Diplomats converged in Geneva yesterday to urgently discuss heightened tensions on the Ukrainian border. Today will see US Secretary of State, Antony Blinken meeting his Russian counterpart Antony Blinken in what could be the most significant day of their diplomatic careers as they discuss the stability of Ukraine, Europe and the global community more generally. Blinken has recently tried to rally support amongst America’s allies for pressing ahead with greater economic sanctions and further conventional deterrents to dissuade a Russian invasion of Ukraine. For example, yesterday Blinken met with British, French and German officials in Berlin to demonstrate the West’s resoluteness in support of Ukraine’s territorial integrity.
Yesterday, Liz Truss warned Putin of the consequences of invading the sovereign state at a time when the UK is reported to have special forces on standby to extract British citizens if such an event occurred. Members of NATO are also beginning to supply Kyiv with military material and are reported to be ramping up troop numbers in neighbouring states once under the Soviet Union’s sphere of influence.
Hence, all eyes will be on Geneva today as Blinken is set to offer a “diplomatic off-ramp” to Russia, enabling the situation to be diffused and the prospect of peace restored.
Yesterday we learnt that Britishvolt – a company founded just two years ago – have won £1.8bn worth of funding in order to establish a Gigafactory. The company, whose Blyth based factory is expected to have a price tag of £3.8bn – has set its sight on commencing production by 2024 with the further goal of producing 300,000 cells for electric vehicles by 2030. While just shy of 95% of this funding is being provided by Tritax Group (a retail investment group with over £5bn of assets under management) the Treasury are also providing around £100m.
The government’s decision is a signal that it is attempting to remain an attractive place for the green technology sector as it tries to ensure that new and existing car manufacturers do not merely look overseas as they invest in the next era of production. For instance, in 2020 Tesla decided to build one of its largest Gigafactories in Germany, as opposed to the UK which it had been considering, thus representing a major blow for the sector and wider economy. Nevertheless, during Cop26, Downing Street announced its Clean Green Initiative to boost investment in the sector and hence the government will consider Britishvolt’s success as a major coup. Moreover, the plant is expected to generate some 3,000 direct jobs in the Northumberland region which between Oct 2020-Sep 2021 had an unemployment rate of 5.1% against a national average of 4.8%.
This morning saw year-on-year retail sales in the UK dip to -0.9% for the month of December which was well below market expectations of 3.4% indicating the impact that omicron had on consumer spending in the run up to Christmas. Month-on-month figures saw retail sales fall to -3.7% which again was well below the market’s predictions of -0.6%. These figures further suggest that consumers may be constraining spending as the cost of living is set to soar in 2022 with inflation at 5.4% (against earnings increasing just 3.5%), energy price caps being lifted and national insurance contributions increasing 1.25% in April.
On the issue of energy price caps, with some analysts warning of a 51% increase in energy bills for many UK households, reports are emerging that No.11 may be considering a one off pay-out of £500 to help support some households meet the rising costs.
Following announcements that Netflix expects to see a slowdown in the rate of new subscriber, its share price finished the day 20% down. With stay-at-home orders acting as an impetus for consumers to spend in the home entertainment industry, Netflix were able to capitalise on this dynamic and achieved 36m additional subscribers in 2020 in addition to around 18m in 2020. However, concerns over the degree to which consumers may spend on the home entertainment industry with the rising cost of living are concerning some investors and many worried about an over saturation in the market
While yesterday’s trading may have been particularly intense for Netflix, it is nonetheless indicative of the wider sell off of ‘stay at home stocks’ which we have seen as economies emerge from the pandemic – and indeed many growth stocks more generally, many of which have struggling to defend recent gains achieved.
Have a great weekend.