Wednesday 26/02/25

US House passes budget resolution to cut taxes and spending by trillions (Financial Times, Alex Rogers) shows that a budget resolution to cut taxes by $4.5tn and spending by $2tn scraped through the US House of Representatives by 217 votes to 215. * SO WHAT? * Budget resolutions are actually non-binding but they act as an outline of fiscal goals. Democrats described the budget as a “disgrace” while Republicans maintain that it will stimulate growth. The fact remains that the US deficit is big – and it looks like measures like this could just deepen it even further.

In Ukraine agrees minerals deal with US (Financial Times, Christopher Miller, Alex Russell and Gideon Rachman) we see that Kyiv and Washington have agreed on a minerals deal that could potentially improve relations and engender America’s longer-term commitment to the country’s security. The US dropped its demands to get $500bn in potential revenue and president Zelenskyy is due to meet Trump this Friday to formalise everything.

Meanwhile, Donald Trump announces US ‘gold card’ visa scheme (Financial Times, James Politi) shows that Trump is keen to ship in the rich people by offering them a “gold card” visa that will give them “green card privileges plus” for just $5m a pop, subject to some vetting. This new scheme will replace the existing EB-5 one. Trump said that these gold card visa holders will be “spending a lot of money and paying a lot of taxes and employing a lot of people”. When asked whether Russian oligarchs would be eligible, Trump said “Yeah, possibly. I know some Russian oligarchs that are very nice people”.

Then in US stocks fall as consumer confidence sinks most in four years (Financial Times, George Steer) we see that Wall Street had an off day yesterday thanks to rising concerns that Trump’s tariffs would slow the economy, a sharper-than expected drop in consumer sentiment to a level that normally precedes a recession and increasing expectations of inflation rises. Investors appear to be loading up on “defensive stocks” (those which tend to outperform when the economy slows down) like Dr Pepper and Colgate-Palmolive in advance of expected turbulence.

Back home, ‘Everything has changed’: UK embarks on biggest arms drive since cold war (Financial Times, George Parker and Lucy Fisher) shows that Starmer has decided to decimate the aid budget and use the money to fund the biggest rearmament programme since the cold war. UK to raise defence spending to 2.5% of GDP by 2027 (Financial Times, Lucy Fisher, George Parker and Anna Gross) looks at the decision to raise defence spending from 2.3% to 2.5% of GDP and it comes ahead of Starmer’s meeting tomorrow with Trump. He also aired the longer term ambition to spend 3% of GDP on defence “in the next parliament”.

Elsewhere, Farmers worried if they will make it to 2026 amid ‘cashflow crisis’, says NFU (The Guardian, Joanna Partridge and Helena Horton) highlights ongoing concerns by farmers over planned inheritance tax changes and their current “cashflow crisis” that has occurred following years of rising costs, labour shortages, post-Brexit changes and now “unprecedented weather”. * SO WHAT? * The agriculture sector has had an extremely tough few years and the IHT thing is probably the final nail in the coffin for many. Food independence and security is becoming even more vital in our increasingly uncertain world so you do wonder whether the government will shift its position – particularly as it has now done so with the defence/aid spend rebalance.

Then in Spring statement 2025: when is it and could Rachel Reeves announce tax rises? (The Times, Jack Barnett) we take a look ahead at the spring statement due on March 26th when the OBR publishes its predictions for the UK economy. Since the Labour government came to office, the economy has underperformed and the economy’s much-vaunted £10bn of headroom has evaporated. The OBR publishes two economic forecasts per year while the chancellor has said she would only do one budget per year. * SO WHAT? * Thus far, the government has downplayed the importance of the March spring statement and fears of tax rises and spending cuts. However, given the slew of generally disappointing economic data it’s increasingly possible for Reeves to try and give herself more room for manoeuvre by increasing taxes, decreasing spending or changing her fiscal rules. Although the government remains steadfast in its commitment not to raise income tax, VAT or national insurance contribution from employees it’s possible that Reeves could freeze income tax bands that would make more people liable to pay more tax when their wages go up and she’s also thinking about raiding savers by lowering the annual limit on how much money people can put into their cash ISAs from £20,000 to £4,000. We’ll just have to wait and see!

In oil and gas news, BP signs $25bn deal to redevelop Iraq’s oil and gasfields (The Times, James Hurley) shows that BP and Iraq’s government have come to an agreement for the oil major to redevelop four big oil and gas fields in Kirkuk. * SO WHAT? * This is a big deal for BP, which is expected to spend $25bn over the duration of the project, but it is also important for Iraq which needs BP expertise to access its natural resources. This just goes to underline the company’s increased focus on its oil and gas operations and ongoing move away from renewables.

Then in LNG demand to jump 60% by 2040, Shell forecasts (Financial Times, Shotaro Tani) we see that Shell is predicting a massive rise in LNG demand moving towards 2040 thanks to accelerating economic growth in Asia, the need to decarbonise heavy industry and transport as well as rising demand from the increasingly energy-thirsty tech sector. Fun facts: Shell is the world’s biggest LNG trader while China is the world’s biggest LNG importer. * SO WHAT? * Until we’re all powered by super-efficient energy generated via nuclear fission and renewables, fossil fuels of all types are going to be powering us for many years to come. I think that this is inevitable given the massive spike in power we’ll be seeing over the coming years as more people switch to EVs and more data centres are needed to power AI development.

