The phoney war in the lead-up to the general election kicked off last week with some story that there won’t be many Labour votes from (a) Monaco-based billionaires or (b) Tory peers who once ran the UK’s best-known purveyor of underpants.
It was an astonishingly highbrow contribution to the debate, kept rumbling by the Labour front bench’s extraordinary proclivity for making gaffes – the most hilarious being shadow chancellor Ed Balls being out-foxed by the request for names of Labour-supporting business people, and alighting on one “Bill Somebody”.
So what Labour really doesn’t want this week is another business platform from which Balls might topple, which is what makes his scheduled appearance at the British Chambers of Commerce annual conference so enthralling. Other expected speakers include chancellor George Osborne (via remote link), business secretary Vince Cable and his opposite number, Chuka Umunna. The potential for farce is almost limitless.
Yet why does Labour engage? The last time anybody checked, chief execs get no more votes than each employee (fewer, if the boss hangs out in Monaco) and it seems unlikely that staff cast their ballots in line with the gaffer.
Still, could Balls use the BCC to turn the narrative? Next up: trade union leaders might not vote Tory.
Wheels coming off at Rolls-Royce
When it comes to FTSE 100 shares, there’s a slight irony that the Rolls-Royce of British engineering companies is no longer Rolls-Royce.
It wasn’t that long ago that the engine group used to be considered an almost peerless investment – but it has recently allowed its brand to appear alongside the word “turbulence” rather more frequently than its shareholders (or lovers of prose) might like.
Its problems have included its acquisition of the latest fashion accessory for a FTSE 100 stock – a Serious Fraud Office investigation – as well as a few irritating issues with trading that necessitated a profit warning in October and then the announcement of 2,600 job losses in November. One who left, after 27 years with the firm, was finance director Mark Morris, and his replacement, David Smith, will get an early run out with the company’s full-year results this week.
Apart from his debut, the City’s focus will be on whether life might get tricker from here. Analysts at Deutsche Bank think so, and predict cuts to expected profits this year due to poor trading in the land and sea division and restructuring charges. Developing.
Roll up, roll up for the first deflation report
Are we about to see the Bank of England’s first deflation report? It could be a possibility.
Since 1993, the Bank has published an inflation report each quarter and, regardless of what economic pickle we have managed to get ourselves into, the safest prediction is always that the documents will forecast inflation returning to Threadneedle Street’s target over the ensuing two or three years. But what’s this?
“The February 2015 report [due out on 12 February ] will probably be no exception,” said Simon Wells, chief UK economist at HSBC, “but it may be the first to show a central projection for inflation that is, in some quarters, negative.”
The reason is well-known: the slumping global oil price should mean inflation is significantly lower in 2015, and last month the Bank priced outright deflation in the first half of this year as an even-money bet.
“Given the announcements of utility price falls since then, we think the Bank of England might make its first ever central forecast of outright deflation [in the second quarter of 2015],” Wells continues, before adding: “Beyond 2015, inflation should bounce back.”
The Bank’s predictable clairvoyants are unlikely to put it better themselves.
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