Marketing Newscast

Prime Minister Sir Keir Starmer refused yesterday to give a “yes or no” answer to the question of whether he will keep Chancellor Rachel Reeves in post until the end of this Parliament. Reeves is said to be “very depressed” at the state of the economy: the pound sunk yesterday to its lowest level since November 2023 and the cost of Government debt has sky-rocketed to 16-year highs since her maiden Budget in October, meaning the Government’s “iron-clad” fiscal rule that tax receipts will match public spending looks to be in jeopardy. Reeves’ tax hikes have also led to a slump in job hiring, and economic confidence among businesses has plummeted. Inflation, meanwhile, remains above the Bank of England’s 2% target, and threatens to rise because of Reeves’ £70bn a year additional spending splurge, and the fact businesses will put up prices because of their increased costs. This will, in turn, slow the pace of any interest rate cuts. Starmer said when asked to guarantee Rachel Reeves would be Chancellor until the next election: “I’m confident, completely confident in my team,” before adding: “Rachel Reeves is doing a fantastic job. She has my full confidence. She has the full confidence of the entire party.” The “yes or no” answer requested by GB News Political Editor Christopher Hope was clearly not forthcoming. Since, however, the PM's spokesman has said that Sir Keir Starmer “has full confidence in her and he will be working with her for the whole of the Parliament." Asked if this meant as Chancellor, the spokesman said: "Yes." However, Conservative Leader Kemi Badenoch said: "The prime minister just refused to back his chancellor staying in her job. Keir Starmer and Rachel Reeves have driven Britain's economy into the ground. The markets are in turmoil and business confidence has crashed, yet the chancellor is nowhere to be seen. Labour promised stability and instead the City minister is mired in corruption investigations [1] and the chancellor is hanging on by her fingernails."

The PM also said yesterday that the Treasury will be "ruthless" in cutting Government spending to endure fiscal rules are not broken when responding to a question about the economic situation from Sky News' political editor Beth Rigby. "The number one mission of this Government is economic growth… And that was run through the budget, but there's much more that we're doing on economic growth, pulling those levers of change." "We will be ruthless, as we have been ruthless in the decisions that we've taken so far,” he added. “We've got clear fiscal rules, and we're going to keep to those fiscal rules." Last week, it was suggested that the Chancellor is planning to slash billions of pounds in disability benefits in an attempt to calm the debt crisis.

Rupert Soames, chair of the Confederation of British Industry (CBI), took aim at Rachel Reeves yesterday, saying she has created a “hole in the confidence and trust of business” by using the private sector to fill a £22bn hole in the Government’s finances. She has “bruised” British companies with the £40bn in tax hikes she levied on them in her October Budget, he said. “The Chancellor told us at the time of the budget that there was an unexpected hole of about £22bn in the Government finances, and business was going to have to fill it. In filling in one hole, it’s created another, and that hole is a hole in the confidence and trust that business has in the Government,” Soames told BBC Radio 4 Today programme yesterday morning. “I think sometimes it’s not understood, the extent of the impact, particularly on companies that employ lots of people.” “We think the national insurance increases are going to feed through into inflation, we’re going to have a lower growth rate, but also, because of things like the Employment Rights Bill coming along, you’re going to find people laying people off and less likely to employ,” Soames added.

Keir Starmer’s proposals to make to Britain an “AI superpower,” with a 20-fold increase in public computing capacity, a new supercomputer, “AI growth zones” and billions of pounds in private investment in data centres, as unveiled yesterday, will require more than a nuclear power station’s worth of extra electricity, researchers at data centre analysts DC Byte say. A construction boom needed to meet the soaring requirements of advanced AI will more than treble the industry’s demands on the energy grid in the coming years to more than 4,000 megawatts (MW), DC Byte CEO Edward Galvin tells The Telegraph, compared with just 1,512MW currently. The additional requirements will demand the more than the capacity of a large nuclear facility, such as the Sizewell C or Hinkley Point C stations, he added. The newspaper notes this extra demand could be incompatible with Energy Secretary Ed Miliband’s plans to increase reliance on renewable energy. Luke Alvarez, of tech investor Hiro Capital, said: “We need a lot more energy fast. The UK’s current net zero strategy and the bias towards wind is incompatible with this.” “The unexpected boom in AI has meant data centre operators missing environmental targets and being forced to fall back on fossil fuels. Microsoft said last year that its emissions had risen by a third since 2020, while Google dropped its claim to be carbon neutral after a surge in emissions,” The Telegraph’s James Titcomb and Matt Oliver write.

The British berry growing industry has warned its future is under threat despite its value rising to £2bn for the first time, City AM reports. According to industry body British Berry Growers, rising energy costs and wage increases will continue to create ‘challenging circumstances’ for fruit farmers in 2025. It warned in July 2024 that two-fifths of British growers of strawberries and raspberries could go out of business by the end of 2026 amid rising costs and poor pay from supermarkets. According to a new EY report commissioned by British Berry Growers, the industry added £624m to the economy in 2024, as well as contributing £134m in taxes, and supporting 16,317 full-time equivalent jobs. Nick Marston, chairman of British Berry Growers, said: “We are immensely proud of reaching this milestone, and of the industry’s resilience in the face of challenging operating conditions. But it is also clear that there are very tangible risks which threaten the industry’s future”. He cited as risks fact the industry is “not being sufficiently supported by fairer retailer returns,” noting that while the average retail price of berries rose by 14.5% between 2020 and 2023, the average price paid to growers by retailers increased by only 11.2% in the same period”.

Stanstead airport has reported its busiest year ever. The hub to the North East of London welcomed 29.8m passengers in 2024, a 5.8% increase on the previous record of 28.1m in 2019. Heathrow also reported record passenger numbers yesterday.

Serco CEO Mark Irwin plans to retire and step down from the role on 28^th February after 12 years with the outsourcer. Anthony Kirby, currently CEO of UK & Europe, the group's largest division, has been appointed CEO designate and will succeed Irwin from 1^st March. Irwin will continue to serve as a strategic adviser through a transition period.

[1] City Minister Tulip Siddiq, who has anti-corruption responsibilities, has referred herself to the Government’s Standards watchdog because of allegations she is embroiled in an embezzlement scandal in Bangladesh, and took at least one UK property for free from a person linked to the political party of her aunt, the ousted former Bangladeshi Prime Minister Sheikh Hasina, who has been accused of multiple human rights and corruption abuses.