Marketing Newscast

(Edited 09 January 2025)

Former Prime Minister Liz Truss has sent a cease and desist letter to Sir Keir Starmer demanding that he stops claiming she crashed the economy. The letter, written by lawyers on behalf of Truss, and seen by The Telegraph, argues his repeated statement to that effect is “false and defamatory” and contributed towards her failing to be re-elected as the MP for South West Norfolk. It argues Truss and then Chancellor Kwasi Kwarteng’s so-called ‘mini-Budget’ of September 2022, after which the financial markets reacted badly to the major tax cuts announced, did not amount to an economic crash, since there was no fall in economic output nor any rise in unemployment. As evidence, the letter cites a report from Andrew Lilico, a fellow of the Institute of Economic Affairs think tank. Lilico explains his findings in today’s release of Planet Normal, a podcast by Telegraph columnists Allison Pearson and Liam Halligan, saying the claim is “manifestly false” because “the economy actually grew faster in the period immediately following the mini-Budget.”

Meanwhile, The Treasury intervened to try to stabilise financial markets as the pound plunged as much as 1.2% to a nine-month low of $1.233 and the yield on 10-year gilts – one measure of the Government’s borrowing costs – climbed to 4.81% yesterday, its highest level since 2008. In the first such statement since the Truss mini-Budget, the Treasury dismissed as “pure speculation” yesterday’s reports that rising debt costs had wiped out all by £1bn of Chancellor Rachel Reeves’ borrowing headroom and threatened to put her in breach of her own fiscal rules. A Treasury spokesman said: “No one should be under any doubt that meeting the fiscal rules is non-negotiable and the Government will have an iron grip on the public finances. UK debt is the second lowest in the G7 and only the [Office for Budget Responsibility’s] forecast can accurately predict how much headroom the government has – anything else is pure speculation. Kick-starting economic growth is the number one mission of this Government as we deliver on our Plan for Change. Over the coming weeks and months, the Chancellor will leave no stone unturned in her determination to deliver economic growth and fight for working people.” Shadow Business Secretary Andrew Griffith said the Treasury’s intervention was “extraordinary” and that the Chancellor is so out of her depth “she’ll need a decompression chamber”. “The Treasury would normally stick pins under their nails rather than make any public comment. So it shows a degree of real concern. In my experience it is exceptionally rare for the Treasury in this way to make that sort of comment,” he said, adding: “It is a classic of its genre, which is all it does is publicise the fact that the markets are right to be concerned.”

Three new surveys suggest businesses are increaasingly gloomy about the economy. Over half of respondents (54%) to Grant Thornton’s business outlook tracker said they will need to pass on higher employment costs to customers this year in response Rachel Reeves’ hike in employer national insurance and the minimum wage. Schellion Horn, head of economic consulting at Grant Thornton, said this would “put pressure on inflation” and force the Bank of England to keep interest rates higher for longer. Of the 800 UK firms surveyed, 52% of businesses also said they will reduce hiring, cut jobs or offer lower pay packets to employees. Then, according to a survey from KPMG and the Recruitment and Employment Confederation (REC), the number of job candidates placed in permanent roles by recruiters has already fallen, dropping to its lowest level in 16 months in December, after contracting in November at the fastest pace in over four years. Survey respondents noted a “lack of market demand” for new staff given concerns about the increase in the cost burden facing employers. A third survey, by the Confederation of British Industry (CBI), shows Britain’s leading finance firms are shedding staff and slashing investments as economic optimism tumbles: two-thirds of them anticipate a drop in profits in the next three months, with just one in 10 expecting an increase - an imbalance the Telegraph says matches the very worst moments of the financial crisis when RBS was bailed out by the Government in late 2008.

Investors pulled £9.6bn out of UK stocks in 2024, according to figures from funds group Calastone, meaning UK equites suffered their worst year on record. Asia-Pacific also shed record outflows, totalling £1.8bn. Globally, however, stock markets took in a record £27.2bn. “UK equity valuations are clearly cheap, but investors are capitulating, seemingly giving up hope that a long-awaited re-rating will occur,” said Edward Glyn, head of global markets at Calastone.

Nearly 4,000 staff at The Land Registry are taking industrial action “indefinitely” from 21^st January in protest at being ordered to work in the office for three days a week. They will refuse to cover for colleagues and enact a ‘work to rule’. Their trade union, the Public and Commercial Services (PCS) union, has described the office edict as “unreasonable” and “Victorian”. The strike action could be especially damaging because there is a rush to complete house sales and purchases ahead of changes to Stamp Duty on 1^st April, when the tax rate for a primary residence bought for between £125,001 and £250,00 increases from 0% to 2%. First-time buyers will also have to start paying stamp duty on purchases above £300,000, down from the current £425,000 threshold. Those who buy an additional property also face a tax hike from 1st April as a 7% levy will apply to homes costing between £125,001 to £250,000, up from the current 5% levy.

London is being “killed” by “off the charts” lawlessness and high taxes, according to tech investor Harry Stebbings, who runs venture capital firm 20VC. He made his comments in a post on X, after having had his mobile phone stolen for the second time on Tuesday by members of a bike gangs. “I pay $2m (£1.6m) in taxes per year, the lawlessness is off the charts, the entrepreneurs have left, the taxes are higher than ever. London is sadly falling. I love London, I have lived here my whole life and I am immensely sad to be writing this,” he said. Last year, 28-year old Stebbings criticised Labour’s Capital Gains Tax hike, telling The Telegraph: “It is like the Government is choosing every strategy to discourage entrepreneurship.” “Young, ambitious founders” were threatening to leave the UK, he added, and that “every single day I am getting calls from founders who are looking at moving to another country”. Bike gangs are said to have stolen more than 50,000 phones in the city in the last year alone.

Lloyd's of London CEO John Neal is leaving later this year, after six years in post, to join Aon as its global CEO of reinsurance and global chairman of climate solutions. A leaving date will be confirmed in due course.