EMI left on the shelf again

BRITNEY Spears is not one of EMI's artists. But Eric Nicoli, the company's chairman, might well be humming her hit 'Oops, I Did It Again' ruefully under his breath.

He has been forced to accept defeat in his bid to team up with Warner Music - the third time he has tried and failed to pull off a deal. He has spent plenty of time flirting with others, including Germany's Bertelsmann, but so far to no avail.

EMI has been a big advocate of consolidation, but now faces a solo future. In public the company insists it can forge ahead as an independent. The reality is that the music industry is a tough place for EMI to be on its own.

Nicoli's role of jilted suitor is made the more galling as Sony and Bertelsmann forge ahead with their own plans to merge their recorded music arms.

EMI has taken some positive measures to put its own house in order. It has conducted a drive to slim down costs - shedding staff and artists, albeit somewhat later than investors would have liked. Half-year revenues were flat against an industry decline of more than 10%.

But analysts say the company has now made most of the easy cost savings and it is difficult to see where profit growth will come from.

Predictably, speculation is swirling that EMI might itself become the target of a predatory venture capitalist. Some suggest it may end up merging with victorious rival Edgar Bronfman Jr's venture capital consortium.

Bronfman has a lot at stake. At the time of his disastrous decision to sell the Seagram family empire to stricken French conglomerate Vivendi, he was telling anyone who would listen that the music business was about to enjoy a period of unprecedented expansion.

He clearly believes that the industry is going through a trough and can overcome its present woes. But he is taking a very big bet.

Brown back on track

THE CBI is the latest organisation to back the Chancellor on his growth forecasts for this year.

Gordon Brown was widely criticised by economists earlier in the year for 'over-optimistic' predictions. But in its quarterly economic forecast the employers' organisation now reckons he will hit his mark - for this year at least.

The CBI has raised its forecast for UK growth this year by 0.2% to 2%, in line with Brown's prediction of 2% to 2.5%.

But it reckons growth for next year will remain below the Treasury's figures, upping its prediction by 0.4% to 2.8%, compared with Brown's 3% to 3.5%.

Its economists also foresee government borrowing peaking at £35.2bn this year, well ahead of Brown's expected £27bn, before falling to £32.7bn in 2005. That is £10bn more than the Chancellor has pencilled in.

In its November report on manufacturing, the CBI found ' encouraging signs' in that total order books have bounced back from a two-month slump. Export orders are at their healthiest for a year and a half.

But while consumer goods firms have fared comparatively well, traditional metal-bashers remain weak. Export demand is still significantly lower than normal. Andrew Clare, financial economist at Legal & General, says: 'Manufacturing is struggling because of weak demand growth in Europe. We are expecting next year to be only marginally easier.'

The CBI expects interest rates to hit 5% by 2005, but most economists do not expect the Bank of England's Monetary Policy Committee to cast a pall over the key Christmas spending period by raising them further when it meets next week.

The continued weakness in the manufacturing sector suggests the MPC can afford to stay its hand.

Morals and Mammon

THE Right Reverend Michael Mann, a former bishop and personal chaplain to the Queen, has delivered a timely sermon on ethics to the asset management industry. Fund managers, he says, should keep ethics at the forefront of their minds and not succumb to short-term pressures.

As well as following an ecclesiastical path, Mann acts as an ethics consultant to fund managers and sits on the board of Franklin Templeton Investment Funds, the US-owned mutual fund group.

Luckily for him, Franklin has not so far been implicated in the mutual fund scandal engulfing Wall Street.

Even without the dramatic US probes, small savers have routinely been afflicted with high charges and poor performance. Perhaps more fund managers should consider taking religious instruction.