Table of contents for Issue 1253 in MoneyWeek

It was déjà vu all over again this week. Last October, Rachel Reeves sought to fill a black hole of £22bn. She raised £40bn in taxes and £30bn in borrowing to finance more public spending. The exercise left her with £10bn of headroom against her new fiscal rule that the current budget should be in balance by 2029-2030. Five months later, the £10bn of headroom has disappeared because growth has been nonexistent and interest rates on our debt have been higher than expected. So this week’s Spring Statement (not a Budget, and certainly not a mini-Budget, we were told) saw Reeves attempting to restore the £10bn buffer. “We are spending more than the education budget of £94.3bn on servicing debt” Record tax take This time it was a case of…

“Gordon Brown… will be remembered for [the] decision to sell off nearly half of the nation’s gold reserves at a time when prices were near multi-decade lows… He will… have been reminded of [it] on seeing the gold price surge to a new all-time high of more than $3,000 per troy ounce… Between 1999 and 2002, the UK sold 395 tonnes of gold at an average price of $275 per ounce to realise… £3.5bn. Today, those same reserves would be worth $38.5bn… This [was] one of the worst investment decisions in [UK] history… Brown wanted to diversify [our] reserves away from… the ‘barbaric relic’ towards what the UK government thought would be the higher returns of US Treasuries… Gold still holds a special place in any sensibly managed reserve… because…

Good news from Bloomsbury Publishing, says Mike Sheen on This Is Money. A performance that was both “strong” and “broadly based” in the second half of the year to 28 February 2025 means that it will eclipse expectations of £333.4m in sales and £39.6m in pre-tax profits. Sales and cash generation have been so strong that it has been able to pay down $7.5m of the $37m of debt associated with the acquisition of US academic publisher Rowman & Littlefield ahead of schedule. Bloomsbury’s latest trading update is certainly a “compelling read” for shareholders, says AJ Bell’s Russ Mould. Investors should be particularly happy that the Rowman & Littlefield deal, which added 40,000 academic titles to Bloomsbury’s portfolio, “looks to be integrating smoothly”. A combination of expansion into academic markets…

The “humiliation for the Trump administration” cannot be overstated after The Atlantic’s editor-in-chief Jeffrey Goldberg revealed that he had been added to a Signal text group by National Security adviser Michael Waltz, which detailed an imminent attack on Houthi militia bases in Yemen, says John Bowden in The Independent. Defence secretary Pete Hegseth, a member of the chat, responded by attacking Goldberg, a “respected Washington veteran”, calling him “deceitful” and “discredited”. Officials, meanwhile, insisted the information wasn’t classified, although it could have “endangered American fighter pilots”, say Helene Cooper and Eric Schmitt in The New York Times. This isn’t the first of Hegseth’s “stumbles”. These began soon after he was sworn in to lead the Pentagon on 25 January, and have revealed his eagerness to “out-Trump” Trump in a role…

Markets are getting increasingly rattled by the difficulty of understanding what Donald Trump is likely to do next (see page 4), but this should not have come as a surprise. Trump’s great skill as a politician is his ability to convince so many people that he will be good for them, even though his policies are clearly contradictory and there’s no sound reason for thinking that he’ll stick with the ones they particularly like. You struggle to pick out any consistent ideology, other than a belief that the president’s power should be unchecked. So we shouldn’t put too much weight on any forecasts for the next few years, because they are even more guesswork than usual. Still, there is one big risk that we should not underprice: Trump forcing through…

We need to stop the brain drain Camilla Cavendish Financial Times Just when we most need the “energy and enterprise” of the very rich, we are pushing them away, says Camilla Cavendish. Like it or not, the rich have an “outsize impact” on investment, tax revenues and philanthropy, and the “increasingly footloose nature of capital” means it is only too easy for them to move. Axing non-dom status, changing the inheritance tax and capping business and agricultural property relief have been the “last straw”. The wealthy are “used to paying tax” – 74,000 non-doms handed over £8.9bn in 2022-2023 – but “hit someone’s life’s work, and their children, and it’s personal”. The effects could be much bigger than assumed. The structural challenges date from Brexit, which turned Britain from a…

capx.co Has Thomas Piketty been vindicated? asks Ryan Bourne. The French economist gained fame in 2013 with his book Capital in the 21st Century, which argued that, if left unchecked, capitalism would take us back to a gilded age where spiralling wealth inequality gives rise to a new aristocracy whose position is due to birth and inheritance rather than merit or hard work. Fast forward to today and we see The Economist arguing that inheritance is now the key to financial security in the UK. In the US, there are concerns that the billionaires surrounding Donald Trump could “capture democracy”. That is leading left-wing policymakers to search for “big ideas”. Piketty favoured an “aggressive” global wealth tax and “astronomical” top marginal tax rates. Yet such worries remain “evidence-free speculation”. The…

BioPharma Credit (LSE: BPCR) is one of the more esoteric investment trusts listed in London. Biotech is a specialist sector that I usually wouldn’t touch with a bargepole. The risk of failure is very high, and even the experts are often wrong-footed by a surprising trial result, court case or even fatality. However, as is often the case, uncertainty and complexity create opportunities. BioPharma lends money to small- and mid-sized life-sciences companies. Most of the borrowers are public companies and the trust is lending against their future cash flows, with the loans secured by asset values. “For the most part, our borrowers are asset rich,” says Pedro Gonzalez de Cosio, co-founder and chief executive officer of Pharmakon Advisors, the specialist biotechnology investor that manages the trust. “They are a monopoly…

Annuity rates have climbed to a 16-year high, accelerating the growing interest in what was previously considered an old-fashioned way to manage pension savings in retirement. Data from Hargreaves Lansdown shows that a 65-year-old man in good health with a pension fund of £100,000 could today buy an annual annuity income worth £7,639 a year. That compares with just £5,052 at the start of 2022 and is the highest rate recorded by the financial adviser since December 2008. Savers who use their pension funds to buy an annuity secure a guaranteed income for life, with the rate fixed at the time they buy the contract; insurers set their rates with reference to gilt yields and interest rates, which have risen significantly since January 2022. While the Bank of England did…

PZ Cussons is out of favour with the market. That spells opportunity for investors Sometimes, the market gives up on a company. Investors become so disillusioned that they assume past difficulties will persist indefinitely. This appears to be the fate of PZ Cussons (LSE: PZC), a once-strong consumer-goods business that has faced multiple headwinds in recent years. Its share price is down by more than 75% in the last ten years and it has a valuation that suggests the market sees its struggles as the new normal. But is this truly the case, or does the stock now present an attractive contrarian opportunity? PZ Cussons owns a range of personal-care, beauty and home-care brands. Its portfolio includes brands such as Carex, Imperial Leather and St. Tropez. These are repeat-buy, fast-moving…

UK equity markets are in a decent position as we move through 2025. Our bottom-up analysis points to upside of around 6% from today’s level for the FTSE, which makes the UK market attractive relative to both the rest of Europe and the US. Granted, the macroeconomic environment remains uncertain: growth forecasts by the Bank of England for 2025 were halved recently. On top of this, inflation is rising once again, and of course we have the potential for disruption caused by US trade tariffs. All that said, we still see plenty of attractive stock opportunities in the UK. Firm foundations We believe that Persimmon (LSE: PSN), Britain’s second-largest homebuilder, is a great way to play the structural mismatch between supply and demand in the UK housing market. The stock…

The release of the live-action remake of Snow White is nothing less than “a crisis point for Disney,” says Kevin Maher, the film critic for The Times. “A studio that used to make flawless cinematic stories… now infantilises global audiences with sanctimonious life lessons culled from the corpses of their own murdered movies.” It’s small wonder, then, that a film that cost nearly $300m to remake grossed $43m in its opening weekend in North America – far short of the $50m hoped and the $88.8m Disney’s Captain America: Brave New World made in its domestic debut in February, says Ginger Adams Otis in The Wall Street Journal. The project highlights the challenges of “refreshing classics in the modern age”. Snow White has been criticised for its casting choices, the use…

Central banks are in wait-and-see mode, with both the US Federal Reserve and the Bank of England pausing rate cuts at this month’s meetings. The Bank of England held interest rates at 4.5%. It has already cut rates three times since an August peak of 5.25%. With inflation hitting 3% in January, policymakers are becoming “nervous”, James Smith of ING tells The Times. The Bank is still scarred by the experience of [2021 and 2022, when] rising natural gas prices “aggressively [fed] through to higher service-sector inflation”. It is thus opting to keep “its powder dry” while it waits to assess the impact of global trade wars and UK tax hikes, says Mehreen Khan in the same paper. Markets still expect two or three more quarter-point rate cuts by the…

