Sunak battles for jobs
After the high-flown rhetoric from Boris Johnson, it will be the Chancellor rishi Sunak’s turn in the limelight on Wednesday.
the economic backcloth appears gloomy, with known big corporate redundancy numbers bulking up to 195,000. that could be just the tip of a supply chain iceberg.
there is reason for optimism too. the Bank of england’s Andy Haldane has underlined his faith in a ‘V’ shaped recovery. the latest data reinforces that view. the critical services sector is challenging despond with the purchasing managers index jumping to 47.1 in June from 29 in May. Services are very much a people activity and the subsidence of overseas travel has been debilitating.
the lifting of restrictions will ease the stress. there remains a big question mark over journeys to the US, which is Britain’s biggest single market for services.
It is encouraging that 53pc of respondents to the services survey expect a rise in business activity for the year ahead.
Shards of light also come from the corporate sector. At Primark the new, sanitized, normal seems to be working. encouragement also comes from Land Securities, owner of Bluewater. It reports like-for-like sales at its shopping centres are up to 80pc of levels of last year in the two weeks since non-essential shops reopened. Its office, if not retail, rent collections are picking up. the company feels comfortable enough to restart suspended dividend payments.
Where does this leave the Chancellor? He is under some pressure from predecessors and hard-pressed sectors such as hospitality to cut VAt. the treasury (presumably guided by HMrC) sees all kinds of border and supply chain difficulties in a sectoral VAt cut rather than a general reduction.
More likely actions are around work. releasing the employer’s contribution to national insurance contributions (NIC) as furlough is run down is an option. this would not assist the 40pc of workers whose earnings are below the NIC threshold. A bold step on apprentices, subsidising firms to keep the under-25s in the workforce and accommodating school and university leavers, would be helpful.
Sunak has shown a willingness to overcome his own ‘dry’ fiscal instincts since taking over at Number 11. In the last 48 hours it emerged that he has injected £30m into Spanishowned Celsa Steel UK to save 1,000 jobs in Cardiff under the Project Birch scheme.
the financial Conduct Authority is planning to extend pandemic relief measures for hard-pressed car buyers and on expensive credit deals. forget the snarling from the Left. Bringing the economy back is a priority not being shirked.
Tug-of-war
tHe US is losing no time in punishing Beijing over its ‘brutal, sweeping crackdown’ in Hong Kong. Defence exports have been halted and restrictions imposed on access to high-tech. New legislation would sanction banks which act for key Chinese officials.
All of this, and foreign Secretary Dominic raab’s tough talk about not letting bankers’ bonuses dictate UK policy in Hong Kong, is going to weigh heavily on HSBC and Standard Chartered.
they have decided that stability in the territory is as critical as the loss of personal freedoms and the security and communications crackdown. Unfazed, HSBC is doubling down on Beijing. It is to make investments in its wealth management and insurance operations in the People’s republic. the plan is to target new customers in Shanghai and Guangzhou provinces using fintech.
A global diplomatic stand-off is not getting in the way of HSBC ambitions to be Asia’s top wealth manager.
Palm pals
AS a rookie entrant to financial journalism, a curiosity was an elderly gentleman in the corner of the office who glorified in the Victorian title of Plantations Correspondent.
I wonder what he would have made of a note put out by blue-blooded asset manager Schroder in defence of palm oil. It recounted that the commodity has been targeted as evil by activists. tappers are accused of starting forest fires, rendering orangutans homeless and had become a public enemy for many consumers. Among other things, palm oil is an essential ingredient in biscuits, gum and toothpaste.
Schroder concluded that palms are more productive and less ecologically destructive than other oil crops such as soy and rape seed. Boycotting palm oil would also destroy the lives of smallholders in countries such as Malaysia and damage poverty alleviation. Palm has been a good investment too.
enjoy dunking the McVitie’s digestive this morning.