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Rishi goes further

Written by Ralitsa Bobcheva, associate
Edited by Adam Shaw, associate partner
6 January 2021

Good morning,

Yesterday morning, around two months after first vowing to “go further” with extra support measures for the economy, Rishi Sunak unveiled his new £4.6bn financial support package for businesses impacted by the latest lockdown.

Under the new fund, struggling businesses in the retail, hospitality and leisure industries will be able to claim grants of up to £9,000, while a £594m discretionary fund will be made available to councils to support business outside these hard-hit sectors.

Reactions to the new support package across sectors were varied. Speaking on behalf of the Federation of Small Businesses, national chair Mike Cherry welcomed the support as a much-needed lifeline to 600,000 businesses, but added that it is not enough to match the scale of the crisis which small businesses are currently facing.

A similarly lukewarm reaction was given by the chief executive of UK Hospitality Kate Nicolls, who referred to the fund as a “sticking plaster for immediate ills” and called for a longer-term plan for the economy. And indeed, the chancellor hinted that further support will be coming later in the year as most existing support expires in the spring.

But the devil is in the detail. Just a few hours before the chancellor’s announcement, the Institute for Fiscal Studies published its new year update, shining light on the gap left by the government’s support packages over the last year, especially for those in self-employment and in other forms of ‘atypical’ work.

According to their findings, as the government struggles to provide comprehensive support packages for the self-employed and to target financial support on those worst hit by the crisis, the pandemic has significantly widened a number of pre-existing social and economic inequalities across the UK.

As the chancellor goes further with support measures as part of his next annual budget scheduled for early March, the pressure to help those who have so far fallen through the gaps of previous support packages will only increase.

News

The Democrats are within striking distance of taking control of the US Senate after elections in the state of Georgia. Democrat Raphael Warnock defeated Trump loyalist Kelly Loeffler in one of two runoff votes, while the race between incumbent Republican David Perdue and Democrat challenger Jon Ossoff is too close to call. 
 
Authorities in Hong Kong have arrested a number of pro-democracy activists and politicians whose actions were deemed “subversive” under a controversial new security law. The participants were accused of trying to “overthrow” the city’s government due to their involvement in an unofficial “primary” vote to select opposition candidates ahead of the postponed 2020 elections.
 
Boris Johnson has warned that the UK could face restrictions on normal life for many months to come, as figures suggested that one in every 50 people in England is infected with coronavirus. The prime minister refused to guarantee that children would be fully back at school before the summer and added that the plan to emerge from a national lockdown in mid-February was subject to “lots of caveats, lot of ifs”.

Business and economy

Cabinet minister Michael Gove confirmed yesterday that the government is preparing new border controls for international travellers entering the UK. The new rules, which will be unveiled later this week, are expected to require anyone travelling into the country to receive a negative Covid-19 test no more than 72 hours before their journey.

The Covid-19 pandemic pushed car sales down to the lowest level since 1992, with sales falling nearly 30% in 2020 to about 1.63m. The preliminary data published by the Society of Motor Manufacturers and Traders shows the biggest annual slump of sales since the second world war, despite surging sales of electric cars.

The Highlands may be heading for a further set of winter redundancies, as unions report an increase in people being sacked rather than furloughed due to the impact of the latest coronavirus wave on local tourism businesses. According to campaigners, many of those being laid off are EU nationals who are now forced to leave Scotland with no guarantee they can return after Brexit. The Scottish Tourism Workers League has called on the government to make business grants conditional on job retention after speaking “daily” to workers who have lost their jobs.

Columns of note

On Monday night, following the release of a recording of an alarming call in which he asked Georgia’s secretary of state Brad Raffensperger to “find” enough votes to help overturn his election defeat, President Trump addressed his supporters at a rally in Dalton, Georgia. In the New Yorker, Amy Davidson Sorkin takes a closer look at the rally to conclude that Trump’s definition of winning is not really connected to whether he got the most votes.

In the Financial Times, Elisabeth Braw turns her attention to a growing field of criminality which poses a considerable threat to businesses but does not get enough attention: cyber-attacks. As governments continue to battle one another in cyber space, they should start taking cyber-crime as seriously as nuclear proliferation, Braw argues.

Cartoon source: The Telegraph

Markets

What happened yesterday?

London stocks closed in a positive territory yesterday, with the FTSE 100 ending the session up 0.61% at 6,612.25, and the FTSE 250 closing 0.87% stronger at 20,727.37. Sterling was in a mixed state, last trading 0.36% firmer against the dollar at $1.3620, but dropping 0.01% against the euro to €1.1079.

In the US, the Dow Jones Industrial Average climbed 0.59% to 30,401.41, the S&P 500 rose 0.74% to 3,728.02, and the Nasdaq Composite gained 0.98% to 12,822.75.

 In company news:

Apple has appointed Monica Lozano, chief executive officer of College Futures Foundations, to its board.

London-based broker ATFX UK has closed its Polish satellite office after the decision to cease all services for retail clients.

Payments processor Network International has hired Nandan Mer as its new chief executive following the departure of Simon Haslam.

What’s happening today?

Trading announcement
Greggs

UK economic announcements
(00:01) BRC Shop Price Index
(09:30) PMI Services

Int. economic announcements
(08:55) PMI Services (GER)
(08:55) PMI Composite (GER)
(09:00) PMI Composite (EU)
(09:00) PMI Services (EU)
(10:00) Producer Price Index (EU)
(12:00) MBA Mortgage Applications (US)
(14:45) PMI Composite (US)
(14:45) PMI Services (US)
(15:00) Factory Orders (US)
(15:30) Crude Oil Inventories (US)

Source: Financial Times

did you know

The Earl of Sandwich, John Montagu, who lived in the 1700s, reportedly invented the sandwich so he wouldn’t have to leave his gaming table to eat.

Parliamentary highlights

House of Commons

Recall of House of Commons
Mr Speaker has agreed to the Government’s request to recall the House of Commons to discuss covid-19

House of Lords 

Oral questions
Various
 
Legislation
Trade Bill – report stage (day 3) – Lord Grimstone of Boscobel

Scottish Parliament 

No business scheduled

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