The ebb and flow of company results, which sustains analysts and the stock market, is less followed in the media than used to be the case.
There is, however, no better way of understanding what is going on in the economy than drilling down into what the UK’s resilient corporate sector has to say. There is plenty of macro stuff to bite into.
The read on the public finances for 2025-26 provides ample evidence of challenges facing the Government and Britain.
Tax revenues are up exponentially, which explains why consumers are hard-pressed and businesses have less scope to invest.
This might be tolerable were the national accounts moving dramatically in the right direction.
Yet the nation spent £98.5billion on interest payments last year. Anyone with a mortgage knows how painful that can be.
Gloomy outlook: The CBI’s the quarterly measure of optimism over the business outlook slumped to -65 in April from -19 in January
It wouldn’t feel so bad were borrowing and the national debt truly on a sustainable path but a spend of £327.6billion on social benefits – up £20.7billion on the previous year – tells us how distorted the national budget has become.
A wealth-creating private sector is being punished to finance escalating welfare bills. There looked to be a fragile recovery in motion ahead of the Iran war but that is now dead in its tracks.
The CBI reports the nation’s makers are at their most pessimistic since the pandemic.
The message from the High Street is gloomy, with Britain’s second-largest grocer, Sainsbury’s, cautioning on the impact of a ‘very uncertain’ outlook.
The idea that UK supermarkets, caught up in fierce competition, could somehow be engaged in price-gouging, as Chancellor Rachel Reeves feared, is risible.
In a different part of the forest, the London Stock Exchange Group, looks to be doing fine. Trading volatility, engendered by Trumpian zigzags, boosted income by 9.8 per cent in the first quarter.
It is also preparing for an AI future with, among other things, a deal with Anthropic, the tech outfit of the moment.
Clearly, the biggest worry for companies and consumers alike is going to be inflation, with S&P’s early reading of the conflict economy showing a rapid rise in cost pressures and a growth splutter.
Even if the Government wanted to help it can’t. Labour has ransacked the larder.
Manifold pressure
BP chairman Albert Manifold has been so busy implementing the demands of mercurial activist investor Elliott that he has managed to rub up the rest of its shareholder base the wrong way.
The attempt to ditch live meetings for online gatherings overwhelmingly was defeated. It ill behoves any FTSE 100 company, let alone a member of the top ten elite, to shut out investors.
That may mean having to tolerate eccentrics more concerned with the quality of free food than performance. It would also mean that serious players such as stockbroker and fund manager Rathbones would be locked out.
The bigger error was BP’s failure to honour the request from a respectable quantum of investors for granular information on climate change objectives.
Manifold may have restored the focus on fossil fuels but hiding behind legalisms to avoid scrutiny is not a good look. He and senior non-executive Amanda Blanc should have known better.
An 18 per cent vote against a chairman who has only been around since last autumn is a bloody nose and not very helpful to new chief executive Meg O’Neill just finding her feet. More transparency please.
Bungling Blues
Private equity is meant to be all about cutting costs, making efficient use of the balance sheet and developing new income streams.
Long-standing season ticket holders and supporters at Chelsea Football Club have seen nothing of the kind. Money has been spent on players and a succession of new coaches like drunken sailors.
Pledges to the Government of investments in a new ground or stadium renewal are in abeyance.
As a baseball aficionado I had hoped that the ownership combination of Behdad Eghbali’s Clearlake Capital expertise and Todd Boehly’s experience of turnaround at the Los Angeles Dodgers would be a template. No chance!
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