Good morning,

Yesterday we found out that the UK’s ‘world beating’ test and trace system was actually an excel spreadsheet. The reason we found this out was because sixteen thousand positive cases weren’t able to be added to the spreadsheet because, we’ll because it’s excel and it has limitations! This took place over the course of last week, where the data sheet wasn’t able to fully update every day.
Given Matt Hancock’s career experience in working for his family software company and then as an economist in the Bank of England, you’d expect him to have half an idea about what Excel can and can’t do.
Quick maths: 16,000 contacts not added equals about 48,000 not reached through track and trace and who could be circulating freely rather than isolating. As of yesterday, only half of those people missed had been contacted.

At the Conservative party conference we heard Rishi Sunak set the UK up for tax rises, saying that this is a government that will always balance the books and that we could not simply borrow our way out of any hole. He “can’t comment on any future tax policy”, but the implication was clear! He was directly challenged on BBC Breakfast this morning over his future aspirations and managed to dodge the question impeccably, saying that all of his time and focus is spent in trying his best to save jobs and keep the economy going – Boris beware (or ‘vigilate vestri tergum’, as he may prefer)

The IMF is saying what a lot of people are thinking and urging richer governments to spend more on their infrastructure and green investments, saying that “you get a bigger bang from your buck from public investment because investment by private firms is extremely low”. The IMF are taking a less prudent tone than they normally would with regards to public spending, but say that increasing infrastructure investment by 1% of GDP would increase GDP by 2% in two years’ time – clearly that’s the sort of return on investment that makes a lot of sense. As well as new projects, the fund suggests that getting on with maintenance of existing infrastructure is a great way to start the spending as it’s generally labour intensive and also can reduce costs in the long run if you can repair and maintain rather than watch crumble and then replace. Maintenance projects also buy time whilst effective planning takes place for new projects, to make sure we don’t just end up with white elephants. The FT has the story.

Boris is set to speak about the UK becoming the largest producer of offshore wind energy later today, as he launches a £160m commitment to the renewable energy, which will produce enough electricity to power every home in the country by 2030. The plan is to create 2,00 jobs directly and support another 60,000, with ports and factories upgraded to be able to manufacture the infrastructure, rather than just import it. Germany and Sweden are the leaders in this technology in this part of the world, so you can safely say that these are skilled jobs and that it’s a viable product even with our relatively high input costs. This is a massive project and will take thousands of turbines to be installed, so bravo for the ambition.

Boris will no doubt have other policies and ideas to talk about in his closing remarks of the Conservative party conference later this morning, which he’ll hope will be well received. However it will be a quick bump back to reality, as he’s likely to face rebellion on two votes on the current covid restrictions: The first, due today, is over the rule of six and whether children should be counted in the six. This one isn’t too contentious and it’s likely not many Tories will step out of line. However the second vote, due Wednesday, is over the 10pm curfew and it’s said that there are enough conservative MP’s willing to defy the whip and vote with Labour to get this curfew overturned.

To Brexit: there’s a story in the Telegraph this morning that Nissan and Toyota want the government to pay the tariffs in the event of a no-deal Brexit. The manufacturers would see a 10% tariff applied to their exports come 1st January if there was no deal, which would crush their profit margins if they had to pay it (assuming they couldn’t put their prices up). The industry body, the SMMT, calculates that £3.2bn in additional costs would be incurred across the sector in the event of a no-deal.

Donald Trump is out of hospital and telling people “don’t be afraid of covid” and “don’t let it dominate your life”. He says he feels better than he has done in 20 years, but with the amount of steroids in his system, we’re not surprised! What he’s doing is obviously polarising, but though it will be consolidating his base, it isn’t clear whether it’s turning more moderates away from him or not. One thing it is doing is rallying stock markets: US markets closed 1.7% higher last night and futures markets have continued the trend in after hours trading. It’s not just the fact that Trump is better that’s causing the rally, it’s the hope that the drugs that he took look pretty effective and that bodes well for the treatment of the virus ahead of any vaccine  – This is mostly a positive for the US, who have bought up most of the global stocks of Remdesivir, meanwhile in the UK doctors have been told only to administer the drug to patients in very specific circumstances, as we have a shortage. The government have used their usual generic timeline for having the shortage fixed and said it will be rectified “by the end of the month”.

Trump is hoping to get back on the campaign trail soon and will need to if polls are to be believed. At the moment most swing states have Biden with a lead in the mid to high single digits and the former VP was in Florida yesterday, which is seen as the most crucial swing state of them all. Trump said of the polls “The Fake News only shows the Fake Polls”, but he will be concerned that he won’t be able to get back out there until at least the 14th of this month if he’s to stick by the rules – which he won’t.

Photo – Gage Skidmore – https://www.flickr.com/photos/gageskidmore/5440992738/in/photostream/

In Europe: The European Commission has said that the suspension of budget rules will be extended into the next financial year. It was quite an obvious move, as budgets will be running severe deficits for the foreseeable future. There are concerns that the second wave of the outbreak is turning into a double dip recession. The continued rise is forcing more stringent measures and though every government is trying to resist a lockdown, the measures they’re coming up with aren’t exactly encouraging people to act “fearlessly, but with common sense” and in turn that’s having an impact on consumer spending. Spain is apparently the canary in the coalmine for the double dip, having not rebounded as well as other countries in the first instance due to the dramatic slowdown and shortening in their tourism season.

Today we’ll be watching for UK construction output numbers on the data front. From a sentiment perspective, we’ll be interested to hear what Christine Lagarde has to say when she speaks this morning. This afternoon there are a few Fed members taking to lecterns and we might start to hear about them wanting to extend QE to longer dated maturities – a pretty boring subject, but it could have an impact on the value of the dollar if they say they’ll target the far end of the curve.

Have a great day.

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