ALEX BRUMMER: Forget the growls of the left, bringing back the economy is a priority not to be shunned
- Andy Haldane of the Bank of England has underlined his confidence in a ‘V’ shaped recovery
- The chancellor is under some pressure to reduce VAT
Following Boris Johnson’s grandiose rhetoric, Chancellor Rishi Sunak’s turn will be in the spotlight on Wednesday.
The economic background appears bleak, with known large numbers of company layoffs of up to 195,000. That can only be the tip of a supply chain iceberg.
There is also reason for optimism. Andy Haldane of the Bank of England has underlined his confidence in a ‘V’ shaped recovery. The latest data reinforces that picture. The critical services sector challenges desperation and the purchasing managers index rises from 29 in May to 47.1 in June. Services are an activity of people and the proliferation of foreign travel is grueling.
Under pressure ?: Chancellor Rishi Sunak is urged to cut VAT to boost the economy
Lifting restrictions will ease the stress. A big question mark remains about travel to the US, Britain’s largest single services market.
It is encouraging that 53 percent of respondents to the service survey expect an increase in activity for the coming year.
Shards of light also come from business. At Primark the new, purified, normal seems to work. Encouragement also comes from Land Securities, owner of Bluewater. It reports that comparable shopping center sales are up to 80 percent from last year’s level in the two weeks since the reopening of nonessential stores. The office, if not retail, attracts the rental collections. The company is comfortable enough to restart the deferred dividend payments.
Where does this leave the chancellor? He is under some pressure from predecessors and pressured sectors such as the hospitality industry to reduce VAT. The Treasury (presumably led by HMRC) sees all kinds of problems at the border and supply chain with a sectoral VAT cut instead of a general cut.
More likely actions are around work. Releasing the employer’s contribution to the national insurance contributions (NIC) when the leave period has expired is an option. This would not help the 40 percent of workers with an income below the NIC threshold. A bold move in terms of apprentices, subsidizing companies to keep young people under 25 working and accommodating school and college leavers would be helpful.
Sunak has shown a willingness to overcome his own ‘dry’ fiscal instincts since the acquisition at number 11. Over the past 48 hours, it appeared that he injected £ 30 million into Celsa Steel UK, Spain, to fund 1,000 jobs under the project in Cardiff. Birch schedule.
The Financial Conduct Authority plans to extend emergency pandemic measures for buyers of heavy cars and expensive credit agreements. Forget the growl from the left. Bringing back the economy is a priority not to be shunned.
Tug of war
The US is losing Beijing in no time with their “brutal, sweeping action” in Hong Kong. Defense exports have been halted and restrictions on access to high-tech have been imposed. New legislation would impose sanctions on banks to act on key Chinese officials.
All this, and the hard talk by Secretary of State Dominic Raab about not allowing bankers’ bonuses to dictate British policy in Hong Kong, will weigh heavily on HSBC and Standard Chartered.
They have decided that stability in the territory is as crucial as the loss of personal freedoms and the crackdown on security and communication. HSBC Beijing doubles unfazed. It must invest in its asset management and insurance activities in the People’s Republic. The plan is to appeal to new customers in the provinces of Shanghai and Guangzhou with fintech.
A worldwide diplomatic confrontation does not stand in the way of HSBC’s ambitions to become Asia’s best asset manager.
As a newcomer to financial journalism, a curiosity was an elderly gentleman in the corner of the office glorifying the Victorian title of Plantations Correspondent.
I wonder what he would have made of a note from blue-blooded asset manager Schroder in defense of palm oil. It said that the commodities have been labeled as evil by activists. Tappers have been accused of starting wildfires, leaving orangutans homeless and a public enemy for many consumers. Palm oil is an essential ingredient in biscuits, chewing gum and toothpaste.
Schroder concluded that palms are more productive and less environmentally destructive than other oil crops such as soy and canola. Boycotting palm oil would also destroy the lives of small farmers in countries like Malaysia and harm poverty reduction. Palm has also been a good investment.
Enjoy the digestion of the McVitie this morning.