Daily Brief – UK Student Loans

UK Student Loans

Given the tiggerish enthusiasm of the UK’s PM in waiting to tackle things in the too difficult to deal with tray, Andy Burnham should direct the great minds advising him towards the thorny subject of the UK’s Student Loans with outstandings currently of GBP 295 billion. Apart from the sheer size of that debt, a more concerning fact is that it has increased by 10.5% in the past year or GBP 28 billion of which GBP 12 billion was interest. Average student debt on leaving university is GBP 50K but more than 150,000 graduates have debt of more than GBP 100,000 so that cohort alone owes a minimum of GBP 15 billion. If you think this is alarmist, even HMRC is predicting that the UK’s Student debt pile will reach GBP 500 billion by the 2040’s. Rather optimistically, Government forecasts indicate that just over half of the UK’s aging ex-students will repay their debts in full. A pragmatic and incentivised management plan led by one of those big brain advisers to tackle this perennial poser with a view to reducing the enormous pile of student debt would more than for example pay for a defence budget more appropriate to the needs of the UK today.

GBP/USD 1.3378.

European Fab Five

In the next 5 years the EU economy is slated to grow by 1% per annum. However, there are 5 economies ranging from the definition of a bold selection to one fully ensconced in both the EU and the EUR that are predicted to far outstrip the EU by more than 2 to 1. Starting with Moldova, expected to grow 3.5% per annum due to economic reform and EU integration although its geographic location abutting Ukraine does present other risk; next is Serbia also predicted to grow by 3.5% per annum driven by Serbia hosting Expo 2027 the world fair that will attract millions of visitors and an economic boost to the country; after that comes Ukraine for the bold investor that due to the expected reconstruction boom that will follow the cessation of hostilities will grow by 3.8% per annum; then there is Kosovo which, while small, is predicted to grow by 4% per annum due to its young labour force, personal consumption, and the implementation of the EU New Growth plan; last but definitely not least comes Malta expected to grow by 4% per annum fuelled by its successful tourism and gaming industries and its influx of foreign workers that have all generated recent growth of 7% per annum.

EUR/USD 1.1430.

OPEC+

Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman are the countries that comprise OPEC+ and from August they have agreed to increase production by 188,000 barrels per day. That has depressed the price of Brent modestly, but the question is where it goes from here. Conventional wisdom suggests that the world needs to restore stocks to its depleted reserves following the supply disruption caused by the closure of Hormuz but that is currently counter balanced by the release of the 3 months of production that had built up and is now being delivered. Then there is the question of how the Strait of Hormuz will be policed and access charged going forward; finally is the still unresolved longer term US-Iran peace deal together with the impending expiry of the 60 day ceasefire expiring at the end of this month. The current oil price at only 10% over the pre-March 1 level may be experiencing less volatility at present, but once all of the above factors are concluded the current expectation is for the price in mid-2027 for Brent Oil to be USD 79 according to the US Energy Information Administration.

Brent Oil USD 72.71.

Australia

Podcast interviews and both the discussion and the questions are traditionally gentle and straightforward. However, never under-estimate the no sh#t Sherlock approach to interviewing by Australian comedian and podcast host Nikki Osborne nor the ability of PM Anthony Albanese to fall for it. When asked whether the newly married premier would “ “shag, marry or date” Minogue, actress Nicole Kidman or entertainer Rhonda Burchmore,” he replied “ Oh Kylie, clearly.” Albanese went on to compound matters as follows when Osborne followed up with: “You’d marry Kylie, and shag her, and date her?”. “All of the above,” Albanese said. “She’s terrific.” Doubtless there was more than a little froideur over the tinnies at the conjugal dinner table that night when Anthony Albanese returned home from a tiring day of being Prime Minister of Australia.

GBP/EUR 1.1698.

Puppy Love

This day back in 1972 Donny Osmond, the wholesome clean cut teen throb US crooner and lynch pin of the Mormon family Osmond combo ruled the airwaves. This Paul Anka song once registered and sung to destruction by Donny Osmond, could never be forgotten and worse still, never unheard. Here it is, 54 years later-you have been warned:

And they called it puppy love
Oh, I guess they’ll never know
How a young heart how it really feels
And why I love her so

And they called it puppy love
Just because we’re, we’re seventeen
Tell them all it’s
Please tell them it isn’t fair
To take away my only dream

I cry each night
My tears for you
My tears are all in vain
I hope and I’ll pray
That maybe someday
You’ll be back (you’ll be back) in my arms (in my arms)
Once again (you’ll be back in my arms once again)

Someone help me, help me
Help me, please
Is the answer up above?
How can I
Oh, how can I ever tell them?
This is not a puppy love
(This is not a puppy love)

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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