Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

A return to reading

Written by Li-Ann Chin, associate 
Edited by Adam Shaw, associate partner
14 December 2020

Good morning,

There is no form of escapism purer than losing yourself in a good book, whose pages can pull you to the other side of the world and plant you in the middle of a stranger’s life. As a child, I adored reading and frequently walked around with my head buried in a book. As a young adult, I find myself annoyingly glued to the screen of my mobile or laptop instead.
 
A silver lining of the lockdown has been my return to reading. Over this past nine months or so, I have read more than I did in the last few years. Whether it stemmed from a desire for distraction or solace, or the overwhelming need to somehow ‘travel’ out of my surroundings, 2020 has been the year I voraciously revisited old favourites and discovered new ones.
 
And to judge by reports from publishers and anecdotal evidence, it appears I have not been the only one.
 
According to latest findings revealed by the Publishers Association, fiction sales income rose 13% to £285m in the first six months of 2020. These figures were predominantly buoyed by sales in digital formats, but also helped by print copies. UK sales of digital consumer books were up 26% to £125m, reflecting 24% and 25% increases for fiction and non-fiction respectively, and there was also a 50% rise for children’s books. Having suffered six straight years of decline since peaking in 2014, the e-book industry is reportedly set for a record year in sales.
 
Worryingly, the rise in digital sales has shone a light on the issue of monopolies in online platform markets. If you have a Kindle, chances are you’ve been spending your entire book-buying budget at Amazon. I too am guilty of this. Amazon makes purchasing something – anything, really – incredibly convenient. But it would be less than ideal for the industry to have a situation where the main beneficiary of an uptick in e-book sales is a single tech giant.
 
It is difficult to predict if consumers will return to hardback reading in droves once the pandemic is over, but it is increasingly clear there needs to be a long hard look at unlocking competition in the distribution of e-books, to ensure this phenomenon is not only fair, but sustainable for the publishing industry.
 
Looking for a Christmas read? Check out a complete list of our book recommendations here.

News

UK prime minister Boris Johnson and European Commission president Ursula von der Leyen have agreed to continue Brexit talks. The deadline for an agreement had been yesterday, but the two leaders said it is worth going the “extra mile” to see whether a trade deal can still be struck, amid signs of progress on key sticking points. However, Johnson has warned that no deal is the “most likely” outcome. The decision was made during what the two sides described as a “useful” phone call, following intensive negotiations in Brussels this weekend.
 
Germany is expected to enter a hard lockdown over the Christmas period, from 16 December to 10 January, as the number of deaths and infections from Covid-19 reaches record levels. Non-essential shops will close across the country from Wednesday, as will schools, with children to be cared for at home wherever possible. Christmas shopping has been blamed by chancellor Angela Markel for the increase in cases.
 
The NHS has confirmed that GP surgeries in 100 locations across England will receive doses of the Covid-19 vaccine today, with some expected to begin inoculations this afternoon as the next stage of the vaccine rollout gets under way. Later this week care homes around the country will start receiving their doses of the vaccine.

Business and economy

The UK government has begun talks with EDF about the construction of a new £20m nuclear power plant in Suffolk. The Sizewell C site could generate 3.2 gigawatts of electricity, enough to provide seven per cent of the UK’s energy needs. But the project has proved controversial, with opponents saying it is “ridiculously expensive”.
 
UK business leaders expressed frustration on Sunday that companies still do not know what the terms of trade with the EU will be on 1 January 2021. They have complained it is impossible for companies to prepare properly for Britain’s departure from the bloc in 20 days’ time, given they have little clarity on future arrangements. Retailers have also warned the public against stockpiling food. (£)
 
AstraZeneca has agreed to buy US biotechnology group Alexion in a $39bn deal, marking the biggest acquisition by a pharmaceutical company since the start of the Covid-19 pandemic. The takeover will deepen AstraZeneca’s core focus on immunology, diversifying away from its fast-growing cancer business.
 
US retail giant Authentic Brands is planning an audacious double swoop for collapsed UK retailers Arcadia and Debenhams in a deal that would transform the high street. The firm, which recently acquired historic New York department store Barneys, held talks with the administrators of the two companies this weekend.

