Daily Brief – Competitiveness Compass

Humphrey Percy
Chairman and Founder
Wed 29 Jan 2025

Competitiveness Compass

In case it has passed you by, today is the day or Der Tag when the EU will publish its Competitiveness Compass. Before you reach for your Thesaurus to work out what the latest manifestation of the EU mangling the English language has in store for all of us, this is the twofold response to Mario Draghi’s less than favourable 2024 report on how the EU has fallen behind the USA in terms of economic growth plus the barrage of newly re-minted President Trump pronouncements on where the USA is going versus the rest of the world including the EU. The report will be presented by European Commission President Ursula von der Leyen so her audience is unlikely to be shaken let alone stirred, but the opportunity and the significance of the moment should not be under estimated not only for the EU but also for the UK. One EU official has admitted that the EU has a competitiveness/cost issue which needs to be met with a new EU doctrine of competitiveness and attractiveness.

EUR/USD 1.0425.

UK Population

The ONS is predicting that from 67.6 million in 2022, the UK’s population will reach 72.5 million driven almost entirely by net migration given that the death rate almost exactly matches the birth rate. So while the noise is about the UK’s stretched public services, the fact remains that there is almost exactly net migration every year of 900,000 despite the UK government’s pledge to curb it.

GBP/USD 1.2427.

Central Bank Expectations

The picture has become more cloudy due to President Trump’s tariff promises both before he was inaugurated last week and subsequently in his various speeches in the past 9 days. Currently the US Federal Reserve is not expected to lower interest rates later today while the Bank Of Canada is expected to cut rates by 25bps. Equally the EU’s ECB is expected to cut interest rates by 25bps tomorrow. ECB President Christine Lagarde in a masterly display of understatement at the World Economic Forum in Davos explained that the EU should be prepared for a shift in US trade policy while hedging her bets by saying that she was confident that the EU inflation rate would get back to the 2% target rate this year.

USD/ZAR 18.6955.

Sand Eels

It’s all kicking off at the Court of Permanent Arbitration in the Hague between UK and the EU. The EU claim that the UK is breeching the Brexit agreement by banning predominantly Danish vessels from fishing in the UK’s North Sea waters for sand eels which are mostly used for animal feed. The value of the sand eel catch is GBP 45 million per annum so not exactly major but it does jeopardize Sir Keir and Rachel’s much trumpeted “re-set” with the EU. The three judges who will opine by April this year are from New Zealand, South Africa and… France. What could possibly go wrong.

GBP/EUR 1.1922.

The Loco-Motion

This number from 1974 was co written by singer songwriter Carole King and pub quiz trivia alert, was sung by her $15 an hour babysitter Little Eva but is best known for the version released by Grand Funk Railroad in those far off days when they knew how to make a band sound big before they even mounted the stage.

Everybody’s doing a brand-new dance, now (come on baby, do the loco-motion)
I know you’ll get to like it if you give it a chance now (come on baby, do the loco-motion)

My little baby sister can do it with easy
It’s easier than learning your ABC’s
So come on, come on, do the loco-motion with me
You gotta swing your hips, now (ooh)

Come on (come on)
Jump up (jump up)
Jump back (jump back)
Well, now, I think you’ve got the knack
Wow, wow

Now that you can do it, let’s make a chain, now (come on baby, do the loco-motion)
A chug-a chug-a motion like a railroad train, now (come on baby, do the loco-motion)
Do it nice and easy, now, don’t lose control
A little bit of rhythm and a lot of soul
Come on, come on and do the loco-motion with me

Move around the floor in a loco-motion (come on baby, do the loco-motion)
Do it holding hands if you get the notion (come on baby, do the loco-motion)
There’s never been a dance that’s so easy to do
It even makes you happy when you’re feeling blue

So come on, come on, do the loco-motion with me (come on baby, do the loco-motion)
So come on, come on and do the loco-motion with me (come on baby, do the loco-motion)
So come on, come on and do the loco-motion with me (come on baby, do the loco-motion)


Discussion and Analysis by Humphrey Percy, Chairman and Founder

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