition was formed two years ago while the Bank of England believes it will take until 2014 for gross domestic product to return to the peak reached in early 2008. The economy is expected to contract by 0.2% this year.

Roger Bootle, managing director of Capital Economics, said: "If I were chancellor at this point, I would alter the plan, I would stop the cuts to public investment and I might even seek to increase it. Supply-side reform might be welcome but what we're talking about here is a shortage of demand. The key thing is to try and get the private sector to spend its money and that may require a bit of government spending to prime the pump."

What he is referring to in simple terms is ‘the multiplier effect’

The Multiplier Effect

Every time there is an injection of new demand into the economy there is likely to be a multiplier effect. This is because an injection of extra income leads to more spending, which creates more income, and so on. The multiplier effect refers to the increase in final income arising from any new injection of spending.

The size of the multiplier depends upon household’s marginal decisions to spend, called the marginal propensity to consume (MPC), or to save, called the marginal propensity to save (MPS).  This in turn is largely dependent upon economic confidence.

When income is spent, this spending becomes someone else’s income, and so on. Marginal propensities show the proportion of extra income allocated to particular activities, such as investment spending by UK firms, saving by households, and spending on imports from abroad. For example, if 80% of all new income in a given period of time is spent on UK products, the marginal propensity to consume would be 80/100, which is 0.8.

The following formula to calculate the multiplier uses marginal propensities, as follows:

1/(1-mpc)

So, if consumers spend 0.8 and save 0.2 of every £1 of extra income, the multiplier will be  

1/(1-0.8)

= 1/0.2

= 5

This means the multiplier is 5, which means that every £1 of new income generates £5 of extra income.

The multiplier concept can be used any situation where there is a new injection into an economy for example when the government funds building of a new motorway or invests in a home building programme, as has been suggested.

Of course, there is also the downward or ‘reverse’ multiplier..

A withdrawal of income from the circular flow (austerity cuts, reductions in public spending etc etc) will lead to a downward multiplier effect which will further lead to a reduction of spending and economic activity...

Or in other words, just what George has been doing for the last year.

The Drum fauxlympics

Drum Magazine has been running a twitter and facebook campaign and competition called the #thedrumfauxlympics and the entries are some of the best spoof ads I've seen for a long time.

Have a look at all the entries here and cast your own vote on their facebook page.

Anti-Clockwise - better for right-legged athletes?

A great weekend of Olympic Sport and well done to ‘TeamGB’ on their medal tally so far, although I understand from an Australian friend of mine that actually ‘Silver is the new Gold’!  

Watching Mo Farah on Saturday night, I wondered why do they always run round the track in an anti-clockwise direction?  And, thanks to the BBC, here’s the answer:

According to a certain Paul Cartledge, professor of Greek History at the University of Cambridge, at Olympia and elsewhere in Greece both the running track and the hippodrome were straight, using up-and-back "laps" and even in the early modern Olympics - Athens (1896 and 1906), Paris (1900), St Louis (1904) - athletes ran clockwise.

At the time of the 1896 Games, most track races in England were also run clockwise and at Oxford and Cambridge University, both important athletic institutions, races also ran clockwise  (Oxford until the late 1940s and Cambridge until the 1950s)

But a number of countries began to settle instead on the American custom of running counter-clockwise... 

One theory is that early races were run on horse tracks, which ran in that direction. 

Anti-clockwise became the norm by the early 1900s and the Olympic organisers came under pressure to conform. The change was compete world-wide between between 1950 and 1954 and Roger  Bannister's four-minute mile was run in the anti-clockwise direction.

So we have the Americans to thank it seems – but does running anti-clockwise make a difference to left or right-legged athletes?

Answers on a postcard please.