Weekend Summary

The Conservative party conference got underway yesterday with a few key takeaways and big hint at when the next general election will be: Before the event even got started, Rishi Sunak announced £1.1bn is to be split and spent on 55 overlooked towns in the UK, with the hope of reinvigorating them. As part of the measures the towns will set up ‘town boards’ comprised of community leaders, local authorities and local employers to decide how best they go about deploying the cash – with support given directly from central Government in the form of a ‘Towns Taskforce’ that will sit within Michael Gove’s levelling up department.  Local councillors shouldn’t get too excited though ,as the funds will be paid over a ten-year period, but perhaps with the help of some planning reform and other incentives there might be some private sector money that also makes its way in alongside the government’s.

Also in the conference; there’s some tension between those that want a tax cut and the men in a position to sign them off. Both Rishi Sunak and Jeremy hunt are resolutely against lowering taxes ahead of the next election, which goes against many in the party who are looking at the likely shelving of most of HS2 as a great opportunity to offer something to taxpayers. Michael Gove spoke out against the party line of needing to remain steadfast and said that he would like to see the tax burden reduced before the next election.  Rishi Sunak is still of the opinion that “the best tax cut that we can give working people is to halve inflation” – and mathematically he’s correct.

On the note of inflation and general elections, Jeremy Hunt has apparently been caught in a secret recording of a private meeting between Tory activists saying that a general election will be called when inflation has fallen below three percent – which based on the most recent Bank of England forecasts would put it around autumn next year.

Away from the conference (but no doubt returning to it as the week goes on) UK water companies are proposing to spend £96bn on improving infrastructure over five years, from 2025, but this will come at a cost of £84 a year on top of the current average water bill. The planned investment is almost double that being invested in the current five year investment period and will create new reservoirs, desalination plants and also infrastructure linking the wetter north with the drier south (perhaps they could run it down the proposed HS2 line?) as well as tackle sewage discharge and leaky infrastructure. The Times has the story, click here to read…

Markets closed a tough quarter on Friday, with US stock markets closing the quarter lower than they started, but still marginally up on the year to date. Most of the bad news came in September, with news that inflation was still looking sticky, which meant that interest rates are set to be higher for longer. Energy stocks were a different story and have largely done well as the cost of oil rose over the month – this has a benefit to the FTSE100 where a lot of global oil and gas companies have listings.

Looking at the week ahead: as the first week of the month, it’s always packed with data – starting today with PMI manufacturing data from just about everywhere. The numbers are universally expected to be in contractionary territory, but the question will be by how much.

Overnight we’ll see the Australian central Bank speak rates, but are likely to stay on hold. Wednesday is the PMI services day, always a big one for the UK where services make up nearly 80% of our economic output. Thursday we catch our breath and then Friday is the US non-farm payrolls. Throughout all of this, China is on their Golden Week holiday and Japan just might intervene on the FX market as their currency is uncomfortably weak against the almighty dollar.

Have a great week.