Fuel for thought

NO longer is Britain's advantageous position as an oil exporting nation holding the pound up on the foreign exchange markets. The July trade figures show that for the first time in 13 glorious years the value of Britain's thirst for imported oil exceeded that of exports.

Doubtless there will be months, even years, when the situation is reversed. But the unmistakable fact is that the bonanza of the North Sea - which has supported the nation's prosperity for more than three decades - is coming to an end. Oil import volumes are surging and now stand 20% higher than a year ago. In contrast export volumes have fallen by 7%.

Some of this change will be a direct response to the above-trend growth seen in Britain this year. Soaring demand has a direct impact on fuel requirements. It might have been hoped that at this stage of the world's economic cycle the trade gap would have narrowed as a result of a global appetite for goods. Unfortunately, we are seeing the worst of both worlds with imports rising to meet consumer desires, but exports failing to make up the difference. So the deficit reached £5.2bn in July, well above the market forecast.

As a proportion of output, the trade gap stood at 5.2% of national wealth over the last three months, according to broker Gerrard. This is not far off the record 5.5% level last seen in 1988. The significant difference is that a large part of the shortfall is now covered by investment income. So the oil wealth has not all been squandered unwisely.

After the summer pause in the housing market, on the High Street and in the nation's factories, the Bank of England held interest rates at 4.75%. But if the trade picture is as bad as the July numbers look then we may still be some way off peak interest rates.

That should prevent sterling falling too far - petro- currency or not.

Scotch mist

TRIBAL feuds run deep in Scotland as Celtic and Rangers fans would testify. It is not much different in Scottish banking where the Jacobites at Royal Bank of Scotland are still at loggerheads with the Calvinists at Halifax Bank of Scotland long after the Edinburgh banks diluted their native identity.

The rivalry has been brought into sharp relief by the chase for control of Abbey. As Santander's long-time partner, the Royal Bank of Scotland has been seen as firmly in the Spanish camp. Indeed, when Santander made its first approach in March of this year, the possibility was that much of the back office would be farmed out to RBS.

HBOS has been determined to throw a spanner in the Santander-RBS alliance. So it publicly raised questions about the competition implications of the cross shareholdings and directorships with the European Commission. HBOS has never quite forgiven RBS for gazumping it in the race for NatWest in 2000 with the help of Santander.

HBOS is quietly declaring a famous victory with the decision by Santander to sell down its stake in RBS and unpick the cross directorships in the case of an Abbey victory. But in reality the outcome is pyrrhic. All that HBOS has succeeded in doing is to fill Santander's war chest with an extra £1.2bn as a results of selling half of its stock.

HBOS has so far had a good phony war and has thoroughly enjoyed skewering its old enemy and their Spanish friends. Chief executive James Crosby and the HBOS board are still limbering up for the big fight recognising that the hurdles of the Office of Fair Trading and the Competition Commission will be a great deal higher than those placed in the way of Santander by the EC.

But in a British mortgage market where 70% of sales are conducted through intermediaries, rather than directly, and more than 4,000 different products are on offer, HBOS may not have a hopeless case.

Green v Rose

ANOTHER day and a another spin of the revolving door at Marks & Spencer with design guru Yasmin Yusuf the latest to be sacrificed. That will mean more shareholders' money wasted on a pay-offs after the departures of Messrs Norgrove, Holmes and Radice. Easy when it is someone else's cash.

Philip Green is being much more careful at Bhs. His much vaunted relaunch is more frugal with just £3m to be spent on a new advertising campaign and £20m on a touch up for the store's portfolio. When it is your own cash on the line you want to make sure it is well spent.

The real test is whether this will be enough to lift returns from Bhs floorspace by £250m. That will prove whether Green or M&S chief Stuart Rose is the better merchandiser.