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Week in Business: Why investors are losing confidence in the UK
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Jan 11, 2025
City AM's Editor in Chief breaks down this week's top stories in the UK in this episode of Week in Business. Some of this week's top stories include ad giant WPP now mandating 4 days a week in the office, UK-focused stock funds suffering their worst year on record in 2024, the Bank of England announcing plans to row back on “overcooked” regulations in the banking and insurance sector, and more. Get more of City AM 👇 🌐 http://www.cityam.com X(formerly Twitter): http://twitter.com/CityAM Facebook: http://www.facebook.com/cityam Instagram: http://www.instagram.com/city_am LinkedIn: www.linkedin.com/company/cityam Produced by: Christian May, Joseph Curay Teneda, Emmanuel Nwosu #business #businessnews #news #politics #politicalnews #ukpolitics #labour #labourparty #ukgovernment #ukeconomy #economics #economy #bonds #investing
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0:00
welcome to the week in business with me
0:02
Christian May where every week I'll look
0:04
back and try and make sense of some of
0:06
the biggest business stories of the week
0:08
and cityam kicked off the week launching
0:10
our new partnership with polling firm
0:12
freshwater strategy where each month
0:14
we'll work together to survey the voting
0:16
public and track their attitudes on
0:18
political and economic issues the
0:20
results of the inaugural poll made Grim
0:23
reading for Downing Street revealing a
0:24
grim mood in the country 72% of Voters
0:28
said the country is going in the wrong
0:30
direction while a mighty 75% said they
0:33
had no confidence in the government's
0:35
growth agenda and they're not alone in
0:38
that with investors this week starting
0:40
to lose confidence in the Chancellor's
0:42
Central economic Mission as evidenced by
0:45
the turmoil seen in the UK Bond and
0:47
currency markets this week on Wednesday
0:50
our front page warned of the risk that
0:51
Rachel Reeves may have no choice but to
0:54
hike taxes uh again or SL spending if UK
0:57
borrowing costs continue to spike wiping
1:00
out the so-called fiscal Headroom that
1:02
the chancellor baked into her Autumn
1:03
statement now put simply the government
1:06
issues debt or bonds to help Finance
1:08
long-term expenditure and investment and
1:10
they have to pay a yield or interest to
1:12
the buyer of that bond in order to
1:14
attract investors now when the price of
1:16
the Bond Falls because fewer people or
1:18
institutions want to hold them the yield
1:21
increases in a bids to try to attract
1:23
more investors into that market and this
1:25
pushes up the cost of government
1:27
borrowing on Thursday that pressure
1:30
intensified with pound sterling sinking
1:32
to Fresh lows as the yields on 10 and
1:35
30-year bonds remained High and the
1:37
yields have ticked up again today Friday
1:40
meaning the UK is hitting all kinds of
1:42
unwelcome records when it comes to the
1:44
cost of borrowing now the UK isn't the
1:47
only country to see its bond yields
1:48
Spike and it's true that the threat of
1:50
inflation in the US linked to Donald
1:52
Trump's policy agenda is having an
1:54
effect here but it's also true that the
1:57
government's budget in October last year
1:59
is coming back to haunt them with the
2:01
consequences of their High tax High
2:03
borrowing High spending choices starting
2:05
to seriously spook investors as they
2:07
weigh the budget's longer term impact on
2:10
the UK economy now the situation is
2:13
serious there the pain for markets
2:15
mortgage holders and ministers is likely
2:17
to be drawn out rather than culminating
2:19
in a Liz trust style crash and one of
2:22
the reasons for that is that real
2:23
economic growth remains elusive thanks
2:26
to the budget the bank of England
2:28
released a survey of businesses
2:30
yesterday confirming that a majority of
2:32
firms are rolling out price hikes to
2:34
mitigate the effects of major increases
2:36
to payroll and business costs the very
2:39
real fear is that this will cause
2:41
inflation to stick around for much
2:43
longer which will result in fewer
2:45
interest rate Cuts maintaining the
2:47
pressure on bond markets the real world
2:50
consequences of those minimum wage and
2:52
National Insurance hikes were made clear
2:54
as a slew of big investors reported
2:56
Financial results this week next one of
2:59
the most successful retailers in the
3:01
country is pricing in 50 million worth
3:04
of additional costs and it's a similar
3:05
picture for Tesco ssb's M&S all of which
3:08
have sounded the alarm about the impact
3:10
of these tax Rises resulting in billions
3:12
being wiped off the value of London
3:14
listed retailers this week There's no
3:16
sugar coating it it's not pretty out
3:19
there and the blame lies with Rachel
3:21
Reeves who is now under real pressure to
3:23
Magic up some progrowth policies and
3:25
fast now fresh off the back of asking
3:27
Regulators for progrowth ideas it was
3:30
reported today that the chancellor is
3:31
reaching out to Cabinet colleagues
3:33
asking for any bright ideas she'll also
3:36
be in China this weekend on a mission
3:37
that looks increasingly desperate none
3:40
of this should fill you with confidence
3:43
regular readers of C will know that
3:45
we've been warning of precisely these
3:47
circumstances since August and we take
3:49
no pleasure in saying that we told you
3:51
so any economic growth that does
3:53
materialized this year will likely be
3:55
temporary fueled by an increase in
3:57
public spending something economists
3:59
have liken to a sugar rush and as any
4:02
parent will tell you it's not pretty
4:04
when a sugar rush Fades other stories
4:07
setting the agenda this week include
4:08
City am's Revelation that advertising
4:10
giant wpp is now mandating four days a
4:14
week in the office including brace
4:15
yourself two Fridays a month UK focused
4:19
stock funds suffered their worst year on
4:21
record in 2024 as investors pulled
4:23
nearly 10 billion pound out of the
4:25
London Market underlining the challenges
4:28
facing the London Stock Exchange and the
4:30
bank of England announced plans to row
4:32
back on overcooked regulations in the
4:34
banking and insurance sector slashing
4:36
the reporting burdens and allowing
4:38
riskier Investments the city Minister
4:41
tulip sadik has endured another Torrid
4:43
week as her connections to the former
4:44
prime minister of Bangladesh her aunt
4:46
come under scrutiny she's referred
4:49
herself to the UK standards and ethics
4:51
Watchdog regarding some property
4:52
Arrangements allegedly linked to her
4:54
aunt's political party while authorities
4:56
in Bangladesh are looking into the wider
4:58
family's finan amid accusations of
5:00
corruption and embezzlement she denies
5:03
any wrongdoing but it's Little Wonder
5:05
Downing Street is said to be eyeing up
5:07
possible Replacements should her
5:09
position as City Minister become
5:11
untenable and to end on a brighter note
5:14
the UK's fintech sector continues to
5:17
perform well attracting more investment
5:19
last year than the next five European
5:21
countries combined and coming second
5:22
only to the US on total investment
5:25
raised AS Global fintech investment fell
5:27
20% last year uh just over $35 billion
5:31
the UK attracted about3 and5 billion do
5:35
and that's it for me this week remember
5:36
to download the C app to stay in the
5:38
know we'll stay on top of all these
5:40
stories and all the breaking news over
5:42
the coming days for now have a good
5:44
weekend
5:50
[Music]
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