Investment

Brexit Deal Could Spur UK Growth And Investment Worth Billions – BNN Bloomberg

Published

2 years ago

February 22, 2023

(Bloomberg) — A deal on the Northern Ireland protocol would unleash tens of billions of pounds in business investment for the UK, boost growth and hand the government more funds for public services or tax cuts.

The conclusion by two prominent economists is a reminder of the economic fortunes at stake in talks about the post-Brexit trading arrangements for Northern Ireland. Concerns raised by the Democratic Unionist Party and hardliners in the ruling Conservative Party have left a potential agreement teetering.

British businesses have built up a cash warchest of about £100 billion ($121 billion) since the pandemic but investment has stalled due to uncertainty about the UK’s relationship with the European Union since leaving the trading bloc, said Kallum Pickering, an economist at Berenberg Bank UK.

“If you get rid of Brexit uncertainty, business can start to use some of this cash to invest,” Pickering said. “That will help sort out low growth. While the Irish border problem is alive, there is always the risk the UK could end up in a trade war with the EU.”

Karen Ward, European chief market strategist at JPMorgan Asset Management and a member of Chancellor of the Exchequer Jeremy Hunt’s economic advisory council, also believes an Irish border deal would deliver a significant boost to business investment and growth.

“Companies need certainty,” Ward said. “You can’t entice businesses to spend with low interest rates and tax incentives, it never does the job,” Ward said in an interview on Bloomberg Radio on Wednesday. “It would be really meaningful.”

“With investment, it solves all the other economic ills that we have, which is low productivity, low real wages, fiscal drag. It really is the secret sauce for economists, business investment.”

Prime Minister Rishi Sunak had been hoping to strike an agreement this week but Jeffrey Donaldson, who leads the DUP, said the terms were “not acceptable” since they would require Northern Irish businesses to align with EU regulations — even if they don’t leave Northern Ireland.

The government is keen to secure the backing of the DUP to ensure a deal is sustainable and remove any lingering uncertainty.

The Office for Budget Responsibility, the government’s fiscal watchdog, estimates that Brexit will knock 4% off the level of GDP, almost half of which has already happened. It’s expressed particular concern about the uncertainty that’s come with debate over the protocol.

Last March, the OBR warned there was “significant uncertainty around the longer-term operation of the protocol” and in November said business investment was being “held back … by elevated uncertainty” along with other factors.

Pickering said the economic rewards of an agreement could be substantial. He estimated that removing uncertainty could unleash investment growth of 10% a year, which would add as much as 0.5% to GDP a year and increase potential tax revenues.

Business investment stagnated after Brexit, having grown 40% between 2010 and 2016. There was no growth in business spending between 2016 and the pandemic in 2020, at which point investment crashed.

“I’ve become increasingly convinced that the bigger effect is the uncertainty effect,” Pickering said. “On trade, there has been a lot of switching from EU to non-EU trade and migration has proved stronger than expected.”

“So if you got rid of uncertainty over the Irish border – the final piece of the Brexit puzzle – you may get catch-up on business investment.”

He said an investment spree would be a textbook response in an economy facing constrained supply, like the UK, as businesses chase excess demand. The OBR would probably reflect that by upgrading Britain’s growth potential once there was evidence that the uncertainty is clearing, he added.

Ward added that the UK has fallen behind peers. “UK business investment is about the same level that it was in 2016. The likes of France and Spain – those numbers are around 20% higher,” she said.

The Treasury and the OBR declined to comment.

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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