Outlook: Make the most of it while you can, Gordon. It may not last

BSkyB succession; Retailing nemesis

Forget whether Gordon Brown's speech to the Labour Party conference was that of the leader in waiting. I've no doubt in my own mind that the Chancellor is intent on eventual enforcement of the alleged Granita agreement. Yet is he right to insist that in economic terms, everything is so much better than almost anywhere else? Just as important, is he right to insist that it is all down to him?

In political terms these are Mr Brown's two most important cards. Apart from the economy and the enfeebled state of the opposition, not much has gone right for New Labour in recent years. If the economy was poor and the opposition ready for government, the disaster of Iraq would undoubtedly unseat New Labour at the next general election. As it is, Mr Brown can take much of the credit for keeping the Government upright on the ice.

Britain is as close to full employment as it has been since the 1960s, inflation is low, real earnings have been rising, credit is easy and, thanks to interest rates at rock bottom levels, disposable income has been rising even more strongly than earnings. Mr Brown is right to believe some of this is down to Government policy. So far, the Chancellor has got both the monetary and fiscal side of things about right, the first by ceding control to an independent Bank of England, the second by until recently keeping the lid on public spending.

Yet both policies were essentially inherited from the previous regime. The process of cleaning up the public finances was begun under Norman Lamont and then continued by Kenneth Clarke. Meanwhile, the "Ken and Eddie show" went a long way to making interest rate policy more accountable and transparent. It was but a small step from there to total independence. In economic terms, then, what Mr Brown has done is more of an evolution of what went before than a revolution.

Yet Britain's most important economic advantage of recent years has been structural, and in this regard all the heavy lifting was done in the 1980s. By deregulating capital and labour markets, the Thatcher government ensured that the continued decline in manufacturing and the shift to a service-based economy was smoother and less painful than it might otherwise have been. It also put Britain ahead of much of Europe, where difficult decisions have yet to be faced.

Mr Brown has spent a lot more as the economy has nose dived, thus shielding employment and growth from the worst consequences of the business downturn. Yet the labour market, and to some extent the capital markets too, have been made less flexible under Labour. A lot of this has come from Europe, but at least some of it is of the Government's own making. It may be that the Government has earned the right to spend and legislate more, as it claims, yet few of these measures obviously help the productive, wealth creating part of the economy - the private sector. To the contrary, they act as a big deterrent to business start-ups.

So the jury is very much out. Britons feel better and more prosperous than their Continental peers, and the economy is growing more strongly. Whether this persists, even as long as the next general election, is open to question. Politically, Mr Brown should grab his chance while he can, for his star may never be as high relative to Mr Blair's as it is now.

BSkyB succession

Rupert Murdoch has badly mishandled the succession at BSkyB. He wants to appoint his son James as chief executive yet the way he has set about it has so infuriated institutional shareholders that he may end up with an outsider not of his own choice imposed upon him. This in turn might upset a key part of the Sky success story, which is that Mr Murdoch takes the big strategic decisions, and the chief executive implements them. That formula wouldn't work if the relationship between chairman and CEO is characterised by suspicion and confusion about who's boss.

The hastily convened nominations committee now finds itself in an impossible position. The independent non-executives will be seen as supine if they appoint James, however justified they might be. If they appoint an outsider, they'll have to pay a lot for him, risking an altogether different kind of corporate governance row and, if he's any good, he'll want to be his own man. The consequences might be disastrous should the new chief executive not be to Mr Murdoch's liking, with boardroom infighting replacing the clear chain of command that has been such a hallmark of Sky's achievement.

The whole thing could have been so much better handled, yet part of Mr Murdoch's modus operandi is that he runs his companies like a private fiefdom without regard for the sensitivities of outside shareholders. Independent directors, let alone investors, are rarely consulted on anything. For instance, there was no consultation until it was a fait accompli on the decision to bet the ranch on free satellite dishes and set-top boxes, even though the investment was massive and potentially very high risk. Whether they were consulted about the switch from Mark Booth to Tony Ball, virtually unheard of in the City before he was appointed chief executive five years ago, is unknown, but why does it seem so unlikely?

Of course, the record shows that Mr Murdoch's choices are a good sight better than "due process" is likely to produce. Spencer Stuart deserves its reputation as a top firm of head hunters, but its appointment by the nominations committee is in itself divisive and, to be frank, it is far less likely to come up with the new Tony Ball, the young thruster capable of taking Sky to still greater heights, than Mr Murdoch, one of the world's leading media tycoons.

Of course, what Mr Murdoch should have done was consult first. He should have introduced James to the nominations committee, explained what his intentions were, and recognising the sensitivities of the appointment, given the committee time to get to know his son and assess his capabilities. In the end, Mr Murdoch would have got his way without all this hullabaloo. Instead of which the first that Lord St John of Fawsley, the senior non-executive director, knew about the intended departure of Mr Ball and his replacement with James was when he read about it in the press.

My hunch is that ultimately James will get the job any way. If not him, then it will be another Sky or News Corp insider. Anyone else is unthinkable given the upset it's likely to cause with the ultimate boss. None the less, the episode has unnecessarily created a bad smell not to mention a now inevitably long interregnum while the headhunters do their stuff. Just as well Sky doesn't have any proper competition.

Retailing nemesis

Every time I go to France, as I just have, I get to thinking about why French food retailing is on the whole so much better than its British equivalent. In France, the big edge of town hypermarkets, offering more choice at generally lower prices than their British counterparts, seem to co-exist perfectly happily with a galaxy of traditional street markets and smaller, centre of town, speciality outlets. In Britain, the big supermarket groups have all but wiped out the little guy. The reasons are many and varied, but it does seem to me that the Competition Commission's door stopper of a report into the scramble for Safeway's largely misses the point.

Within reason, I doubt it matters much who takes over whom. They are all cloned from the same concept anyway. Much more important than whether there are four competing supermarket chains within a 15 mile drive time is that more is done to revive the diversity and mix of food retailing in general. Here the tide has yet to be turned. This report doesn't offer any hope it will be.

jeremy.warner@independent.co.uk