Good morning,

The main news of yesterday was that of Andy Burnham and Boris Johnson unable to meet in the middle, with one demanding £65m and the other refusing to go higher than £60m in financial support during a lockdown. Mr Burnham had argued that greater Manchester needed more money per capita than other regions have been offered as his has been under tighter restrictions than most of the country since July and as such businesses hadn’t seen the relative benefits of much relaxed rules over the mid-late summer as they had done elsewhere and are therefore in an even more precarious position.
The £60m is still on the table and the restrictions come into force on Thursday at midnight.

Mr Burnham wasn’t the only person that Boris has been negotiating with the last few days: Rishi Sunak told the PM that it wasn’t feasible for him to outline a three year spending plan for the country, that would take them through to the end of the current parliament, because of the many remaining unknowns over Covid. Mr Sunak is advising instead to have a one year stopgap plan and then re-visit the plan next autumn for what would be a two year plan. The PM is very keen to start looking at long term plans, not only to start thinking about moving forward from Covid, but also to give government departments certainty over what they’ll be getting so that they can plan accordingly. As such we might see certain multi-year deals, for example in defence where there has been a large review of our military and intelligence capabilities and how fit for purpose they are. There are also some benefits in not just having a one year stopgap, in that it would allow for medium term plans to be started, which would involve companies in the private sector and in turn give them some valuable and much needed contracts. Negotiations between Numbers 10 and 11 continue. The FT has more.

A survey by the Chartered Institute of Procurement and Supply has shown that over half of business aren’t ready to trade with Europe under a no-deal scenario and that less than a quarter of UK businesses with EU suppliers have completed all of the necessary paperwork to allow them to send goods across the border! They say that this has only improved marginally since March last year, with businesses presumably lacking bandwidth since Covid struck. Another curve ball is that if we do stop negotiations with Europe and go down the road of no deal, almost 40% of companies are going to have to start renegotiating contracts with their European customers and suppliers, as they have clauses in them that allow for renegotiation to account for tariffs.
One approach that businesses with the cashflow to allow it are taking is to stockpile supplies, but this isn’t always an option and if it is the cost of warehousing has increased through lack of supply. This is all happening at the busiest time of year for most businesses, as we run in to the festive period. So it appears to be a perfect storm – which isn’t mentioned in the latest government TV advert (in fairness to the advert, nothing apart from “January 1st” is really mentioned in the advert- and it’s definitely costing them more than the £5m extra Andy Burnham asked for!) – the CIPS report is here and well worth a read. “Got it? Good”.

More polls from the US are showing a narrowing in the polls and there’s also concern in the Democrat camp over the number of postal ballots that have not yet been returned. This year is already record breaking for postal voting, but there is still a huge number that are still at people’s houses and not being counted. The way that Democrats would have sorted this in previous years would be an active door knocking campaign, but with Covid that has largely been ruled out by Joe Biden. The final TV debate takes place tomorrow (complete with mute button) and that could be a catalyst for people to get out and vote, but after that there isn’t much more the Democrats can do other than throw money at TV advertising and hope.

The US government has filed charges against Google, relating to internet searches. The government aren’t happy with the way Google pays billions of dollars a year to be the go-to search engine on user devices and handles about 88% of US internet searches, saying they have “foreclosed competition for internet search”. Additionally they say that Google controlling 70% of the search adverts means that there is lower competition and higher pricing as a result, which is bad for the consumer. Google have called the lawsuit “deeply flawed” and say that “people use Google because they choose to, not because they’re forced to”. There’s a lot more to it than just this summary and CNBC has the details.

Netflix results for the last quarter demonstrated that they aren’t the only show in town, with their stock falling 5% as a result of dramatically slowing subscriber numbers. In Q2 they added 10 million subscribers, but that fell to 2.2 million in the last quarter. The saviour of many a lockdown is seeing challenges from the likes of Disney+  and Apple TV+, the former having added more than 60 million subscribers by August from its launch in November last year.

In the UK it’s being reported that dividends will be cut by almost 40% this year. This takes them to the lowest level since 2010 and is going to have a large impact on investors, particularly pensioners. The Telegraph has a good breakdown of the numbers.

Today’s data of note has mostly been and gone: UK inflation was higher in September due to the end of Eat out to Help Out, which was a disinflationary schemme, and airfares playing a less important role in the numbers than. The headline number is 0.5% and that’s the rate the government will use to adjust business rates from April next year. Public Sector Borrowing was higher than expected in September, at £35.2bn – compare that to September last year which was only £7bn. The number borrowed in the first half of this financial year is £208.5bn.

The data might have been and gone, but the real fun will be PMQ’s this afternoon. We’re expecting gloves off from both sides and Boris looked much more on form last week than he has done for a long while, so it might be a slightly less one-sided exchange than previously.

Have a great day

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