Crypto News: Sunak's weekend booster

Some good news and bad news on the state of the UK economy today. It recovered faster from the pandemic than previously estimated, according to the Office for National Statistics, bringing upbeat news just in time for the Conservative Party's annual conference on Sunday. The data provides a boost for Prime Minister Rishi Sunak after a week fielding protests about greenlighting the controversial Rosebank oil field and considering reining in the HS2 high-speed rail link.

Britain has shed its dubious distinction of having the worst recovery among the Group of Seven nations, with growth since the end of 2019 surpassing that of Germany and France and trailing just behind Italy. However, as my colleagues Andrew Atkinson and Philip Aldrick point out, "The UK's relative performance may still change. Britain is one of the first countries in the world to review its accounts using new approaches. When others follow suit, the G-7 league table could get rewritten again."

Key indicators such as economic trends in manufacturing and services have darkened in recent weeks. This prompted more analysts to forecast a recession and contributed to the Bank of England's decision last week to pause a run of 14 consecutive interest rate increases. And the Labour party still leads in the polls, even if the Conservatives clawed back some gains this week after Sunak's about turn on the green agenda.

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The less good economic news concerned the UK housing market, with Bank of England data out today showing mortgage approvals fell to a six month low in August. The figures are yet another indicator of rising mortgage costs eating into property market demand.

The housing development market is also struggling as banks turn cautious on lending for projects in London. The lack of credit is another blow to homebuilders, who are being squeezed by a combination of rising costs and slumping demand, write my colleagues Neil Callanan, Jack Sidders and Cagan Koc. Moreover, the problems with land in London are rippling out across the country, they point out. The price of urban brownfield land in the UK fell 18% in the 12 months through June, according to broker Knight Frank.

Victorian terraced houses in Lavender Hill, South London Photographer: SUSANNAH IRELAND/AFP

The state of the property market in the capital is a departure from the last two decades when it seemed housing prices in London could only move upward. The historic housing market boom forced many residents to move out to the suburbs. And the city's black population — almost a quarter of which earns less than the city's living wage — was among the most vulnerable, according to this must-read piece from Olivia Konotey-Ahulu and Demetrios Pogkas.

They crunched data to show less than half of the country's Black residents now live in London — the first time this has happened since at least 1991, when Census officials started collecting data on ethnicity. It's a stark contrast to the record high 20 years ago, when about 70% of Britain's Black population called the city home, and helped shape its social and cultural legacies.

This week also brought depressing news on the UK being one of the most nature-depleted nations in the world, as well as the felling of the iconic Sycamore Gap tree that had stood proudly in northeast England next to Hadrian's Wall for hundreds of years.

So it's worth highlighting research out today showing stocks that are blacklisted by institutional investors on environmental, social and governance grounds will ultimately see significant declines in value. "Contrary to the literature, we find a large fall in the stock prices of the high-emitting firms that are excluded," researchers at BIS, the Swiss Finance Institute and the London School of Economics said in a paper.

Still, as my colleague Lara Williams writes in her opinion column: "people aren't drawn to spend time or locate significant life events at Sycamore Gap or places like it because of its carbon sequestration properties or financial contribution to the UK. They do so because nature is beautiful and makes us feel good. Let that be reason enough to preserve, protect and restore our wild spaces." Amen to that.

Business investment grew 9.2% over the year to June, an upward revision from 6.7%, according to figures from the Office for National Statistics.

The figures may indicate some success in Rishi Sunak's decision to give businesses more incentives to invest in the UK. The Treasury launched the super-deduction, which gave companies 25p of tax relief on every £1 invested, alongside plans to raise corporation tax from 19% to 25% from March 2023.

Analysis by the ONS showed the incentive worked, with a third of manufacturers using it. That finding will feed into a growing debate over how the UK can best stimulate its economy, with members of Sunak's ruling Conservative Party calling for tax cuts.

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£100 billion

The IFS estimates that taxes will amount to around 37% of national income from around 33% in 2019, equivalent to £100 billion of additional tax revenues a year.

"We would like to move ahead if the environment is supportive."

Gilad Myerson

Ithaca Chairman

Ithaca Energy awaits the outcome of a fiscal review before commencing the controversial Cambo oil field in the North Sea.

One key story, every weekday

An ad for the Mate 60 series smartphone in Shanghai, China Photographer: Qilai Shen/Bloomberg

Export controls haven't stopped China from developing surprisingly advanced semiconductors for smartphones, increasing American anxieties about the country's military capabilities amid significant uncertainty. After years of escalation, the conflict between the US and China over chips is reaching a crucial moment. This fall, the Biden administration is expected to finalize its export controls and broaden the range of US technology it tries to keep away from Chinese customers.

Read The Big Take.

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