Daily Brief – Bank of England

Bank of England

As expected, the Monetary Policy Committee delivered a 25bp rate cut to 3.75% yesterday lunchtime. This was what is being described as a hawkish cut which means that further reductions are less predictable in a mixed economic environment which has the curate’s egg attributes of rising unemployment and falling inflation. The Committee only narrowly approved the cut at 5:4 and the narrowly won majority is predicated by the aim of stimulating the UK economy in 2026.

GBP/USD 1.3433.

Triple D

This is what France will be battling in 2026: the three D’s: Debt, Deficits, and Deadlock politically. Growth in France is estimated to be 0.8% for 2025 and while inflation is well below that of the EU overall at 0.9%, those three D’s are weighing heavily on France with one Ratings Agency already having downgraded France to AA-. Take the French Debt to GDP ratio which the IMF are forecasting to rise from 116% in 2025 to 130% in 2030. Back in 2020, France spent EUR 36 billion on servicing its debt and that figure has mushroomed in the intervening period and is set to hit EUR 60 billion in 2026. Turning to the political deadlock, the loss of a majority, various budgetary impasses including labour and pension reforms and the failure to pass legislation have all resulted in real world consequences that are damaging France and its reputation with international investors as well as the EU indirectly.

EUR/USD 1.1756.

Shrinkflation

As one ages, policemen look younger and places from one’s childhood when re-visited as an adult appear smaller. This season, chocolate confectionery seem to be going the same way with less chocolate, more chocolate substitute flavouring and smaller sized chocolate offerings. Take that staple of the Christmas period, the Chocolate Orange which is now sold and weighs 12g less than a year ago which is a weight reduction of 8%. Aficionados of the Chocolate Orange have not forgotten the shock of a 10% weight reduction in 2016 which means that the well loved seasonal Chocolate Orange is really a lot smaller than it used to be. And the price? Yes you guessed it: just 3 years ago in December 2022 it cost GBP1.24 but now it will set you back GBP 2.25. So less for more in every sense and it’s not just Chocolate Oranges: that triangular treat the Toblerone and also Quality Street chocolates are similarly affected.

GBP/EUR 1.1427.

ShinyHunters

This is a Western based hacking group that has managed to collect viewing habits, search history and location data of a Canadian owned site that enjoys 200 million users. What is causing more than a frisson among what used to be called the “top shelf” client base of newsagents when newsagents were a thing, is that the site that has been hacked by ShinyHunters is the adult content Pornhub. According to industry experts at BleepingComputer who keep a close watch on such matters, clients of Pornhub can rest easy in that their financial information, payment details and passwords are all secure. So that’s all right then; it’s just their names addresses and menu choices that are out there.

EUR/JPY 182.77.

No Smoking

This day 13 years ago in 2012, Madonna appeared in concert in Santiago, Chile. The star came out on an elevated stage more than 3 meters above the auditorium which was in the open air but she was not in the mood for small talk as she snapped at the crowd: “No Smoking!” She went on to threaten them that she would not perform unless they ceased smoking immediately. Doubtless the long-suffering Chileans were inured to such dictatorial behaviour given their long experience with… dictators.

Santa baby, slip a sable under the tree, for me
I’ve been an awful good girl
Santa baby, and hurry down the chimney tonight

Santa baby, an out-of-space convertible too, light blue
I’ll wait up for you dear
Santa baby, and hurry down the chimney tonight

Think of all the fun I’ve missed
Think of all the fellas that I haven’t kissed
Next year I could be oh so good
If you’d check off my Christmas list
Boo doo bee doo

Santa honey, I wanna yacht and really that’s
Not a lot
I’ve been an angel all year
Santa baby, and hurry down the chimney tonight

Santa cutie, there’s one thing I really do need, the deed
To a platinum mine
Santa cutie, and hurry down the chimney tonight

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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