The Notebook is where interesting people say interesting things. Today, it’s Victoria Scholar, head of investment at Interactive Investor, on why it’s not the time to be gloomy about the UK’s prospects, the battle for your coffee pound and a new podcast.
You wouldn’t be blamed for thinking that the UK economy is in a dire position with the cost-of-living crisis, sky-high inflation, rampant industrial action, and rising mortgage rates. While the war in Ukraine and the covid hangover have undeniably caused major economic headwinds, there is still reason for optimism.
The FTSE 100 hit a record high last month. Amid last year’s global equity market volatility, the UK index proved its resilience, in part thanks to a lack of exposure to technology, a sector which sold off heavily in 2022. It has benefitted from sky high profits from BP and Shell on the back of a surge in oil prices. UK banks meanwhile profited from the rising rate environment, helping to lift the FTSE 100. Standard Chartered is in fact one of the best performing stocks on the UK blue-chip index over the past year.
In August, the Bank of England predicted the UK was facing the longest recession since the global financial crisis, however the central bank has since upgraded its view on the economy. The latest official figures saw the UK stave off a recession in 2022 and the National Institute of Economic and Social Research (Niesr) now forecasts the economy will in fact grow marginally by 0.2% this year.
Inflation has arguably been the biggest economic threat to the UK post-pandemic, with soaring food prices, expensive energy bills and falling real wages causing widespread economic pain. Fortunately, it looks like the UK’s headline rate of inflation is starting to come down, having dropped for a third consecutive month to 10.1% in January. Other economic data points are also improving including consumer confidence, retail sales and PMI figures.
With the Spring Budget on 15th March, public finances are in a much better state than they were last year following the fiscal fiasco around the disastrous mini-budget. The UK government achieved an unexpected budget surplus in January, arguably providing some leeway when Chancellor Jeremy Hunt delivers his red box next week.
Wake up and smell the coffee
Both Costa Coffee and Pret A Manger are giving workers their third pay increase in a year. Beginning in April, Pret’s shop staff will have benefitted from a 19% raise year-on-year while around 16,000 UK Costa workers will enjoy a jump of around 14%. Meanwhile Starbucks is planning to open 100 new UK sites as part of a wider expansion across Europe. The US coffee chain has a total of 1,066 UK sites with plans to invest £30 million over the next three years.
Mass exodus from the LSE?
WANdisco is the latest London-listed firm to mull a US flotation. Responding to press speculation, the big data firm said it is proactively exploring the United States to create a dual listing. It follows similar decisions from chipmaker ARM and building materials supplier CRH which are both looking at listings in New York. Betting and gaming group Flutter Entertainment has also been eyeing a move stateside. This has raised concerns that London could be losing its appeal among investors on the global stage.
Can I quote you on that?
We’re at 85 per cent likelihood that prices won’t be going upMartin Lewis expects another government intervention on energy
Is the glass ceiling starting to crack?
On International Women’s Day, it is worth celebrating the announcement that 40.2% of FTSE 350 Board positions are now held by women, meeting the 40% target three years ahead of the 2025 deadline. Women hold a third of all leadership roles in FTSE 350 companies as the glass ceiling finally begins to crack. Just over ten years ago, 152 boards on the FTSE 350 index had no women whatsoever, highlighting the progress made over recent years with more and more females reaching the top jobs.
The Rest is Politics
This is a new-ish podcast from former Labour Prime Minister Tony Blair’s spokesperson and campaign director, Alastair Campbell and former Conservative Member of Parliament Rory Stewart. It is the latest addition to their existing two weekly podcasts which analyse current developments in Westminster and further afield, giving “an insider’s view on politics at home and abroad”. In Leading, Campbell and Stewart sit down with people who are leading in their field from politicians to sports stars to religious leaders. This week’s episode is a long form chat with Bertie Ahern, former Taoiseach (Irish Prime Minister) and a key architect of the Good Friday agreement. Previous guests include four-time Olympic gold medalist Michael Johnson and the Shadow Secretary of State for Foreign, Commonwealth and Development Affairs, David Lammy.