This morning sees the start of the Investment Summit hosted by Rachel Reeves and she has put out the line to The Times that “investments are a vote of confidence in the UK and the stability that this government has brought back to the economy.” She claims “Britain is open for business.” Unfortunately the Treasury also let it be known to the Guardian that officials are considering proposals to double taxes levied on the gaming sector, as Rachel Reeves “aims to pull every lever possible to raise funds in her upcoming budget.” Seeing as her manifesto revenue-raising proposals have been exposed as a fantasy…
UK gambling stocks slumped this morning following the report that Rachel Reeves is weighing proposals to increase taxes on the industry by as much as £3 billion. Whoops…
Jefferies investment bank analyst James Wheatcroft called the proposals “unrealistic” adding “the proposals apparently being considered would all but wipe out bookmaker profitability in the UK, per our estimates”. Shares in Ladbrokes-owner Entain Plc dropped 15%, casinos operator Rank Group Plc fell nearly 7%. Evoke Plc, owner of the William Hill betting brand, slid 16% and New York listed Flutter Entertainment tumbled 8.8% on the back of the tax hike report. Hardly the pro-business news that investors at the summit want to hear…
The British gaming industry is a global player, with the major groups employing software engineers and operations being major employers in Stoke, Manchester, Leeds, and Sunderland. Taxes on business are taxes on jobs…
BlackRock have warned that the upcoming General Election may lead to bond market turmoil as pre-election tax cuts and spending pledges from both parties are expected. The asset manager warned of the risk of the return of bond vigilantes (investors who who sell bonds to protest inflationary policies) as parties attempt to win over voters. While Labour has been attacking the Tories over Truss “crashing the economy“, they might want to look in the mirror. Guido reminds his readers of Labour’s £28 billion a year black hole, which Starmer confirmed he would borrow in the second half of the next parliament…
Bim Afolami, the government’s City minister, told Bloomberg:
“The bond markets are clear: Labour cannot borrow to pay for their £28 billion-a-year unfunded spending commitment without risking a debt crisis”.
The Labour Party may have enjoyed the political benefits of the markets bucking Liz Truss out of her saddle. They should remember that those same bond market vigilantes trust socialists even less…
Slow economic growth with inflation – stagflation – could result from the surging price of oil. Markets are mesmerised by the thought that as we go into winter in the Northern hemisphere oil is heading towards $100-a-barrel. The chart above shows Brent crude is in the mid-nineties as the Saudis are determined to push prices higher. The US is now insulated by domestic fracked shale oil supplies and the dollar has become a petro-currency as a result. Campaigners today again won permission for yet another hearing to challenge and delay the go-ahead to build the Sizewell C Nuclear Power Station. Thanks to anti-frackers, anti-nuclear campaigners, and Net Zero zombies, Britain’s energy insecurity has increased.
Oil prices will add to the political miseries facing Sunak as he decides whether to go for a May election before things get worse, or play it long in the hope that things get better. He’s caught between an unfracked rock and a hard place…
We introduced EuroGuido as a channel focused on European affairs ahead of the referendum in 2015. We had a lot of fun over the years and ran a mainstream media-mocking series of articles with the #DespiteBrexit hashtag, highlighting the media’s– particularly the BBC’s – qualifier for any positive news that happened. At some point, political discussion has to move on from Brexit.
The political salience of EU issues among readers is diminishing and the wider world is looming larger. The Indo-Pacific tilt away from the Old World is well underway. China and India are the coming superpowers with super-sized economies whilst the European Union’s share of world trade is shrinking, and even native national populations are shrinking in absolute terms. Focusing on the Atlantic powers seems narrow. Apart from the conflict in Ukraine, there are tensions over Taiwan and ongoing wars in the Middle East, as well as instability in Africa and economic challenges in South America. There is a lot more going on in the world outside Europe.
So we’ve renamed the Twitter/X account and have updated the branding to reflect our shifting coverage. GlobalGuido will cover trade, politics and economic affairs. So expect to read about election results in Argentina, and everything from crypto-regulation to defence alliances. We’ll do it in the accessible way we have always done; serious issues lightened, perhaps, by looks at the US election – which gets saturation coverage by the UK media from a monocultural perspective. We won’t cover everything because this isn’t the Economist or Foreign Affairs. Often we will report on international policy developments with reference to UK policy. We might, for example, reference the US Federal Reserve’s interest rate moves because they set the monetary agenda for us far more than many think the Bank of England does. We will, as always, aim to do it all in an entertaining way with an underlying bias towards policies which promote freedom and prosperity.
The International Monetary Fund has admitted it has, once again, underestimated the country’s economic growth, and now forecasts the UK will avoid recession this year. They claimed the UK economy would contract by 0.3%, the bottom of the G7 alongside Germany. Now that’s been upgraded to 0.4% growth over the year.
Falling energy costs and improved business confidence have contributed to their revised data, although they hasten to add add that “the outlook for growth, while improving somewhat in recent months, remains subdued“. Not so subdued that the UK is now expected to outperform Germany, which is still forecast to contract by 0.1%…
Chancellor Jeremy Hunt said the revised figures were a “big upgrade”:
“It praises our childcare reforms, the Windsor framework and business investment incentives. If we stick to the plan, the IMF confirm our long-term growth prospects are stronger than in Germany.”
Since 2016 the IMF has consistently underestimated UK GDP growth… every single year.
While today’s figures are an improvement, Guido hopes they’re still far too pessimistic…
The new Manufacturing Outlook report from Make UK and BDO for the first three months of 2023 shows plenty of welcome optimism in the manufacturing sector, with a sharp uptick in confidence, investment and output compared to the last quarter. BDO’s Head of Manufacturing, Richard Austin, even dares to talk of the “the green shoots of growth beginning to take shape“. Albeit with enough caution to save face…
The data shows improved performance across the board for the sector:
“Both Employment and Investment Intentions increased on balance compared to last quarter. The improvement in the latter metric is particularly interesting as manufacturer’s confidence in investment plans had recently hit negative balances just one quarter ago […] Investment Intentions increased from -5% to +14% as growing order books, supply-chain disruption easing, and cooling inflation has allowed businesses room to focus on the future and less so on short-term issues.
Both business confidence and UK economy confidence improved this quarter. This was due to improvements in most UK nations and regions who are feeling slightly more positive about the next twelve months, except for the West Midlands which reported a marginal decline (despite remaining overall more positive than negative about the future).”
Manufacturing output balance increased to +21% over the last three months, with it forecast to rise to +32% over the next quarter. Similarly, the total orders balance has shot up to +28%, up from +6% in Q4 2022. Confidence is returning, orders are rising, and investment remains strong. Finally, some good news…
Read the full report below:
