MAGGIE PAGANO: Bring me sunshine, Rishi
Top economist Mohamed El-Erian is sure to warn that the Bank of England could push us into a recession if the government relies solely on rate hikes to curb inflation.
More pertinently, Allianz’s chief economist added that while the bank has no choice but to raise interest rates, the only way to avoid a recession is to increase productivity, simplify supply chains and improve the labor market.
In other words, El-Erian says that inflation can only be reduced by a multi-pronged attack. In itself, interest rate hikes are too blunt a club.
Indeed, the reason why inflation is so much higher here in the UK, particularly for food, than elsewhere is because of long-term structural problems exacerbated by appalling productivity levels and job shortages.
Yet there is little evidence that politicians or policymakers are doing anything drastic enough to solve these problems.
Sunny outlook: The UK tourism industry is forecast to perform well this year
There are new proposals, such as recent measures to get people back to work, but they will take months to implement.
You could argue that politicians are only making a grim situation worse by being so pessimistic. Worse still, Chancellor Jeremy Hunt says he supports further rate hikes to flatten skyrocketing inflation, even at the risk of a recession.
But there are alternatives and other levers to pull, if only Rishi Sunak and his ministers would listen to businesses on the ground – particularly the UK’s smaller businesses – on how to improve productivity and investment.
Now that the sun is shining they should look at helping the UK tourism industry which is expected to be thriving this year with so many Brits staying at home and good exchange rates for international visitors.
To make life easier for them, the Federation of Small Businesses has produced its own Sunshine List, which contains a host of ways the government can help an industry still suffering from the aftermath of the lockdown. And small businesses need a helping hand: Recent surveys show that 77 percent of people in the hospitality industry have some form of debt, compared to 59 percent before the pandemic.
The Sunshine List is simple but effective: work out the pitfalls, raising the VAT threshold from £85,000 to £100,000 and raising the threshold for reducing small business rates to £25,000, taking 200,000 businesses out of tariffs.
Energy costs are still a big factor, whether it’s electricity for breweries or the electricity for the fish and chip fryers. Energy companies should allow small businesses, which negotiated their contracts at the height of the energy crisis last year, to renew contracts to take advantage of lower wholesale prices. Sounds logical.
Famous last words, but if the Met Office is to be believed, a hot summer is ahead of us – so taking over the list is a good idea.
In the immortal words of Morecambe and Wise: Bring Me Sunshine.
ExxonMobil and Chevron’s annual meetings promise to be lively next week.
Norway’s sovereign wealth fund is flexing its muscles, demanding the two do more to tackle the climate crisis – and split the roles of chairman and chief executive at both oil giants. The world’s largest equity investor – the fund owns £1.1 trillion stakes in 9,000 companies – is backing the climate activist group Follow This, which is leading the protest.
It hopes that having so much clout on board will persuade other investors to step aside: it has a 1.13 percent stake in ExxonMobil and a 0.86 percent stake in Chevron.
They demand the two reduce their “scope 3” emissions by the end of the decade, in line with the 2015 Paris climate agreement and a change in corporate structure at the top.
But the oil giant’s bosses are fighting on the front foot.
They will undoubtedly point to the hypocrisy of the Norwegians, whose country only became one of the richest in the world after the discovery of oil and gas in the late 1960s.
When it comes to such moral dilemmas, the Norwegians can be holier than you. Yet they should also be asked to explain the irony.
Ice cream vendors complain that Cadbury Flakes, now made in Egypt by Mondelez International, are too crumbly for a 99 cornet.
If we want a great tourist season then making a non crumbly flake should be at the top of the Sunshine List.
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