There was a flash of good news this week as Singapore launched quarantine-free travel plans for vaccinated people with 10 countries including the UK, US and Canada.
But as the city-state changes tack, China’s president Xi Jinping holds firm. Despite weak economic performance in the third quarter, Xi is pursuing policies that prioritise longer-term structural changes over short-term growth.
Change was afoot at Bundesbank as its head Jens Weidmann, who was a vocal critic of the European Central Bank’s ultra-loose monetary policy, decided to step down.
Indeed, the choice of his successor will send an interesting early signal about the balance of power between the three parties trying to form a new coalition government in Berlin.
Weidmann may have felt less lonely among UK central bankers, however, who look to be turning more hawkish.
Although inflation dipped slightly to 3.1 per cent in September in the UK, it is likely to be temporary as food and energy prices rise. There is more evidence that labour shortages are fuelling wage growth too. A survey has found UK employers expect to hand out bigger pay rises next year to retain staff.
Indeed, last Sunday, Bank of England governor, Andrew Bailey, warned that it “will have to act” to curb inflationary pressure. That was enough for traders to bet the BoE will increase interest rates as soon as November, sparking a sell-off on Monday in short-dated UK government debt.
There could be further surprises ahead too. If rates rise to 0.5 per cent, this is the level at which the BoE plans to begin the process of reversing quantitative easing – and bonds worth £28bn fall due on March 7.
Continued supply woes will do nothing to help inflationary pressure either. On Tuesday, business leaders warned MPs that the UK’s supply chain crisis will continue into 2023 and beyond.
There was a similar message from Ngozi Okonjo-Iweala, head of the World Trade Organization, who told the FT Africa Summit that she expects global supply chain difficulties to last several months.
Into politics and British businesses will be eagerly awaiting next week’s Budget. Chancellor Rishi Sunak was given an early boost as figures show public borrowing fell by more than expected in September.
It was good news for banks too as Sunak will cut the tax surcharge on their profits from 8 per cent to 3 per cent to keep the City of London competitive.
But elsewhere the government warned that new taxes are likely for UK households and businesses in the coming years to meet the costs of hitting the 2050 net zero target.
And finally, THG was trying to restore investor confidence this week, announcing it would abolish the “special share” rights held by co-founder and chief executive Matthew Moulding by the end of 2022.
“Fair enough, THG is trying to show willingness in addressing City concerns,” writes business columnist Helen Thomas.
“...But the motivation is an absence of other near-term options, rather than a sudden conversion to the merits of proper oversight and governance,” she adds.