Copper has soared 27% this year to a near-record high. Chinese government stimulus is expected to stoke demand in the world’s biggest copper consumer. The Middle Kingdom accounts for more than half of global copper consumption. Copper’s rally would normally be a sign of a booming global economy, says Paul La Monica in Barron’s. Yet this rally in “Dr Copper” (so called because of its uncanny ability to forecast economic trends) has more to do with Donald Trump’s tariff plans, which have prompted a surge in US imports as traders rush to beat upcoming import taxes. That’s not a very durable tailwind. After a strong run, commodities strategists think Dr Copper could be poised to run out of puff.…

Shares in sportswear giant Nike have slipped to a five-year low after it predicted an unexpectedly large drop in sales for the three months to May, says Peter Hall in the Financial Times. The percentage decline in revenue is now expected to be in the “mid-teens” compared with the previous consensus of a 12% fall. Nike also said that while it enjoyed a generally robust Christmas season, it suffered declining sales in its Jordan brand and a double-digit fall in sales in its classic footwear franchise. The group blamed geopolitics, “new tariffs, volatile foreign-exchange rates and tax regulations”. It’s not just the “disappointing” forecast that should worry shareholders, says Jennifer Saba for Breakingviews. The firm faces the challenge of “ditching unwanted inventory”, which implies “more profit-sapping promotions and discounts on…

Canada’s new prime minister, Mark Carney, has called a snap election for 28 April against the “backdrop of a trade war with the US” and Donald Trump’s threats to annex the country, says Sky News. Trump has imposed 25% tariffs on Canada’s steel and aluminium and is “threatening sweeping tariffs on all Canadian products”. Pre-Trump, Conservative leader Pierre Poilievre, 45, seemed on course for a landslide victory. Carney, the unelected 60-year-old former Bank of England boss, had the “initial upper hand” with the government “leading the reaction” to Trump’s threats, says Ilya Gridneff in the Financial Times. However, the election is an opportunity for Poilievre to “make his case” for building a stronger economy. Justin Trudeau’s near decade in power has led to “widespread discontent over the cost of living…

When the UK voted to leave the European Union, French president Emmanuel Macron devoted a huge amount of energy to luring banks across the Channel. He quite rightly saw an opportunity for his country. Many financial firms are required to trade within the EU, and with its depth of expertise, vibrant culture and good schools, Paris was a natural alternative to Britain. Special tax deals were on offer, along with exemptions from onerous employment laws, and even regulations in English instead of French. Macron rolled out the red carpet. To some degree that worked out well. The finance industry added 25,000 jobs from 2017 to 2023, according to the French National Institute of Statistics and Economic Studies. Morgan Stanley raised its head count in the city from 150 to 450;…

A yield curve is a graph that shows how the yields on a group of related bonds vary according to their maturity. Investors normally focus on the yield curve for bonds such as US Treasuries or UK gilts. These governments have a vast number of outstanding bonds, with remaining maturities ranging from months to many decades in the future, so their bonds provide a key benchmark for pricing other bonds and loans of different maturities. But yield curves are also used to compare yields versus maturities for bonds issued by a group of borrowers that have similar credit ratings, or even a single large company. Yield curves move up and down, and shift in shape, in response to demand for bonds of different maturities. A normal yield curve slopes up…

“Eating at the dinner table with your family, it never happens. Being in a room by yourself never happens… [You’re] surrounded by systems figuring out how to monetise and market you, to turn you into an enterprise.” Pop star Lady Gaga (pictured) on the lack of normality that comes with fame, quoted in The Sunday Times “The trouble with tariffs, to be succinct, is that they raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions. Other than that, they’re fine.” JPMorgan Asset Management’s chief global strategist David Kelly, quoted on Morning Brew “So why does our rate of VAT not reflect this distinction: between spending which adds to intrinsic happiness and socialisation, and spending driven by vanity and FOMO [fear of missing…

spectator.co.uk In some countries, the development of artificial intelligence proceeds apace, says Theodore Dalrymple. Here in the UK, meanwhile, “artificial unintelligence” is becoming ever more widespread. AU is “the means by which people of perfectly adequate natural intelligence are transformed by policies, procedures and protocols into animate but inflexible cogs”. Such folk “speak and behave, but do not think. They are always only carrying out orders and stick to them through thick and think”. AU is much in evidence in the NHS, for example. Anyone who has tried recently to do something as simple as talk to a doctor to get a prescription will know what is meant. But it’s not limited to public bureaucracies: the “whole country is rotted by AU”. Some years ago, I was asked to investigate…

