Daily Brief – Bank of England

Bank of England

As expected the Monetary Policy Committee left UK interest rates unchanged following yesterday’s  50 basis point cut in the USA and last week’s 25 basis point cut in the EU. Inflation at 2.2% is creditable given where it has been and for the moment it looks unlikely that the UK will cut rates again until November or even December. However the MPC will be keeping an eye on UK economic growth which has markedly tapered in the course of the year. Meanwhile GBP was briefly enjoying its strongest performance for some time in fact since March 2022….before USD mounted a comeback yesterday evening.

GBP/USD 1.3230.

Irish Housing

Driving around the outskirts of Dublin after the Global Financial Crisis in 2009, there may not quite have been tumbleweed, but the landscape was littered with half completed housing estates that had been not paused but abandoned as the chill wind of the collapse took out building firms of all sizes including the very largest. Now the picture is very different with 20,000 new homes needed every year due to the huge increase in Ireland’s population. The Irish government has increased its housing budget from EUR 1 billion per year to EUR 6.5 billion which makes it one of the largest spenders on housing in the EU, but such is demand, prices have risen sharply-up 9.6% in the past year alone- and supply is still nowhere near demand.

EUR/GBP 0.8405.

Eco Tax on the Super Rich

The G20 is getting closer to implementing a tax that they have already approved in principle: taxing the super rich (unclear what that means exactly) who apparently account for 1% of the world’s population  or 70 million which sounds like rather a lot, on their carbon footprint e.g. yachts and private jets. Are there really 70 million people globally who fall into that definition or is the 1% a number that does not at first glance frighten the horses? Doubtless well intentioned the policy may be part of the answer but is certainly not the whole answer given the behaviour of the remaining 99% of the global population, rather it smacks more of the G20 succumbing to populism for the politics of envy.

EUR/JPY 159.43.

UK Tourist Tax

Beware of statistics but since 2019 spending in shops by tourists in the EU has risen sharply at the expense of the UK following the removal of the ability for foreigners to reclaim VAT upon exiting the UK. The Swiss Tourism Tax Refund company, Global Blue reports that such spending in Europe has risen 36% in the past 5 years. Not forgetting the pandemic and also inflation it is hardly surprising that the number has risen but given that the number of tourists visiting London’s West End has risen by 3%, it is instructive that spending has fallen 12% in that time. Tourists in search of top brands now fly to Milan or Paris rather than London and put the 20%+ savings on their shopping towards the cost of their trips. As we have written previously, a spectacular own goal by the UK’s Treasury at the expense of UK retailers.

EUR/USD 1.1125.

Can’t Find My Way Home

This day in 1969, Blind Faith the British supergroup that coined the term was formed and released its first and only eponymous album . The band consisted of Eric Clapton, Ginger Baker, Steve Winwood and Ric Grech. The album sold an astonishing 500,000 copies in its first month. The lyrics may not sound it, but you had to be there.

Come down off your throne and leave your body alone
Somebody must change
You are the reason I’ve been waiting all these years
Somebody holds the key

Well, I’m near the end and I just ain’t got the time
And I’m wasted and I can’t find my way home

I can’t find my way home
But I can’t find my way home
But I can’t find my way home
But I can’t find my way home
Still I can’t find my way home

And I’ve done nothing wrong
But I can’t find my way home

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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