The Market Call

The Market Call gives a periodic summary of major macro events, market themes and selected UK company-specific news.

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November 23, 2023

If you see Nigel, don’t tell him

While today's financial news coverage focused on the Autumn Statement, probably the most significant economic news yesterday was the postponement of the OPEC+ meeting this weekend. With signs of fracturing within the cartel, this casts doubt on its ability to implement production cuts. In a demonstration of the fragility in the world's most critical and rigged energy market, benchmark oil prices fell over 5% on the news, albeit they recovered later. 

The recent decline in global energy prices went unnoticed by the UK's OFGEM energy regulator, which announced that the UK retail energy price cap would rise by 5% in the new year. 

As the US takes its Thanksgiving holiday, the UK is busy absorbing yesterday's Autumn Statement. As usual, the Chancellor pulled fewer rabbits from his hat than the build-up suggested. The political theatre attached to this event ramps up as election year approaches.

In summary, the giveaways, such as NI reductions and increased investment allowances, were less than the inflationary-fueled fiscal drag on tax revenues. Hence, the UK will still have its highest tax take as a proportion of GDP since World War Two.

However, it is worth noting that the UK's GDP is a full 2%age points higher than that forecasted by the OBR only six months ago.       

There were no new measures to address the functioning of the UK's capital markets. And the only direct action for stock market investors was a plan to revive the If You See Sid campaign to widen share ownership and sell off the Exchequers' remaining holding in Nat West Bank to retail investors. This holding in Nat West is a hangover from the Global Financial Crisis, which the government has struggled to offload to institutional investors for the last 14 years. It was recently embroiled in the "debanking" scandal that cost it its CEO. Perhaps the campaign should be renamed If You See Nigel, Please Don't Tell Him.   

Motorpoint Retail, the used car supermarket, reported significant H1 revenue and profit declines, driven by lower volumes and a fall in finance commissions. It also suffered an increase in finance expenses during the period. More recently, it has seen reduced wholesale used car prices of about 6% in just the last six weeks, more deflationary signals.


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