Columns of note

The decline of British town centres predates the pandemic – it has been decades in the making. However, the impact of national lockdowns, the uncertainty of a constantly shifting tier system, and the growth of online shopping has battered high streets further. In the Financial Times, chief executive of Power to Change, Vidhya Alakeson, calls for the government to take action in the form of a radical rethink which would see communities empowered and high streets reinvented as civic spaces fit for the 21st century. (£)
 
On 16 January, Kanagawa, a prefecture located in the Kantō region of Honshu, confirmed its first case of Covid-19 when a man in his 30s, who had previously travelled to Wuhan, tested positive, marking Japan’s first confirmed case of the virus. In retrospect, however, the early exposure taught the authorities lessons that have helped make Japan’s epidemic the mildest among the world’s big economies. In total, 2,487 people have died of coronavirus in Japan. The Economist sheds light on how the archipelago has managed to achieve this success without strict lockdowns or mass testing – the main weapons in the battle against Covid-19 elsewhere. (£)

Cartoon source: The New Yorker

Markets

The week ahead

Covid-19 vaccines and the latest news on restrictions to prevent the spread of the virus will be in focus this week as the holiday season nears. England’s strengthened three-tier system is set to be reviewed on Wednesday, with Londoners being warned that the UK capital could soon be subject to England’s highest tier three category.
 
Brexit trade deal talks were thrown a lifeline over the weekend when the UK and EU agreed to “go the extra mile” as the previous deadline for a deal passed. Negotiations are poised to continue on Monday.
 
Whether it is a deal or no-deal outcome will be the deciding factor when the Bank of England sets monetary policy on Thursday. If a trade deal is reached the central bank is likely to vote 9-0 to continue with its current policies. However, if talks collapse, the bank would look at cutting rates to zero and accelerating the pace of quantitative easing.
 
The Federal Reserve and Bank of Japan are also expected to hold their last meetings of 2020, though not many policy changes are on the cards.
 
Flash purchasing managers’ indices (PMIs) in Japan, Europe and the US through the week will give investors an early take on how economies are holding up in December. Manufacturing and services are forecasted to improve in France and the UK, while both readings are slated to fall in Germany and the US. The US also publishes industrial production figures on Tuesday and retail sales on Wednesday, while the UK’s labour figures, which are set to show relatively strong wage growth, come out on Tuesday.
 
China is set to publish industrial production, retail sales and investment data on Tuesday that is likely to show the economy strengthened in November.
 
Dixon Carphone is expected to report company earnings on Wednesday, while shareholders of Norwegian Air Shuttle will vote on Thursday on the proposed measures to save the low-budget airline from collapse, including a debt-for-equity swap and the sale of new shares. SSP Group, the catering company behind Caffè Ritazza, is scheduled to report its earnings on the same day.
 
On Friday, Nike is set to report a rise in its quarterly revenue, boosted by demand for sports shoes and clothing from people taking up more outdoor exercise.

What’s happening today?

AGMs
Celtic
Fidelity
Kibo Energy
Proactis
River Mer

EGMs
Renewable Infrastructure Group TRIG

Annual Report
Premier Miton

Int. economic announcements
(10:00) Industrial Production (EU)

Source: Financial Times

did you know

Extreme ironing is a sport where one irons in dangerous situations – such as while skiing, parachuting or underwater. The Extreme Ironing Bureau claims it “combines the danger and excitement of an ‘extreme’ sport with the satisfaction of a well-pressed shirt”.

Parliamentary highlights

House of Commons

Oral questions
Home Office (Including Topical Questions)
Adjournment
Government policy on dark skies – Andrew Griffith

House of Lords 

Oral questions
Work of the Committee on Climate Change – Lord Browne of Ladyton
Operation of repair and reuse programmes in Scotland and Wales and plans to introduce similar programmes in England – Baroness Harris of Richmond
Pilot Environmental Land Management schemes – Lord Greaves
Promoting a green economic recovery following the impact of the COVID-19 pandemic – Baroness Ritchie of Downpatrick
 
Legislation
United Kingdom Internal Market Bill – consideration of Commons
amendments – Lord Callanan
High Speed Rail (West Midlands–Crewe) Bill – third reading – Baroness Vere of Norbiton

Scottish Parliament 

No business scheduled

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