Investment, fairness, prosperity

27 November 2020

Ma v Zhang
Xi Jinping has been extolling the public spirited patriotism of the great 19th century Chinese entrepreneur Zhang Jian. Which in a way is odd, because at other times the Chinese Communist Party has vilified Zhang as a bloodsucking capitalist and exploiter of the working class. The reason is simple, the FT explains in a worth-your-time long read (£). Xi wants a new role model for China’s business class to replace Jack Ma, whose latest stock market flotation he personally scuppered earlier this month. Ma cavorted with foreign plutocrats at Davos and dared to criticise Xi’s regulators. Zhang made nice with officialdom, made a fortune in textiles, and restricted his political ambitions to his hometown of Nantong – to which Xi recently paid an otherwise inexplicable visit nine days after instructing his enforcers to rap Ma’s knuckles. 

26 November 2020

AstraZeneca stock down
The markets are digesting early Covid vaccine trial data, and their verdict so far is gloomier for AstraZeneca than for Pfizer, BioNTech or Moderna. The reason is continuing confusion (£) over why some participants in the AstraZeneca phase 3 trial seemed to derive 90 per cent protection from the vaccine, and some just 62. When the data were released on Monday the difference was explained, counter-intuitively to some, by the fact that the 90 per cent group got a lower first dose. It has since emerged that they were also younger – under 55 – and therefore less vulnerable to the virus. Why not be clear about this up front? AstraZeneca shares are down 6 per cent this week. Pfizer, BioNTech and Moderna are up 6, 14 and 11 per cent respectively since their announcements. Tense conversations going on inside the Oxford-AstraZeneca joint venture? You’d have thought so. 

25 November 2020

Rishi’s rescue
Jobs for some. Help for others. That’s the headline before the UK chancellor’s spending review today. There may be the odd surprise at the dispatch box but it’s clear that while Sunak would love to avoid a surge in long-term unemployment he doesn’t want big Keynesian job creation schemes or anything that looks like a universal basic income. Job seekers will get guidance, interview coaching and maybe some re-training instead.

The numbers: the £4.3 billion Sunak has earmarked is split between £2.9 billion for a new Restart programme and £1.4 to expand capacity of the existing Jobcentre Plus network. There will be 250,000 state-subsidised jobs for younger people, and an extension till March of the £2,000 payment to employers for each apprentice they take on. But the outlook for most of the million or so people expected to be made redundant by this time next year will depend overwhelmingly on their local job market.

In the optimistic column, the Office for Budget Responsibility’s updated GDP forecasts point to a V-shaped recovery next year with the fastest growth since 1941.

In the miserable column: that will follow the deepest recession in three centuries. And the end of the Brexit transition. The OBR, the governor of the Bank of England and the Resolution Foundation all agree a no-deal Brexit would deliver a long-term hit to the UK economy even more profound than Covid.

24 November 2020

Yellen returns
One very striking appointment by the incoming administration: Janet Yellen will be treasury secretary – and comes with the most remarkable experience. As a former chair and vice-chair of the Federal Reserve, she has had the longest and best possible training for the job. The New York Times reports ($) on her longstanding concerns about the national debt, while the FT reports (£) that she has recently been bullish on using the low interest rate environment to increase public investment. 

23 November 2020

Hollow city
New office construction in central London fell by half in the six months to September compared with the six months before, and by 60 per cent in the City. In the later period there were just ten big schemes being worked on in the Square Mile compared with 16 in the preceding one, according to Deloitte. “The crowd flowed up the hill and down King William Street,” the poet wrote. Not anymore. Covid drove it away, Zoom kept it busy at home and the chance of lower overheads means the big question is whether it will ever return.