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It was refreshing to hear the Chancellor tackle the issue of Britain’s sluggish economic growth during her Mais Lecture, yet the event felt somewhat detached from reality.
Bringing a dose of realism, Make UK, the body representing British manufacturers, highlighted that steep energy costs are currently the ‘biggest single factor impacting on industry competitiveness’.
This wasn’t the only gap in the Chancellor’s strategy for enhancing productivity. She envisions a swift move towards limiting banks from engaging in riskier lending practices.
Meanwhile, the Bank of England is wisely taking precautionary measures, ensuring the financial sector braces itself for any potential future crises.
Just yesterday, the Bank released proposals aimed at guaranteeing banks can swiftly convert assets into liquid cash during a ‘fast-paced stress event’—a polite term for a bank run.
Criticism was directed at the Bank for labeling these as proposals when immediate action is needed, especially in light of Blue Owl Capital’s troubles and the significant collapse of Market Financial Solutions, based in Mayfair.
Precautions: The Bank of England has published proposals designed to ensure banks can turn assets into cash in a ‘fast-paced stress event’ – polite talk for a run on the banks
The Treasury should dial in closely to what the Basel-based Bank for International Settlements (BIS) has to say.
The central bankers club was way ahead of the game in 2007-08 on the dangers posed by the toxic risks of securitised sub-prime mortgages.
It warned this week that higher borrowing costs, as inflation takes off, will add to tensions in private credit markets where investors are seeking to withdraw billions from open-ended funds, several of which have been gated, allowing investors no escape.
There was also caution from the BIS on possible earnings disappointment from artificial intelligence (AI) hyperscalers.
Davidson Kempner Capital Management, a hedge fund looking after $38billion (£28.4billion) of credit funds, fears excessive leverage and weak cash flows have created circumstances ripe for a cascade of corporate defaults.
Britain would be daft to row back on research and development, AI, quantum computing, and other tech investments in the coming storm.
But it is naïve to think that the new money allocated by Reeves in the Mais Lecture – £2.3billion to boost Britain’s cities and an extra £100million of loans for Cambridge – will move the dial.
Impax cowed
Faith in the board of Impax Environmental Markets (IEM) and loyalty to its green mission will be badly shaken by the trust’s response to the assault by Boaz Weinstein of Saba.
IEM has made a supine decision to throw in the towel in its battle with the activist.
After all, Saba owns just 22.1 per cent of the stock and we know from shareholder votes last year that both retail and institutional investors would vote in great numbers to keep Weinstein and his placemen at arm’s length.
IEM chairman Glen Suarez wrings his hands and says there is no choice but to offer investors (including this writer) a tender offer allowing an exit at 100 per cent of the assets’ value.
Admittedly, Impax and the other investment trusts attacked by Saba find themselves in a difficult position because of weak company law and pusillanimous City regulators.
Yet if Suarez and his colleagues give in to Saba they will make it easy to destabilise the whole sector.
Instead of engaging with an implacable foe, who declines to make a deal, IEM should have slammed the door in his face.
A holder of one-fifth of the stock has no right to dictate terms to the rest of the share register.
Exiting at 100 per cent of current asset value deprives investors of future upside, may create an exposure to a capital gains tax liability, and undermines faith in green investing. It is a betrayal.
Movie star
Warner Bros Discovery boss David Zaslav had much to smile about at the Oscars where One Battle After Another, which earned $210million worldwide, and Sinners, which has sold $369million of tickets, were big winners.
The group’s prospective new owners Paramount Skydance had nothing to cheer.
Zaslav’s skilful handling of the bidding war between Netflix and Paramount will leave him a very rich man collecting an estimated $700million from the $111billion merger.
That’s more than the earnings of the triumphal Oscar movies added together.
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