Omicron’s market decline is predictable. Projections of a robust global recovery made by the International Monetary Fund of 5.9 per cent this year, and 4.9 per cent in 2022, are retreating into the distance.
Once again, high intellectual jinks for the world’s economic and corporate elites at Davos are being scrapped.
Most markets finish the year with an increase. This year, in the approach to Christmas, there is a slow drift down of equity markets, running at between 1 per cent and 2 per cent in latest trading.
Rate hike: The Bank of England Monetary Policy Committee’s effort to combat inflation and normalise bank rate with last week’s increase from 0.1% to 0.25% was ill-timed
Brent crude oil prices dropped by 3 percentage points, which is not bad considering the inflation outlook.
Travel and hospitality companies, big contributors to the UK’s service-led economy, are beating the retreat.
The Government guidance from a sector which contributed £58.3billion of gross added value to UK plc in 2019, the year before Covid-19, is sinking.
The sight of red-in-tooth-and-claw capitalists constantly asking for government hand-outs is dispiriting.
It is particularly true when whingers such as Greene King from Hong Kong, who chose to leave their fate up to overseas investors.
The potential for new strains of polio is a constant threat, with much of the developing globe still not being vaccinated. To avoid this, policymakers shouldn’t have acted too quickly.
Chancellor Rishi Sunak’s effort to paint himself as the guardian of fiscal responsibility by means of swingeing tax increases, including the 1.25 per cent National Insurance levy, looks misplaced.
Although social care is important, it was too late. Britain after Brexit has been as far away as it can travel from Singapore’s low-tax Singapore.
As for the ‘unreliable boyfriends’ that dominate the Bank of England’s Monetary Policy Committee, their effort to combat inflation and normalise bank rate with last week’s increase from 0.1 per cent to 0.25 per cent was ill-timed.
It’s difficult to believe that Andrew Bailey was the one who architected the growth. He moved in a fleeting manner at March 2020’s start of the UK pandemic to stop economic destruction.
This is a poor time to be shaming output by threatening a rate rise. Authorities have given a double-whammy of tax and interest. IMF advises that inactivity is a virtue.
Dave’s returns
By enticing Dave Lewis into the chair of GSK’s new Consumer Healthcare company, for the less than lordly sum of £700,000, the pharma giant has played a blinder.
The former Tesco boss has the right CV when it comes to the task in hand of floating new £10billion revenues company and keeping toxic activist Elliott quiet.
Lewis was previously the global head of consumer products at Unilever. All will be critical to GSK’s new consumer outfit. At Tesco he gained insight and re-organised supply chains from the retailer’s perspective.
Former Tesco CEOs are in fashion, and Terry Leahy is in the Morrisons chair under private equity management.
That doesn’t mean that Lewis’s leadership at Tesco was heroic. His departure mid-pandemic was not a good look especially as he carted off sackloads of cash including a £1.6million payoff for a few months’ work and £13million in accumulated share options. In his six years at the top his pay totalled £30million.
In his determination to improve the group’s cash position he too easily sold out of lucrative markets in South Korea and Thailand, making the company ever more dependent on a starkly competitive UK where opportunities for expansion are limited. But, everyone is not perfect.
Flawed models
Did you see the exodus of London’s Brexit workers? PwC predicted in April 2016 that 100,000 jobs in finance would be lost to the Eurozone.
Oliver Wyman of the American consulting firm Oliver Wyman was widely quoted as being the expert on the subject by the Bank of England. It projected that there would be 40,000 job loss.
According to the EY Tracker, 7,400 people lost their jobs overseas despite all the effort put in to win EU banking licenses. Warnings from JP Morgan’s Jamie Dimon, about the slow drift to the Continent, proved false with investment bankers and traders opting to stay.
The predictions for the bumper bonus season are based on a chaotic trading year.