Hostile fire from the New York Times (NYT) was a constant after Britain’s departure from the EU.
Now it has started again with the paper noting that in a fevered global rout of bonds, fuelled by hefty debt piles across the world’s richest countries, Britain is the sickest.
If ruthless spending cuts become the future, then the survival of Rachel Reeves will be determined by draining support on Labour’s backbenches.
But losing the confidence of Wall Street, which the Chancellor relentlessly cultivated before and since last year’s election, will be a cruel blow.
If Labour wants private investors to line up alongside its growth agenda, by supporting initiatives to boost output through AI, Great British Energy and a National Wealth Fund, it will need the US investors on side.
Counting on China to fill the gap simply isn’t going to work, as the modest £600million return from Reeves’s showboating mission to Beijing and Shanghai at the weekend demonstrates.
Bond crisis: The Chancellor’s international reputation is in danger of being as damaged as her domestic image
The Chancellor’s international reputation is in danger of being as damaged as her domestic image.
The NYT notes her plan to revive output by allocating more money to public services and state investment is at risk three months after it was so confidently announced.
Counting on Britain’s moribund, unreformed public sector to deliver economic expansion was never going work.
Granting some £9.4billion of pay awards to public sector unions, in a misguided effort to preserve industrial peace without productivity deals, was a colossal error.
Railways are still being disrupted, with the Aslef union targeting West Coast mainline operator Avanti with a series of strike days.
In launching her broadsides against Tory predecessors and trumpeting her own approach to get Britain moving, by repairing government and getting the UK building again, Reeves was brimming with confidence.
She showed no sign of reversing in the Commons yesterday despite the battered condition of retail and the loss of manufacturing confidence.
Similarly, she managed to convince herself that changes in the fiscal rules, allowing more investment, would fix the UK’s credibility deficit on financial markets.
Instead, as Hugh Gimber at blue-blooded JP Morgan Asset Management observes, the UK is the ‘weakest link’ in the chain.
The consequences of that are dire for growth plans. Higher long-, medium- and short-term interest rates will raise the cost of building and buying houses, investing in infrastructure and AI, and supporting growth. Kowtowing to China is all very well, but Wall Street and global investors are voting with their feet.
Oil spillover
A year after taking over from Bernard Looney as boss of BP, Murray Auchincloss is out of action.
A scheduled investor day in New York on February 11 will be held in London on February 26 while the oil giant’s chief executive recovers from ‘a planned medical procedure’.
The delay will not be reassuring to BP shareholders given the underperformance of the accident-prone group’s stock vis a vis Shell and other oil majors.
Auchincloss has been engaged in a rearguard action designed to retreat from the testing climate-change agenda set by Looney.
The former finance director is engaged in an expensive and politically sensitive retreat given the green zealotry of Energy Secretary Ed Miliband.
When he is fully recovered, Auchincloss may draw comfort from Donald Trump’s ‘drill, baby, drill’ mantra. Fossil fuels are a key to energy security.
Nevertheless, the way in which the world adjusted to the fallout from sanctions on Russia suggests there is more than enough oil and LNG available.
Global demand for petrol and diesel is less than robust and there are hints of over-supply. Returns from Looney’s green agenda, when global oil prices were rising, were less than promising.
But that will not always be the case.
Flying the flag
The accusation of an air of ‘jingoism’ in the defence of seven investment trusts against the assault by Boaz Weinstein’s Saba is not without merit.
He may be doing all shareholders, in deeply discounted investment trusts, a favour if he helps to end the complacency which infects the sector. After all, that’s what activists do.
That doesn’t mean that his back door, unaccountable bids for control, should in any way be supported.
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