The PM’s charm and policy offensive got off the ground yesterday, with the Navy now in charge of managing migrant crossings from France, the BBC license fee being frozen for the next two years and more to follow in the coming days. One item that caught our eye is the possibility that the government might intervene in the energy market and make direct payments to energy firms in a bid to shield the consumer. The plan being deliberated goes along the lines of; if energy prices cross a particular cap, then the government will make payments to stop energy companies having to charge consumers more, while if wholesale prices traded below a certain level, then energy companies would make payments to the government, with the hope that over time the system would become cost neutral. The plan is being welcomed by energy companies, but still negotiated at Number 11, where they recognise that if energy prices remain elevated then the government could have signed a blank cheque of taxpayer’s money. The energy price cap is expected to move to about £1,900 in April and then £2,100 in October – an 85% rise from Summer last year.


Scottish Power
Scotland awarded 25 gigawatts of offshore wind projects yesterday, raising £700m in the process. The permits are effectively long leases on patches of seabed around the country that in time will be developed with a mixture of fixed and floating turbines. The UK’s current offshore wind output is around 12 gigawatts, so you have to applaud the ambition. If all goes to plan the first of these permitted sites could be switched on before the end of the decade and along with a big chunk of renewable energy generated, it’s hoped that this will put Scotland as a world leader in developing and manufacturing floating wind farms, which could be a large global industry.


Germany has finally decided to speak up on the Russia-Ukraine situation and wants to convene peace talks between France, Germany, Ukraine and Russia. Europe were notably absent from talks last week between Russia and the US/Nato but hope that they can reach a successful conclusion with the same stakeholders that were present when they negotiated the end to the proxy wars that began as a result of Russia annexing Crimea. In signs of escalation from Russia, they’ve started moving troops into Belarus for combined military drills that will take place near the Ukrainian border.

The FT has the story:

Moscow has also been recalling staff from its embassy in Kyiv since the start of the year. The  – which the New York Times points out could be part propaganda, part preparation or part feint, or all three. Meanwhile the UK Defence Secretary has confirmed that Britain has begun sending military hardware to Ukraine in the form of “light anti-armour defensive weapons”. The weather has turned cold in the region and the forecast is for temperatures well below freezing for at least the next couple of weeks, which is what Russia will need for it to be able to roll tanks across the country.

The New York Times has more:

Chinese GDP
Yesterday saw chinese GDP Figures figures published for Q4 of 2021. While the market was predicting 3.6% growth, the National Bureau of Statistics beat estimates with a 4% y-o-y print meaning that the Chinese economy grew just above 8% in 2021. Given that annual growth rates have averaged around 10% over the last three decades, yesterday’s data is indicative of an economy which has been hindered by coronavirus, energy shortages, Evergrande and both internal and external sanctioning in 2021.

These figures are the latest indicator on the health of the Chinese economy, which analytics around the world have been playing particularly close attention to in recent months. For example, last Wednesday we saw CPI figures coming well below expectations at 10.3% – considerably lower than November’s 12.9% y-o-y print, suggesting that consumer demand in the world second largest economy may be slowing. Those in Beijing are also continually watching the Evergrande situation which has got off to a poor start this year with orders to demolish 39 buildings and the forced suspension of trading its stocks. The situation is feeding into analysts predicting a slowdown in China which will amongst other things greatly affect the stability and the health of the wider global economy.

Xi Jinping also made headlines during his interview at the virtual World Economic Forum meeting yesterday where he championed his ‘Common Prosperity’ policy which has been heavily criticised by libertarians who argue that the CCP’s sweeping restrictions, regulations and fines in the technology and education sectors will continue to hinder socioeconomic growth and further expand the state’s power. Xi maintains that policies such as restricting for-profit education and limiting monopolistic aspects of the tech industry will help to reduce income inequality which Beijing is keen to give the impression that it is reducing. For example, while recent date is unsurprisingly lacking, the World Bank estimates that in 2016 China’s Gini coefficient stood at 38.5% which is considerably higher than its neighbours in South Korea at 31.4% and also the UK at 35.1%


Unilever has seen its share price fall to its lowest for five years after news of a takeover bid for GSK’s consumer healthcare division leaked. The £50bn approach to GSK has upset shareholders of both companies who see the deal as undervaluing the GSK asset and being an act of desperation for Unilever, who have lost ground to competitors over the last few years. The choice quote came from a major GSK shareholder, Jupiter Asset Management, where Richard Buxton said that “the idea of letting the goons at Unilever run it is laughable”. The market seems almost universally against the deal and the news may ask more questions than it answers about Unilever’s strategy and leadership team.

The FT has more:


​​​​​In Other News
Tennis and covid don’t seem to mix; with Novak Djokovic being kicked out of Australia and now Credit Suisse CEO, Antonio Horta-Osario resigning after it emerged he was at the Wimbledon finals last year, which breached quarantine rules. Mr Horta-Osario was brought into Credit Suisse to try and fix the damage that the bank has suffered of late, from spying scandals to losing billions to Greensill Capital’s collapse but decided that being a headline himself was clearly not the right look given the task at hand. His successor is Axel Lehmann who was previously leading the banks’ risk committee and has had experience running its retail business and as COO.

Have a great day.


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