Morning Brief – UK Employment

Humphrey Percy
Chairman and Founder
Mon 28 Nov 2022
UK Employment

Fresh on the heels of the shockingly high net UK migration of 504,000 released at the end of last week comes another statistic that will pile pressure on the UK government.

The much trumpeted UK unemployment rate of sub 4% or approximately 1.4 million has been unmasked as more than somewhat misleading: the number of people claiming Universal Credit is 3.4 million and those claiming Incapacity Benefits is 2 million. Add those and take the total together with a couple of much smaller categories and the total of people in the UK claiming unemployment benefits is well over 5 million.

GBP/EUR 1.1625.

European Central Bank

The last meeting for the ECB this year takes place on December 15 and following the rhetoric from its leader end, President Lagarde, it seemed clear that the ECB would albeit late in the day, be stamping on inflation with a large rate hike. that is now up in the air with two ECB Board members giving conflicting messages: Philip lane the Chief Economist has now said that inflation will decline next year and a large rise of 75 bps is unwarranted. Meanwhile fellow Board Member Isabel Schnabel is giving the opposite message plus what’s on her mind is the likelihood of a wage rise spiral if the ECB does not take hard decisions now. Taken with the ECB’s recent decision to scrap forward guidance which had proved misguided, the Board divergence adds up to a new era of difficulty for market participants to gauge the path of European monetary policy.

EUR/USD 1.0390.

Oh Canada!

This weekend marked the launch of the much vaunted Canadian Indo-Pacific Strategy which is articulated in a 26 page document with a budget of CAD 2.6 billion. The aim is for Canada to diversify from its 68% trading relationship with the USA and bolster its less than 7% with China. While the strategy is aimed at 40 countries worth CAD 50 trillion, the document is clearly largely focused on increasing share of wallet from China. USD/CAD 1.3375

Hydropower Red tape

Drax and SSE have a plan to power up to 1 million homes through renewable energy by harnessing Scottish lochs at a cost of GBP 2 billion. Government sign off is required and a decision is expected to be taken by 2024, after which assuming it’s given a green light, construction will take 6 years. That means that it will be 2030 before what seems to be a project eminently suitable for our times to come on stream. GBP/USD 1.2090.

Shake it Up

The Cars had a fast moving hit with this roadworthy number back in 1981. What it lacks in lyrical quality, if you can remember back to 1981, it makes up for in acceleration:

Uh well, dance all night, play all day
Don’t let nothin’ get in the way
Dance all night, keep the beat
Don’t you worry ’bout two left feet

Shake it up
Shake it up, oo yeah
Shake it up
Shake it up

Dance all night and get real loose
You don’t need no bad excuse
Dance all night with anyone
Don’t let nobody pick your fun

Shake it up, oo, oo
Shake it up, yeah yeah
Shake it up, oo, oo
Shake it up

That’s right, I said
Dance all night
Go go go
Dance all night
Get real low
Go all night
Get real hot
Well, shake it up now, all you’ve got, woo

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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