ALEX BRUMMER: Britain’s stature not in doubt

There is no doubt that Britain’s status took a beating at the International Monetary Fund (IMF) meetings in Washington last month.

US Treasury Secretary Janet Yellen rose to her full six-foot-tall to berate her counterpart, six-foot-tall Kwasi Kwarteng, about the chaos caused by his failed mini-budget.

IMF Managing Director Kristalina Georgieva condescendingly reminded everyone that the UK had robust institutions in the form of the HM Treasury, the Office for Budget Responsibility and the Bank of England – as if to say they should not be ignored .

This focus on the UK may seem unusual, but we should remember that before Britain voted to leave the EU, her predecessor, Christine Lagarde, warned that doing so would be ‘pretty to very, very bad’, which undermined the reputation of tax the country.

It was former chancellor Philip Hammond who later remarked that it was great to have ex-Governor of the Bank of England Mark Carney beside him at international meetings as his fellow G7 and other finance ministers always listened when he spoke .

Certainly confidence in the UK may have eased the market distortion caused by the mini-budget, as Carney’s successor Andrew Bailey testified in the House of Commons. Such market couplings are a hallmark of free-market capitalism.

The eurozone recovered after the bond crisis caused by Greece. No one looks at the Federal Reserve with disdain after the near-implosion of the US Treasury bond market in 2020. Britain helped calm sentiment with dollar swaps.

Indeed, the FT reports that the US bond market – like the gilts before it – is an accident waiting to happen.

Bailey is on the wrong side of history when he refers to the UK’s reputational damage. The reality is: our robust institutions have overcome adversity.

Do no harm

What quirky fund manager Chris Hohn makes of the rise and rise of his former associate Rishi Sunak is anyone’s guess.

As a supporter of shareholder activism, he is believed to be less than impressed by the Sunak government’s obsession with what has been described as a ‘black hole’ in Britain’s public finances. The UK’s debt to national output ratio is better than many of our G7 competitors.

The current obsession for Hohn and his TCI Fund Management group is a perceived black hole at Google owner Alphabet, wasting too much revenue.

The arrival of Elon Musk on Twitter brought a hard focus on labor costs. An advertising slump at Facebook does the same.

Google is different, as revenue from advertising is still strong. In addition, Hohn’s chances of shaking off Alphabet out of complacency are limited because founders Sergey Brin and Larry Page are still dominant shareholders.

Alphabet is a vacuum cleaner for engineers and its workforce has increased by a quarter in the past year to 186,779. With an average pay of $300,000 (£250,000), it offers some of the best rewards in Silicon Valley.

Despite his own wealth, estimated at nearly £6 billion, Hohn considers this extravagant. He also believes that Alphabet’s investments outside of core search serve investors poorly.

Last year, the Waymo self-driving operation alone suffered a loss of $5bn (£4.2bn).

In recent years of go-go for tech stocks, investors have been more fixated on earnings than earnings. For all his chatter, Musk’s ownership of Twitter reminds investors that when costs get out of hand, revenue is quickly gobbled up.

Hohn is onto something. But, as he found out at the London Stock Exchange when he tried to keep former CEO Xavier Rolet in place and sack chairman Donald Brydon, not all activist campaigns end in victory.

Check size

One of the reasons why the value of shares on the Paris Stock Exchange is in one sense higher than that of the London Stock Exchange is the runaway value of French luxury brands. like LVMH.

Today, with budget constraints, Burberry’s new boss, Jonathan Akeroyd, will try to convince markets that he has what it takes to compete with the Parisian stars.

With all due respect to Akeroyd, the answer could be a CEO with the pit of predecessors Rose Marie Bravo and Angela Ahrendts.