Just when you thought things couldn’t get any worse, now the Office for National Statistics has reported that the unemployment rate has risen to 5 per cent, the highest for four years.
Indeed, if we leave out the economic shock generated by the pandemic, unemployment is now at its highest rate for a decade.
Meanwhile, wage growth slowed in the three months to September, our inflation rate remains the highest in the G7 group of the world’s richest nations and our hospitality sector is so depressed that pubs are shutting at the rate of one a week.
Oh, and two weeks from today the Chancellor Rachel Reeves will unveil a Budget which is calculated to create yet more misery for millions, with horrors ranging from a swingeing income tax rise to a raid on our pensions.
Yet when the chairman of one of our leading high street banks asked me the other day whether I felt there were any grounds for optimism in the current climate, I found myself coming up with a surprisingly long list of reasons to be cheerful.
Optimism
Have I lost my mind? Far from it. For while the Government undoubtedly imposed a terrible burden on corporate Britain in the shape of last October’s sharp increase in employers’ national insurance, a surge in the minimum wage, increased business rates and a cocktail of stealth taxes, a charmed circle of businesses have found the strength to battle through.
Only yesterday, the FTSE 100 index of the country’s leading companies hit a record high
Only yesterday, the FTSE 100 index of the country’s leading companies hit a record high, boosted by the news that the US Senate had voted to authorise funding that would end the government’s 41-day shutdown.
Overseas investors may be cautious about keeping funds in British government bonds – known as gilt-edged stock – but they are rediscovering their appetite for shares in UK PLC firms. No stock has performed better this week than pharmaceutical firm AstraZeneca, which rose 1.7 per cent to surpass its September 2024 peak and solidify the company’s position as the UK’s largest listed stock by market value.
Its latest results showed revenues up 10 per cent year-on-year at £11.6 billion, with sales of its oncology treatments up 18 per cent.
Shares in GlaxoSmithKline, Britain’s other listed life-sciences giant, also hit a new high for the year yesterday.
Trailblazers
Nor have we been left behind in the race to exploit the boom in artificial intelligence. Amid the hype around OpenAI and other American trailblazers, it is easy to forget that much of the science around AI was developed by British talent and we remain a leader in this field.
Sir Demis Hassabis, the joint-winner of last year’s Nobel Prize in Chemistry who founded Britain’s AI pioneer DeepMind, may have sold out to Google’s parent company Alphabet but its labs in London are at the forefront of AI research.
Other UK firms, notably the top FTSE data and cyber champion Relx, are global groundbreakers in AI.
No stock has performed better this week than pharmaceutical firm AstraZeneca, which rose 1.7 per cent to surpass its September 2024 peak
And we continue to spawn great financial companies, including globally successful ‘fintech’ (financial technology) outfits such as Revolut and Monzo.
The historic Lloyds of London insurance market, one of the pillars of the City, has re-established itself as the leading provider of cutting-edge climate change and cyber insurance risk.
The London Stock Exchange may have lost its lustre as a share market, but it has reinvented itself as a financial data powerhouse and Europe’s leading centre for complex derivatives trading, clearing trillions of dollars of financial transactions each day. On the engineering front, Rolls-Royce – under the leadership of ‘Turbo’ Tufan Erginbilgic – is showing how smart management can transform a company’s prospects.
The group’s global reach in wide-body aerospace engines, small modular reactors and the turbines which drive nuclear submarines has seen its value soar ten times since Erginbilgic took the pilot’s seat in 2023.
Nor should we forget that the UK is home to those powerhouses of research that are our leading universities and a creative sector which has spawned gaming giants such as Grand Theft Auto creator Rockstar North and brilliant live programming, including Celebrity Traitors.
Only last week, Sky – owned by the US cable, streaming and content giant Comcast – set its sights on expanding its interest in the UK with a bold £1.6 billion bid for the ITV broadcast network and its streaming service ITVX.
The group has just reported that ITVX has surpassed 3billion streams for the year to date, and is believed to boast healthy advertising revenues.
Despite Rachel Reeves’s claim to be the ‘securonomics’ Chancellor, the view from the battlefront tells a very different story
The group’s production arm, ITV Studios, is a credit to creative Britain with content such as The Reluctant Traveller for Apple TV and its award-winning docudrama Mr Bates vs The Post Office.
It is a time of rapid change and consolidation among creators on both sides of the Atlantic – apart from Comcast’s ITV bid, Warner Bros Discovery has put itself up for sale – and there is good reason to think that ITV Studios will be viewed as an important asset in the shake-out.
But the fortunes of Britain’s commercial sector hang on a knife edge. As our reckless Chancellor considers ever more damaging ways to plug her £30 billion-plus Budget ‘black hole’ even our most resilient performers will feel the heat. The sad news is that these global players are succeeding despite the Government’s policies – not because of them.
Many firms and their executives are being driven overseas by a combination of neglect, intrusive regulation and higher taxes.
Take the jewel in the FTSE’s crown, AstraZeneca. The British Government’s refusal to back a new vaccine plant in Liverpool and an attempt to impose a stealth tax on drugs sales to the NHS has alienated the group.
Neglect
In July, it announced that it would invest $50 billion in the US by 2030 and expected 50 per cent of its revenues to come from there by the end of the decade. Its chief executive Pascal Soriot went so far as to say Europe risks losing its ‘health sovereignty’.
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At the same time the Government is driving away Big Pharma, it is piling resources into ‘greening’ an uncompetitive steel industry with a £500 million injection for Tata Steel in Port Talbot alone.
It is the same story elsewhere. Despite Rachel Reeves’s claim to be the ‘securonomics’ Chancellor, the view from the battlefront tells a very different story.
Thanks to slowness in embracing Rolls-Royce-developed reactor technology, US and Japanese rivals were allowed to catch up.
As one leading defence industrialist told the Daily Mail, the odds on the UK hitting Nato targets on defence spending are remote and the Cabinet are ‘incapable of making the big decisions’.
British companies have shown enormous resilience against the odds. The UK is expanding faster than some Continental competitors, largely because of the nation’s science, engineering and technology inventiveness.
But a government with little understanding of commerce, innovation and what incentives encourage human endeavour is flailing.
The fear must be that a second tax-raising, confidence-stifling Budget by ‘Round-up Reeves’ will spray a deadly dose of weedkiller on the green shoots of recovery.
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