Client Update - 22nd September 2023
In a week where the US Federal Reserve (Fed) kept interest rates steady, followed by the Bank of England (BoE), the lack of a rate rise did nothing to cool markets as the rhetoric used in delivering these verdicts suggests that they are not yet finished in their work.
US Fed Chair Jerome Powell hammered home this point on Wednesday, when despite confirming that they are almost where they need to be with regards to interest rates, due to a better economic outlook, he stated that any relief from higher borrowing costs will be neither swift nor generous.
The first blows to be struck in the UK 2024 elections came from Rishi Sunak this week with his about turn on when the UK will achieve net zero, with comments focused on the costs to achieve this that many do not understand, many do not want to pay, and may be unnecessary anyway. This caused the expected split in the Conservative party with some heralding the move a sensible way forward, with many others claiming Sunak had sold out on a key pledge. I had better not print what ecologists said of his decision.
The new target to reach net zero carbon emissions by 2050 without inconveniencing the general public may well require more detail before we can understand if this is remotely possible, especially if the delay on the ban of diesel and petrol cars is implemented. The ban on the sale of new petrol and diesel cars was due to be implemented in 2030, so a change to 2035 is actually quite big news, especially for car manufacturers. Spending a lot of time on the road as I do, he may well have a point that the critical electric charging infrastructure across the UK is still some way off where it needs to be if only new electric cars are to be sold within 10 years. The previous 2030 target had certainly helped with new electric car sales, with one fifth of UK car sales in August being for pure electric vehicles.
In an interesting change, Sunak also appears to have his election hat on by scrapping a plan to phase out oil boilers from 2026 to 2035 – critics suggest a large proportion of the 1.3 million rural people this would impact may well be prospective Tory voters. The argument has been strengthened that there is a growing divide between younger and older voters, with a suggested assumption that the younger generation are more keyed into environmental concerns. In 2017, the age at which people were more likely to vote Conservative than Labour was 47, by 2019 it had fallen to 39. Nonetheless, the only demographic that the Conservatives enjoy a majority is in the over 65 cohort. Worryingly for Rishi Sunak, research by think tank Onward suggests that millennials (the oldest of which have just turned 40), are only 21% likely to vote Tory.
No doubt the Labour party will now cast itself as the more responsible and reliable political party, however the gauntlet has been thrown down and traps are starting to be laid it what will undoubtedly be a tumultuous 12 months in UK politics. Now, doesn’t that sound familiar?
Do have a good weekend.