CO2 and Energy
The government has agreed a continuation deal with CF industries, to maintain production of CO2 at their Billingham plant until early next year. The deal comes at no extra cost to the taxpayer, which means the government is going to have to ensure the price of CO2 or fertiliser (or both) increase accordingly for CF to be suitably compensated for keeping the factory open and though CO2 suppliers have apparently signed off on this increase, there’s not yet any communication of what these cost increases will be to the next step down in the supply chain. Perhaps more concerningly is the expectation that between now and January people should find “robust alternative sources” of CO2, which seems like a very big ask given the industrial nature of the production.


The Treasury is considering a proposal from the business secretary to offer loans to high energy consumption businesses. Industry bodies were pressing for an energy price cap, which would have shifted some of the cost back to their energy suppliers, or to the taxpayer if it were to be subsidised, rather than loans which ultimately need to be repaid further down the line. The government is keen to strike a fine balance between keeping these businesses going so as not to suffer the fallout of massive job losses and industrial decline, but not wanting to be on the hook for any more money going out of the door without at least the hope that it comes back in. Loans won’t suit everyone though and businesses that are already highly geared, or running a business at a loss because costs still outstrip revenues with the input price jumps might have to think twice before they go in even more – or if they do and the government is guarantor, then this could well end up costing the taxpayer in the long run.


UK Treasury

The Institute for Fiscal Studies has produced a report that the Treasury is set to borrow some £54bn less this year than they were forecast to. The numbers are still big, with borrowing expected to come in at £180bn by the end of the financial year, and though that will be welcome news to many, it doesn’t mean that Rishi is now flush with cash. The Chancellor will have less room to spend as the constraints on the economic rebound mean that the economy will be smaller than projected and therefore additional spending may not pass the Office for Budget Responsibility’s scrutiny. Borrowing levels will continue to fall, albeit more slowly as the government’s concentration of inflation linked bonds is going to cost more and more to service.



There’s been ​​​a damning report into the government’s handling of the pandemic. The “Coronavirus: lessons to date” paper that was compiled by a couple of cross-party committees and highlights multiple failings that made this the “worst public health failure ever” and cost tens of thousands of lives. You can take your pick of papers that are covering the story, or read the full report here.


EU and N.I. Protocol
David Frost has decided to make a speech today, a day ahead of the EU delivering their responses to the government’s Command Paper on the Northern Ireland protocol, to warn the EU that they will be making a historic misjudgement if they don’t offer new concessions to the protocol. The red line for the UK is that the European court of Justice can’t be arbiter to disputes, which is also a red line to the EU. His pitch is that the EU needs to be flexible to build a better solution, once done the UK and EU can unite to confront the shared challenges of China and Russia. The Telegraph has more.


The EU is set to issue a joint warning to the UK over reduced fishing rights for the bloc: 14 countries are taking a tough stance against what they see as the UK risking “significant economic and social damage” to their countries by the UK not issuing anywhere near the quota of fishing permits. The joint effort of so many countries escalates the seriousness of the situation, but it also cools down the individual rhetoric from France, who have been threatening quite extreme retaliation. The Guardian has the story.


Looking at Today
Overnight we’ve seen UK like for like retail sales print just a 0.6% increase in September 2021, compared to September 2020. Fuel spending was up significantly recently, but anxiety at the pumps had a knock-on effect of slowing expenditure elsewhere at the tail end of the month. We’ve had UK jobs data this morning too, which shows the unemployment rate has fallen to 4.5%, vacancies continue to increase but wage growth has slowed down, though still ahead of inflation.


Evergrande look like they’ve missed more bond repayments, with bondholders reporting that they are yet to receive payments that were due yesterday. Asian markets have fallen on the news and have taken European markets down with them on the open today. There’s very little data due out over the rest of the day, so we’re not too sure how we’ll get a turnaround of fortunes.


Have a great day


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