Achilles, the new activist investment trust, and other investors including TR Property are calling a shareholder meeting at Urban Logistics Reit to vote on removing chair Nigel Rich and directors Richard Moffitt and Heather Hancock from the board. Achilles says that Moffitt – who is CEO of the Reit’s external manager – has a “potential conflict of interest” due to him being a partner in M1 Agency, a logistics specialist that has received £6.3m in fees from Urban Logistics, and says it opposes plans to bring the managers (including Moffitt) in-house. Urban Logistics says that fees paid to M1 Agency were in line with those paid to other agencies, that the relationship and transactions were fully disclosed and that Moffitt had already agreed to step down from M1 Agency.…

How much can you pay into your private pension plans before the end of the 2024-2025 tax year on 5 April? If you’re not sure, find out now to maximise your contributions, and secure as much tax relief as possible on your retirement savings. The headline rule is that you can pay up to £60,000 into your private pension arrangements each year, including any contributions from an employer and the value of tax relief, payable at your marginal rate of income tax. However, this figure, known as the annual allowance, may not be the right one for you. Some savers have a lower annual allowance. You can’t pay more into your pension each year than you earn, so if your earnings are below £60,000, your annual allowance comes down. High…

Keller (LSE: KLR) is the world’s largest specialist geotechnical contractor, quite literally preparing the ground for major construction projects. Its work has included groundworks for Zayed City, a new “downtown” area in Abu Dhabi; a tunnel at the iconic Hard Rock Casino in Florida; mining the 2,700ft long First Street Tunnel in Washington DC; building work on a drop-shaft for London’s Thames Tideway project; and overseeing work on a renewable-energy refinery for Nestlé in Singapore. Keller’s teams of engineers are experts in geotechnical theory and experienced in a wide range of techniques, so the company can offer a service known as “project design and build”, whereby the optimum solution is first selected and then built. Some 40% of the 5,500 contracts executed each year are design-and-build schemes. A wide array…

“To the untrained eye”, Donald Trump’s tariff policy may look like an “incoherent” and “self-destructive mess”, says Rogé Karma in The Atlantic. But some believe it to be “the first step of a carefully orchestrated master plan”. On Wall Street there is talk that the aim is to make the world’s leaders come crawling to Mar-a-Lago, Trump’s Florida residence. There, they will be forced to agree to build factories in the US and strengthen their own currencies to help US manufacturing. There is a historical precedent for the mooted “Mar-a-Lago accord”, says Gillian Tett in the Financial Times. In 1985, Washington persuaded Japan, Germany, Britain and France to coordinate on devaluing the dollar in the Plaza Accord. There are many barriers to a 2025 repeat, and most economists are dismissive,…

Troubled online retailer Asos’s stock bounced 20% last week, says Isabella Fish in The Times. It expects a big improvement in profitability in the first half of the year despite a decline in sales volumes. Asos ascribed the boost to “tighter inventory management and a shift away from heavy discounting”. There was a “return to growth in full-price sales across its own-label ranges”, helped by its “test and react” model: it can “test small runs of new designs and quickly increase production if they prove popular”. The update is more of a “mixed bag” than the market’s reaction would suggest, according to Panmure Liberium’s Anubhav Malhotra. Sales are in “sharp decline”( a 13% fall has been pencilled in for the first half), so the notion that Asos will return to…

● Tesco, Sainsbury’s and Marks & Spencer saw their shares slump after Asda said “it has had enough of being the industry’s punchbag and will try to regain lost market share by cutting prices”, says Nils Pratley in The Guardian. Yet markets may be overreacting. “Asda definitely needs to do something.” It’s been losing ground for years and new chair Allan Leighton wants to create a bigger price gap with rivals to drive growth. Still, it’s not clear how much profit it can sacrifice and how much share it aims to regain. Food retail has changed since Asda’s heyday. Aldi and Lidl are bigger forces. Tesco and Sainsbury’s have better loyalty schemes. A price war against rivals with stronger balance sheets would be risky. Tesco and Sainsbury’s are “oozing cash” – they…

David Rosenberg, founder, Rosenberg Research Canada has “more leverage than people think” in the trade war with the US and should be willing to hit back hard, says David Rosenberg, the former Merrill Lynch economist who now runs his own research firm. “When the bully in the schoolyard gives you a black eye, you don’t punch back, you go burn down his house.” There’s no point in negotiating with Donald Trump to try to get a better trade deal, Rosenberg tells Bloomberg. “You can’t believe a word the White House says.” However, imposing tariffs on imports from the US – which will only push up costs for Canadians – is not the way to go either. Instead, Canada should respond with export taxes or export bans on items that are…

bloomberg.com/opinion Nine months after the “drubbing of a century”, the British Tory party looks in fine fettle, says Adrian Wooldridge. Despite being squeezed by a Labour party moving to the right and a Reform UK party throwing “red meat” at right-of-centre voters, at conservative events the feeling is upbeat, even joyous – that of a party waiting for power. Partly that’s down to the weakness of Labour and the fact that it’s being forced to do things that will be unpopular with its voters. But it’s also due to “intellectual fecundity on the right”. The Labour front bench is “as intellectually negligible as it’s possible to be”; among conservatives, there is a “wide-ranging debate” in stimulating forums. An “awful lot could go wrong” between now and the next election, of…

