Sensemaker Live: America and Covid
Whatever happened to the country’s can-do spirit?
Brexit: the dividend
The FT has a widely-followed scoop (£) on plans being drawn up in Whitehall to seize the opportunity presented by Brexit to tear up the EU-derived Working Time Directive, scrap the 48-hour week and end the practice of taking overtime pay into account when calculating holiday pay. Ed Miliband, the shadow business secretary, says the government is taking a sledgehammer to workers’ rights. The government says not to worry, the UK has a record of “gold-plating” those rights compared with the EU, for instance on statutory paid leave. Free marketeers in the cabinet are said to be giddy at the prospect of a big round of post-Brexit deregulation, but this hasn’t been put to the cabinet formally yet. Feels like a trial balloon, albeit one with quite a lot of helium.
Retail: therapy required
Empty offices, shuttered shops and a government ban on commercial evictions until March have left the retail property market reeling. Land Securities, the UK’s biggest commercial property developer and investor, collected less than a third of the rent owed by retailers in regional shopping centres and under a quarter due from London shops and restaurants in the three months to Christmas. Overall, commercial landlords are owed around £4.5 billion, most of which is unlikely to be paid. As a result, Land Securities, which ranks 6th in Tortoise’s Responsibility 100 Index on sustainability, has already slashed its portfolio value by £1 billion. Is that sustainable?
“There’s so much complexity,” Adam Marshall of the British Chambers of Commerce tells Bloomberg. “It’s like an onion. The more you peel, the more you cry.” He’s talking about the UK’s exciting new trading environment. Clearly if you want evidence that there’s more friction, angst, confusion and bureaucracy now than heretofore, you can go out and find it. But it’s just so easy. Empty shelves in Northern Ireland. Supermarket bosses pleading for more time to get used to the Northern Ireland protocol. Ham sandwiches snaffled from lorry drivers at Calais. Salmon and seed potatoes piling up in Scotland. Duplicate health and safety certification requirements. Less cod for some trawlers rather than more. European share trading for some banks cut in half. But as we’re reminded from time to time it’s not all gloomy. The London IPO scene (initial public offerings for well-connected investors) hasn’t looked this good since 2008. One to watch this week that’s worthy of a caption competition: Dr. Martens, maker of boots.
The Financial Conduct Authority, the UK’s consumer protection financial watchdog, has issued a warning for investment vehicles who put their money into cryptocurrency assets: “Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money.” Cryptocurrencies are, in a sense, a very easy product for the authorities to worry about. Yes, they remain a problem for money laundering. But crypto tokens have no systemic importance: the price can crash and soar without real consequences. If people want to take the punt, let them.
Because of an EU rule that requires EU investors to trade EU stocks in the EU, quite a lot of business left London rather suddenly on the first trading day after Brexit. The FT says share trading volumes fell by half (£) in London last Monday as business moved to Frankfurt, Amsterdam and Paris. Smoothed out over the year the hit to UK revenues may be as low as £70 million. That’s a smidgeon compared with the UK finance sector’s overall £57 billion annual surplus, but the question is whether the 4 January exodus was a blip or the start of something bigger, and no one knows the answer. Note: Team Johnson failed to negotiate an equivalence deal for the City with the EU, but the US does have one, which means if more business does leave London it could go to New York and Chicago rather than Europe. Bracing for Blighty, either way.