Jeremy Warner: Scaremongering and the financial press

Outlook: Have we been unduly guilty in the financial press of exaggeration and rumour-mongering over the past year, and therefore of contributing to the panic in the markets and the economy? I raise this point because I was alarmed on waking yesterday morning to hear the London Evening Standard's stock market reporter, Mickey Clark, accusing The Independent in particular of just such an offence on the BBC's Radio Five Live.

The piece he was referring to was our lead business story yesterday headlined "Carnage on the high street as retailers feel the chill", which he thought an irresponsible use of language to describe what's going on in retailing.

The headline was admittedly not as eloquent as it might have been, but it does seem to me reasonably to describe the state of play, with three major retailers going into administration in little more than a week and countless others hovering on the brink. But perhaps "Small earthquake on high street, not many dead" would have been more to his liking.

Irresponsible reporting by the financial press was the subject of a characteristically thoughtful speech this week from Richard Lambert, director general of the CBI and a former editor of the Financial Times.

Careless headlines and injudicious reporting risk becoming self-fulfilling prophecies of a very serious nature, he suggested, while the use of melodramatic language, unsourced quotes and suggestions that problems in one institution were spreading to others were making the crisis worse than it needed to be.

"What makes me sick", says Mr Lambert, "is some of the sloppier journalism we have seen in recent months. For example, ABC bank is in difficulty, XYZ is in the same line of business, and unnamed analysts say it is next in line for trouble". I know what he means, but I'm hoping we haven't been guilty of it at The Independent.

To the contrary, it has often seemed to me that we have erred too far on the side of caution. I can't tell you how many times we've taken the PR spin at face value, and as a consequence written down or ignored the rumour only to find out later that it was essentially true. If we have been guilty of anything, it is of underestimating the seriousness of the crisis. The events of the last year have been quite melodramatic enough, without the press needing to exaggerate them.

What is certainly true is that modern communications have been very much a part of this 21st-century financial crisis, acting like a lightning rod to communicate instantly rumour and hearsay, some of it malicious and misinformed, around the world's financial markets. Separating truth from untruth has never been more challenging or necessary.

But we have to be able to tell it as it is, and if what Mr Lambert is saying is that we contribute to a panic simply by reporting it, then there is not an awful lot that can be done. We have to be allowed to report, for instance, that HBOS's share price has collapsed by 30 per cent in a single day, and the reasons why this has occurred, even though the front page splashes which did so almost certainly contributed to the funding and solvency problems the bank ended up facing.

One particular genre of story which I know has been a real source of dismay to retailers is the withdrawal of supplier credit insurance to high-street names thought particularly vulnerable to the downturn. On at least one occasion at the Indy, we have not run one of these stories, even though we knew it to be true, because of the obvious danger that it would cause other suppliers to withdraw their credit and thereby sink the company. Yet it is by no means certain this was the right call. If something happens, it deserves to be reported.

The fault lies not with the messenger, but in the nature of markets, which alternate, sometimes violently, between self-feeding bouts of fear and greed, or of euphoria and blind panic. What does Mr Lambert expect? For the press to shut up shop and engage in self-censorship of the financial rumour mill whenever it turns unduly negative? Surely not.