Boost for UK prospects: Government must keep rolling out the vaccines to give Britain an edge, says ALEX BRUMMER
Britain’s post-pandemic recovery is proving more robust than anyone dared hope. There have even been signs that productivity is strengthening as the Covid embrace of technology produces dividends.
As anyone who tunes into the radio each day will recognise, there are logistics issues affecting commerce with brewers the latest to whinge.
But there is no doubt that the Government’s spirited double vaccine roll-out has given the UK an edge.
Jab drive: But there is no doubt that the Government’s spirited double vaccine roll-out has given the UK an edge
BDO data from the High Street shows that in August, same and online store sales climbed by 20.1 per cent. So far rising prices and supply disruption isn’t having much impact, although that could change in the run-up to Christmas.
Those supply problems will be as nothing if coronavirus infections and hospitalisations cause a re-imposition of restrictions.
That is why it is so crucial that the Government rediscovers its vaccine mojo and follows the example of Israel and makes booster shots a priority.
The hundred organisations backing a permanent 20 per cent rise in universal credit, and those groups pressuring Rishi Sunak for more money for education and NHS services, need to recognise that the best way of generating resources is to back growth and end the stop-go of the Covid era.
Public finance data for July, released in the depths of August, underlined this point. The Office for Budget Responsibility noted that borrowing so far this year is £26.1billion below where it was expected it to be in March.
The main reason for this is that Britain is working and spending again. Revenue receipts are £15.6billion ahead with national insurance, income tax, VAT and corporation tax the main drivers of this bonus.
There is much to worry about, not least Britain’s debt burden at £2 trillion-plus, and the cost of servicing that should interest rates rise.
The best defence against it being a problem is keeping the wheels of commerce turning.
The latest financial results are filled with optimism. Gym Group, grounded during Covid, is speeding up the treadmill and outlined plans for spending its war chest of £30million on 40 sites.
Financially driven engineer Melrose is reaping benefits from its shrewd acquisition of GKN. Aerospace is benefiting from the demand for narrow body jets and stronger defence budgets.
Previous management’s investment in R&D for pure electric motor platforms is coming good with the Chinese among those ordering GKN’s e-drive.
It will be a shame if these UK technological assets eventually end up in overseas hands as part of the buy, improve and sell model.
Housebuilding is roaring away (helped by the stamp duty holiday) with Barratt Developments reporting a 65 per cent leap in profits for 2021 and projecting pre-pandemic levels of building in the current financial year.
Sharply higher profits mean sustaining dividends and a bigger chunk of tax for the Treasury.
Supply issues and rising prices are a problem. But they are a consequence of a rapid recovery. The last thing needed are roadblocks caused by delays to a booster vaccination plan.
The late Labour Prime Minister Harold Wilson famously remarked that ‘a week is a long time in politics.’
By that standard, the three-and-a-half year sojourn of John Glen, as Economic Secretary to the Treasury, tweeted out by Rishi Sunak, is a lifetime. There have been four Business Secretaries in the same time scale.
It has been turbulent, although the City has reason to question why winning EU ‘equivalence’ for the Square Mile was never high on the post-Brexit agenda while farming and car making garnered all the attention.
Glen had his moment this year, steering the new financial services legislation through the Commons.
When fully implemented, the act is intended to free the City from the more onerous aspects of EU regulation, such as MiFID II, a critical step for ‘global Britain’. Onwards and upwards.
Britain is not the only country where private equity is making waves. Advent, in partnership with Singapore’s wealth fund, has just launched a £5.7billion offer for Swedish biotech firm Sobi in the biggest ever highly indebted buyout in Nordic history.
Even though the deal is on the low side the board showed no resistance and the Wallenberg family, which owns 35 per cent, is in favour.
Sobi should have looked at the fate of Cobham in Advent’s safe hands before taking the bait.