Anyone expecting cheap fireworks at the King’s speech will be disappointed.
The determination to combat inflation and keep public finances in order was reiterated. But there are no signs of easing the tax burden, one of the pillars of conservatism.
The budget’s sober approach is relegating the rise in bond yields from a year ago to history. That won’t stop Labor from accusing the Conservatives of ruining the economy.
In the Covid-19 inquiry, much attention is paid to the poor functioning of Downing Street during the pandemic.
The reality is that the economic measures adopted at the time – the furlough scheme, the VAT and business rates exemptions and the abused pandemic loan schemes – prevented long-term scars on the economy. Instead of increasing unemployment, what increased were vacancies.
Housing market: Latest data from Halifax shows house prices rose 1.1% in October after six consecutive falls
The UK economy is bigger than before Covid-19. Resilience is an important feature of the UK’s economic performance.
When interest rates rose last year, the Bank of England predicted the longest recession in the country’s history.
It didn’t happen, which is why the Bank’s governing body, the Court, has summoned former Federal Reserve Chairman Ben Bernanke to review his forecasting duties.
Britain and the world are living through difficult times amid the conflagration and terrible loss of life in Israel and Gaza.
That is why the Government’s intention to reopen licensing for future offshore oil and gas exploration makes sense. Energy security is paramount as Britain moves towards net zero.
It is impossible to have full confidence in the Bank of England’s forecasts. One of the biggest concerns for forecasters is a collapse in the housing market as mortgage holders abandon their fixed-rate agreements.
Home loan approvals have been weak, but concerns of a housing crisis are greatly exaggerated. The latest data from Halifax shows house prices rose 1.1 per cent in October after six consecutive falls.
This is in line with an optimistic Nationwide figure. Feedback from lenders suggests the move is due to a lack of supply, with potential sellers on the sidelines.
That raises the possibility of a positive feedback loop as potential sellers are lured into the market.
Homebuilders have been extremely cautious, wanting to avoid a repeat of the 2008-09 crisis. However, despite a “highly uncertain” market for 2024, Persimmon is more optimistic than its competitors, reporting better sales since October.
The Bank’s chief economist, Huw Pill, offered some light on rates and agreed with markets that a base rate cut to 5.25 percent by August 2024 appears possible.
That helped trigger a drop in two-year bond yields. Better deals should be available for the approximately 650,000 that will emerge from corrections over the next year.
An improved housing market will not solve Britain’s long-standing productivity problem.
But it will do wonders for consumer and business confidence and could well mean that gloomy predictions of a stagnant economy, or worse, are too pessimistic.
light touch
Accounting reforms will never be attractive. But for stakeholders harmed by the bankruptcies of Carillion, Patisserie Valerie, Greensill and, more recently, Wilko, it is of fundamental importance.
The absence of legislative reforms in the King’s speech, including a new Audit, Information and Governance Authority, is no coincidence.
The Conservatives are intent on increasing the city’s competitiveness, as evidenced by the recent decision to end the cap on bankers’ bonuses.
The audit and governance enforcement body, the Financial Reporting Council, has been told to walk away from the reforms. He wants to ensure that the British style is different from the “intrusive approach taken in the United States.”
Low-octane audit firms and corporate hooligans can thank their lucky stars.
wrong note
The UK music industry is a major contributor to British creativity, generating £4 billion in exports in 2022, driven by the growth of recorded music, publishing and the return of touring. New markets have opened in the Middle East, Africa and Latin America.
But competition from South Korea, Australia and Canada, among others, is eroding market share.
It doesn’t help that the UK no longer has a national champion producer on the roster or that Universal Music, which acquired a chunk of EMI’s catalogue, has chosen to list in Amsterdam.
On a global stage, national ownership does matter.