Why is crypto down? Bitcoin value plunges below $90,000 (The Times, Louisa Clarence-Smith) takes a look at bitcoin’s recent weakness as it fell below the $90,000 mark yesterday to hit its lowest level since November 18th. * SO WHAT? * Global investors appear to be shunning riskier assets at the moment thanks to the prospect of a potential US economic slowdown while previous hopes of the establishment of a strategic bitcoin fund and relaxation of regulation for cryptocurrencies have not come to anything (yet). Last week’s hack of Bybit won’t have helped sentiment either. Smaller altcoins have had an even worse time of it – dogecoin fell by about 20% versus bitcoin’s 8% slide over the past week (although it’s worth saying that bitcoin is still up 64% from where it was a year ago!).

Dockworkers Approve Labor Deal (Wall Street Journal, Paul Berger) shows that the dockworkers have won a new labour deal that gives them a 62% par rise and a guarantee against fully automated machinery at East Coast and Gulf Coast ports for the next six years. Members of the International Longshoremen’s Association (ILA) participated in the union’s first coastwide strike in almost 50 years last October, causing chaos during the busy peak shipping season. * SO WHAT? * Trump said in his election campaign that he supported the union and was against automation. Now that he’s in power and potentially facing stormy economic conditions ahead while Chinese continue to automate to cut costs, you do wonder how long this resolve is going to last…

BlackRock, a Diversity Pioneer, Distances Itself From DEI (Wall Street Journal, Jack Pitcher) highlights yet another company walking away from DEI commitments. This is notable given that BlackRock had previously been a big supporter. It deleted statements that it had included in past annual reports about a diverse and inclusive workforce. Last month, the world’s biggest asset

manager withdrew from a UN-sponsored climate initiative. * SO WHAT? * Unfortunately, I think this is just a company reacting to Washington’s current mood music. There will be more of this to come I am sure!

On the other hand, Apple investors defy Trump to back DEI (Daily Telegraph, James Titcomb) shows that a majority of Apple’s shareholders at its AGM yesterday voted against a proposal calling for the company to axe its DEI programme. Interestingly, the motion had been put forward by the US conservative group the National Centre for Public Policy Research (NCPPR) and Apple had itself urged shareholders to oppose it. * SO WHAT? * Apple remains the exception to tech rivals including Meta, Amazon, Google and Microsoft who have all walked back their DEI schemes to some extent, reacting to Trump’s threats to name and shame “woke companies” and “combat illegal private sector DEI preferences”. He has also threatened to cut funding for companies that run diversity programmes and cut them out of the US government. Good on Apple and its shareholders!

Tesla sales in Europe plummet by 45% amid Elon Musk backlash (The Times, Robert Lea) cites the latest pan-European data which shows that Tesla deliveries in January almost halved versus the same month last year. It’s possible that this is due to some technical reasons and an ageing model line-up but many are saying that it’s due to Musk’s increasing association with politics, Trump and the far-right. Tesla vehicles are being referred to by some as “Swasti-cars”, in a nod to his recent straight-arm gestures to the audience at the US presidential inauguration as well as his well-publicised rapport with the far-right in Germany.

Then in Lucid Group Launches Search for CEO as Rawlinson Steps Aside (Wall Street Journal, Sean McLain and Connor Hart) we see that the EV maker has seen the departure of its CEO, to be replaced on an interim basis with its COO, Marc Winterhoff. The company’s performance has been poor for some time and the CEO’s departure was probably inevitable given that the company’s losses continued to widen. It has had to rely heavily on its majority owner, Saudi Arabia’s PIF, for the finances to keep itself going.

In a quick scoot around some of today’s other interesting stories, UK ministers consider changing AI plans to protect creative industries (The Guardian, Kiran Stacey and Eleni Courea) shows that government ministers are at least appearing to listen to concerns voiced by the creative industry as they debated plans to make it easier for AI companies to access copyright-protected work. Both sides are likely to want to find some kind of compromise before the government announces final plans later this year.

Britain’s household energy bills to rise from April (Financial Times, Rachel Millard) highlights the greater-than-expected rise in the energy price cap announced by Ofgem yesterday, which means that household bills will rise to an average of £1,849 a year from the current £1,738.

This will be the third consecutive rise in the cap and comes at a very difficult time for households who are facing pressures from all sides! This isn’t going to help ease inflation…

Then in Unilever boss ousted as company struggles to move on from ‘social purpose’ (Daily Telegraph, Chris Price) we see that Unilever’s CEO will leave next month less than two years into the job, to be replaced by his CFO. Why was Unilever’s chief executive ousted and what happens next? (The Times, Isabella Fish) highlights the risks of booting someone so soon in their tenure as head honcho but the fact is the Unilever has stubbornly underperformed its peers for some time. We’ll just have to see how the new guy does!

I have a feeling that I might have used this video before, but just in case I haven’t, just marvel at the skill of this pancake maker! He creates edible works of art 👏!