UK Government Partygate
Comments from all sides of the political spectrum came thick and fast yesterday following the most recent “partygate” developments. Arguably, of the most alarming for Johnson is that of the Conservative Party leader in Scotland, Douglas Ross who stated that he ‘would not in any way support the Prime Minister if he broke the law and attended that party’. Ross, who previously held the position of Scotland Office Minister resigned last year in anger against Dominic Cumming’s trip to Barnard Castle and has argued that a clear position needs to be sent to the electorate. Aside from the unsurprising calls for Boris to resign coming from Sir Ed Davey and Angela Rayner, the prominent Tory donor and founder of Phones4U, John Caudwell criticised the PM stating “Sort it out, Boris, or step aside and let someone else sort it out so that the Tories aren’t wiped out at the next election.” Furthermore, while single polls should be treated with caution, Number 10 will have been alarmed to learn that a study conducted by Savanta ComRes indicated that 66% of respondents believe that the Prime Minister should resign over ‘party-gate’, and this included 42% cent of those who voted for the Conservatives at the 2019 general election. One of the key questions for Johnson is whether the gravity of ‘party-gate’ will force the Met Police to reconsider their policy of not retrospectively investigating alleged Covid breaches. The organisation is under increasing pressure to do so, not least from The Good Law Project which reported to have started legal proceedings against the Met’s refusal to investigate the alleged party at Downing Street on 18th December 2020. It’s worth remembering that on 6th April 2020 – some six weeks before the alleged “bring-your-own-booze” party – Scotland’s chief medical officer, Dr Catherine Calderwood resigned over news emerged that she travelled several times to a second home in Earlsferry, Fife – more than an hour’s drive from her family home in Edinburgh. While it would be naïve to suggest that this sets a precedence for public officials resigning if they broke restrictions, we have seen amongst others Matt Hancock leave his post after kissing an aide and Margaret Ferrier lose her whip from the SNP after news emerged that she travelled to Westminster while waiting for a Covid test. On the other side of the argument, the attendees would have presumably all been designated ‘key workers’ which might be used as a shield, as might the fact that Number ten is on Crown Land and therefore laws need not apply. There’s also the argument that an apology and a huge slice of humble pie might at least be a step in the right direction with the electorate. Either way, all eyes will be on Prime Minister’s Questions at 12:30 this afternoon where Boris will face the music for the first time since the leaked email emerged.

IPO Uncertainty
Away from politics: Yesterday an article in The Times highlighted uncertainties around IPOs on the London Stock Exchange this year. While it noted that last year saw a record 12I IPOs (which cumulatively raised £16.3Bn), it emphasised that inflationary pressures will undoubtedly cause rate hikes and thus move liquidity away from the stock market and into bonds. Moreover, a rise in the cost of living, reduced disposable income and reduced consumer spending will likely weaken the strength of the equity market while ongoing supply chain issues and labour shortages could also hit companies’ inclinations to go public as they continue to weather the uncertainty storm of Covid.

World Bank Revised Growth Forecasts
Yesterday we saw the World Bank’s revised growth forecasts and they’re casting a more pessimistic view than previously, predominantly based on the divergence between developed and developing nations. The latter are going to suffer a more protracted rebound, not only because of lower vaccination rates, but because of inflationary effect means countries are withdrawing stimulus prematurely and also the developed world raising rates more quickly, which is increasing debt service costs for a lot of nations. The global growth expectation for 2022 is now 4.1% and 3.2% for 2023.

​​​​​Looking Ahead
This afternoon at 12:30 we have the all-important US CPI figures where the market is predicting a 7% print – a slight increase from last month’s 6.8% number – which would see inflation hit a new 40 year high. Concurrently, CPI figures which exclude food and energy will also be published, where notably the market is predicting a 5.4% print – up from last month’s 4.9% – indicating that the market is considering how inflationary pressures are endemic across all aspects of the US economy.  Any print below expectations seems unlikely, but would presumably be latched onto by markets hoping that the status quo, of abundant and cheap money, remains.

Good Luck, Boris

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