As the Rio Olympics draw to a close, newspapers and television alike are obsessing about Team GB’s place in the medal table. Will we outrank China? Celebrating individual excellence seems to have taken second place to a frenetic bout of Rule Britannia flag-waving. Perhaps this is understandable, though. The UK’s self-belief has taken a bit of a battering these past few years, and the unexpected vote to leave the European Union (EU) has caused something of a crisis of confidence.
So it was pleasing to see some positive market and economic news this week. First, UK shares reached a new 14-month high. The upward move was largely propelled by the energy sector, whose stocks rallied following the welcome news that Russia would co-operate with the Organisation of Petroleum Exporting Countries in stabilising the oil price. Energy stocks – including BP and Shell – are a prime constituent of the FTSE 100’s total value.
Second, UK unemployment has remained steady at an 11-year low. Some have been quick to jump on the good news as evidence that dire warnings of post-Brexit job culls were overblown. But whether this is actually the case remains to be seen; the official statistics showing an unemployment rate of 4.9% are based on data covering the three months before the EU referendum. Nevertheless, a fall in the number of benefits claimants between June and July paints an encouraging picture.
Easing does it
The European Central Bank (ECB) dropped heavy hints that it would take further action next month if economic conditions in the eurozone fail to improve. Minutes of its July meeting suggest that the governing council might keep its highly-accommodative monetary policy in place for longer. While Europe’s economic recovery continued apace, it noted, fallout from the UK’s Brexit vote and the parlous state of some of the region’s banks could halt progress. The remarks raised hopes that the ECB’s quantitative easing programme will be extended past its current spring 2017 deadline.
Store wars
In corporate news, Asda reported its worst decline in quarterly sales on record; results its management blamed on fierce competition and food deflation. Like-for-like sales were down 7.5% at the supermarket giant, which is the UK’s third largest after Tesco and Sainsbury’s. Asda has struggled to maintain its reputation as the country’s cheapest place to buy groceries in the face of an onslaught from German discount chains Aldi and Lidl, which continue to increase their share of the market.
And finally…
Many of us will have felt the sense of looming dread when confronted with an ominous brown envelope from Her Majesty’s Revenue and Customs. Still, Giles Hembrough was unfazed when he returned from the pub one evening and found such a letter lying on his doormat. “I’ve had lots of tax errors recently, so I thought it was just an update,” said the railway signal tester from Bristol.
He tore open the envelope, only to read: “Although we are changing your tax code you may still not pay enough tax by 5 April 2017. We think the amount you owe HMRC is £14,301,369,864,489.03. We will let you know if this amount is right when we look at your tax return for the year.” To put this into perspective, the figure is almost twice the size of the UK economy, and roughly five times the size of last year’s US federal budget. It could pay for the Hinkley C nuclear power station 777 times.
Fortunately for Mr Hembrough, HMRC has acknowledged the error. Otherwise, he calculates, it would have taken him 369 million years to pay off the bill using his salary. “I will be checking my pay check closely next month, though,” he added.
