The Notebook: Susannah Streeter on Jeremy Hunt, Dua Lipa and the advent of the YIMBYs
Today, Susannah Streeter, head of money and markets at Hargeaves Lansdown, takes the Notebook pen.
Houdini Hunt and his hat
The rumour mill has been grinding for days about the seasoning Jeremy Hunt plans to sprinkle into the economy in an attempt to perk up unpalatable prospects.
It’s long overdue given the UK is expected to stagnate well into 2025, with a lacklustre projection even after that. He’ll be longing to return to the Salt-N-Pepa era of 1988 when growth hit five per cent just as the hip-hop trio hit the top of the charts. Pushing it higher than one per cent would appear to be wishful thinking, at the moment.
It’s apt that Dua Lipa is closing in on UK Number 1, right now, with Houdini. Mr Hunt is going to have to have some tricks up his sleeve if he’s going to escape stagflation and conjure up some rocket-propelled growth. If Hunt is going to pull any rabbits out of his hat, then he’ll have to offer some carrots to entice companies into revving up investment.
Extending full expensing, allowing firms to set 100 per cent of their capital expenditure off against tax immediately, should help with company cash flow and provide more certainty. But what companies are really holding out for is this to be made permanent, which would enable businesses to make commitments stretching far further into the future, particularly given the imminent hike in corporation tax.
The economy probably needs more than rabbits, carrots and seasoning, to super-charge growth. The UK is languishing down at the foot of the global business investment league, trailing other G7 countries. Now there’s even more competition from the EU’s new Green Deal Industrial Plan and the US Inflation Reduction Act.
Instead of short-term political sweeteners, the wriggle room offered by a larger than expected increase in tax receipts could be used to draft a new recipe to encourage more private investment, especially in infrastructure, to help deliver more sustainable growth, over the longer term.
ISA shake up
A shake-up of ISA rules will provide a boost for UK-listed companies. The LSE is a wallflower among its peers, with companies bearing the brunt in lower valuations due to a lack of love from investors.
A rise in the limits on ISAs, would be a shot in the arm for retail investors hit by cuts in the allowances for dividends and capital gains tax. Importantly, it would automatically encourage more investment in UK companies too, given the domestic bias of retail investors.
However, the key will be to ensure any changes genuinely make retail investing easier for more people. Often the main barrier to retail investment is building confidence and here the Advice Guidance Boundary Review, which aims to help people become better investors, has the potential to have a much greater impact than ISA rule tinkering.
The YIMBYs are coming to town
The grindingly slow place of planning approvals is part of the reason key infrastructure projects have been beset with so many delays and increased costs. The government is clearly worried that net zero commitments won’t be reached if brick walls of opposition are allowed to build.
The latest idea is that cash sweeteners for residents would turn more NIMBYs into YIMBYs – more likely to vote ‘yes in my backyard’ to plans to upgrade the electricity network. When it comes to housing, young YIMBYs look set to be a force to be reckoned with, given structural shortages of homes in key areas. Green belts are less likely to be such a high priority among a generation who have been priced, not just out of buying, but renting too.
Black Friday challenge
The latest snapshot of falling sales sets the stage for a tough Black Friday for retailers. It comes at a crucial time in the calendar, which should be the cash-cow quarter for retailers. It means companies are going to have to work even harder to lure in custom.
Stores are also grappling with a rise in shoplifting, so expect even tighter security around big-ticket items. Now, online retailers are bracing themselves for a wave of e-commerce crime. This isn’t perpetrated by gangs, but middle-class shoppers, according to fraud prevention platform Ravlin.
It has found that over a third of internet shoppers committed fraud within the last 12 months. They game the system by taking advantage of returns or refunds, so they get more than they should without paying. More meddling Grinches are expected to emerge this festive season, that’s until the tech catches up with them.
Mending mobiles cottage industry
Music Magpie is the latest listed company to emerge as a shiny target to be swooped on. Both BT Group and Aurelius partners are flapping their wings with interest in the tech re-furbishing firm, which began in a Stockport garage back in 2007.
There will inevitably be hand-wringing that another listed firm may disappear from indices. But it creates an opportunity for another to fill its shoes. My husband is proving to be a tiny but formidable competitor, having his own cottage industry of rebuilding kit for friends and family. He’s happy with a beer as thanks for mending the smashed screens of phones and laptops but it’s clear there’s still huge potential for others to create significant revenue streams in this growing market.