Covid’s wasteful legacy
Vaccine sceptics and big pharma critics may need to adjust their thinking now that the Moderna covid-19 jab has come through trials even more fighting fit than rival Pfizer.
The Moderna vaccine will be easier to transport and store than its competitor and has been trialled on the elderly, the most vulnerable group in the pandemic.
The breakthrough was enough to give another shot in the arm to global stock markets, which have been cowering under the shadow of reduced revenues, dividend cuts, debt pile-ups and lost jobs.
Hard-hit aerospace shares, including iaG and Rolls-Royce, climbed in the UK. across the atlantic, the Dow Jones looks as if it is heading to a landmark 30,000 level.
Markets typically like to look ahead and as we can see from output numbers from china and Japan, dizzying bounce backs are possible.
The bigger question for the UK is whether the huge step up in public sector spending has been worthwhile.
Data shows public consumption was far higher than among our main competitors in the last quarter.
That is laudable but there are real fears the money has not been spent wisely. a national audit Office (naO) report last month reckoned that the Government may have to pick up a bill of up to £26bn on government-backed loan schemes.
The expensive furlough plan has been widely abused. chancellor Rishi Sunak was encouraged to write a blank cheque until March, opening a new black hole in the public accounts. a further naO study due later this week will look at whether government virus procurement has met required standards. Payouts, such as £630,000 to PR consultants for vaccine procurement, suggest standards of audit for taxpayer money spent in Britain have not been met.
The principal concern is that stuff which really needs doing for the longer term, ranging from the roll out of ultra-fast fibre broadband to funding for R&D and energy security, will suffer because of the wastage of the past. Losing control of the public finances could be the most menacing of all the virus fallouts.
Dialling down
VODafOne is a UK company well suited to be a champion for ‘Global Britain’. But as the world has grown smaller, Vodafone has been in a constant state of change, selling its Japanese operation and its fantastically valuable Verizon Wireless stake in the US, just as data use went into the stratosphere.
What followed was a rush into emerging markets such as egypt, Turkey and india, where it found itself caught in race to the bottom on pricing.
The current focus is on europe, with Germany most promising. This is not entirely comfortable. as a group which thrives on deal making, it is highly dependent on the competition commissioner in Brussels who has been brutally interventionist.
The eU also has been a terrific consumer advocate and forced down roaming charges and income.
This week Voda is going to take investors through the next strategy with the proposal to float a chunk of its Vantage Towers operation in frankfurt. it argues that the majority of its towers are in Germany and the structure of the new firm would have excluded it from being included in the fTSe indexes if it had chosen London.
Loyal Vodafone investors may be pleased to see the group shrink its near £40bn debt mountain but might reflect that, ever since it was spun out of Racal some four decades ago, debts have hung around its neck like an anvil. Mobile has had a good pandemic and Vodafone has come through well after a thrashing for roaming revenues.
in spite of chief executive nick Read’s dividend cut in 2019, the group remains in the top ten of UK dividend payers.
after a drop in first-half revenues it has upgraded its full-year outlook and is promising £4.5bn or so of free cash flow for the full year. Very encouraging in a ghastly year. But you always wonder with Vodafone where the next strategic mishap will come from.
Green fingers
WaTcHeRS of The crown will know that Prince charles was a green pioneer when he laid out the gardens at Highgrove.
He is at it again, backing fund manager Lombard Odier’s natural capital fund, which will seek out investments in small and medium sized firms globally that work on the bio-economy.
The power is in his hands.