■ Power firm Drax has topped last week’s bid for Harmony Energy Income by renewables specialist Foresight. Drax is offering 88p per share for the battery fund, against 84p by Foresight. The board are backing the offer, which is a 35% premium to the undisturbed share price, but still a 5% discount to NAV. ■ Schroders British Opportunities, the struggling “best of British” trust, wants to change its strategy to focus on private equity, arguing that its public holdings have held back returns. At present, the fund – which has £82m in assets and trades on a 38% discount to NAV – has 23.5% in listed stocks. But the switch would not be in investors’ interests, says Joachim Klement of broker Panmure Liberium. “Rather than [making] the fund less liquid…

“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism,” wrote Adam Smith, “but peace, easy taxes and a tolerable administration of justice.” Britain is hardly heading in the right direction; peace is precarious, taxes are the highest for 70 years and the administration of justice, whether in the legal process or as administered by unaccountable regulators, is barely tolerable. Subsequent to Adam Smith, a fourth requirement should be added: a high level of domestically financed investment. Here, Britain is failing badly with inadequate, falling and often misdirected investment, such as carbon capture. More than half the companies in the FTSE 100 are buying back shares, yet very few are raising capital. Businesses are being acquired, but none are raising capital through…

● Three-quarters of employers still offer high earners the option of taking extra pay instead of some of their pension contributions, actuarial firm WTW reveals. Many employers introduced this benefit to help employees worried about breaching the lifetime allowance (LTA), a cap on pension savings above which swingeing tax rates were payable, but this has now been abolished. It therefore makes sense to review your arrangements. If you’re still receiving pay in lieu of pension contributions, this may no longer be the most tax-efficient option. ● Parents who do not qualify for child benefit will be able to claim national-insurance (NI) credits for years when they haven’t been working under new rules to be introduced next April. The initiative closes a loophole that has seen some parents miss out on…

Steve Bannon is “ready for war”, says James Billot on UnHerd. The “architect of old-school Trumpian populism”, who served briefly as a White House adviser in Donald Trump’s first term as US president, and now continues the MAGA battle through his regular podcast, is fighting on two fronts. The first is against the “tech bros”, especially Elon Musk, who have Trump’s ear but a very different agenda to the MAGA populists. Bannon (pictured) doesn’t pull his punches. “Musk is a parasitic illegal immigrant,” he tells Billot, who wants to ”impose his freak experiments and play-act as God without any respect for the country’s history, values or traditions”. He was at first minded to give Musk the benefit of the doubt – to “give the devil his due”, as Bannon puts…

2023 Côtes-du-Rhône Blanc, Parallèle 45, Paul Jaboulet Aîné, France £15.99, tanninandoak.com; £14.17, strictlywine.co.uk My featured wine is one of the most intriguing and detailed £15 whites I have tasted in years. Made from organically grown grapes and carefully assembled in a 38% viognier, 33% grenache blanc, 12% marsanne, 10% roussanne, and 7% clairette blend, this tremendous white Rhône is a genuine beauty. There is a uniqueness and innate complexity here that you cannot find in any other wine style on Earth. The varietal make-up ensures Rhône whites have an appeal all of their own, and this example is simply stunning. With gentle lees ageing and no oak used, this pure, clean, springlike style has haunting orchard-fruit notes and white-tea details. If this wine hits the mark, which I am confident…

Why We’re Getting Poorer A Realist’s Guide to the Economy and How We can Fix It Cahal Moran William Collins, £22 For the past two decades, the UK economy (like that of other Western countries) has seemed to lurch from one crisis to another. The credit crunch in 2007 led to the failure of several banks a year, later followed by a prolonged recession and then by years of austerity. Now, with the bill from Covid and the lockdowns having to be repaid by another round of tax increases and spending cuts, it looks like we might be in for yet more years of belt-tightening. These problems are not, however, just down to bad luck, argues Cahal Moran, but are the result of the way in which our economy…