Britain is in a terrible budgetary pickle.
Rachel Reeves is so intent on being the Iron Chancellor and placing distance between herself and Liz Truss and Tory predecessors that the whole focus of her troubled 17 months at the Treasury has been on fiscal policy.
Labour’s faulty growth and change agenda never stood a chance.
From the moment Reeves stood at the podium at the Treasury and cancelled the winter fuel allowance (now restored for some), her whole life as Chancellor has been about meeting contrived fiscal rules.
A bright spark monitoring leaks and speculation from Downing Street, the Treasury, Whitehall and the think-tanks has counted 100 floated tax ideas for the November 26 Budget.
This follows the record-breaking 70 policy decisions taken last autumn, another 30 in the spring statement and 105 pages of spending choices in July.
Constraint: Chancellor Rachel Reeves entrenched forecasts from the Office for Budget Responsibility in law a year ago
The ever-lengthening number of tax and spending changes, and the endless speculation, has wreaked havoc on the economy. Reeves and the Treasury need to find a way of jumping off the treadmill.
The insanity of Britain’s approach is highlighted by former IMF chief economist Gita Gopinath, now Professor of Economics at Harvard, writing in the FT.
Gopinath says the cycle of announcing headroom (budgetary space) five years in advance creates ‘unnecessary policy uncertainty and market instability’.
That is precisely the opposite of what Reeves aimed for when she naively entrenched forecasts from the Office for Budget Responsibility in law a year ago.
Reeves’ re-writing of the fiscal rules and the consequences of that are among the key reasons why Labour has sunk in the opinion polls, and business and consumer confidence has been shattered.
One doubts if Gopinath would have been quite so forthright were she still at the IMF. But her thoughts reflect the findings of the Fund’s annual inspection of the UK back in May. It concluded one fiscal event a year is enough.
Reeves has shown herself as heedless when it comes to criticism wherever it comes from. Current homemade fiscal chaos should not and cannot continue.
Upwardly mobile
Vodafone, as global pioneer in mobile telephony, might have been Britain’s Nvidia. Instead, it has been a serial disappointment.
Long-term investors, including this writer, have seen a company weighed down with debt and goodwill which has never missed an opportunity to miss an opportunity. Finally, in the shape of chief executive Margherita Della Valle, the group is dialling up performance.
The key to success now and in the future is the hefty £16.5billion merger of its UK operations with the Three network.
Big mergers often take years to settle down so Della Valle’s challenge will be to execute rapidly.
She will need to deliver on the pledge made to the Competition & Markets Authority for £11billion of new investment in the network.
All of us who are Vodafone subscribers are more than aware of the great gaps in coverage. This is not just confined to remoter areas of the UK, such as the Lake District, but also applies to West London.
Della Valle is embracing a satellite strategy to tackle some of this. The other encouraging development is a sign Voda’s disastrous investment, the Liberty Global network in Germany, is growing after a change in the law which saw cable subscriptions plummet.
Investors are being rewarded with the first dividend increase in eight years and there is a promise of progressive payouts. The shares zipped up 8.3 per cent and are now nearly 40 per cent higher so far this year.
Before hanging out the bunting it is worth reflecting the stock is still down almost 20 per cent over five years. Far from a Silicon Valley style performance.
Kicking off
The sprint of private capital into football gathers pace.
The latest arrival is US hedge fund Apollo, which is buying a controlling stake in La Liga’s third most famous club Atletico Madrid, which is valued at £2.2billion.
The New York based investment group, which manages £700billion or so of assets, is in a belated drive into the sports sector.
Current uncertainty in private credit markets suggests it may be a case of sellers beware.
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