Crypto News: His Majesty's Opposition: the bond market

There's a startling fact in Marcus Ashworth's column today: a "skittish and apprehensive bond market" could undermine the new government's entire agenda.

Here's Marcus: "Investors are charging the UK under the Labour government more to borrow than they demand from the US, a relatively rare historical anomaly."

That's quite a way to mark this week's two-year anniversary of Liz Truss becoming prime minister, when uncosted spending plans, U-turns, resignations, lettuces and then a bond market smash up put September 2022 in the history books. But far from being behind us, today Marcus makes the case for why we need to start looking at gilts again.

"It's evident that gilts are struggling from much wider fears about how much extra issuance is coming from a new Labour administration, which is painting as bleak a picture as possible about the state of public finances," he writes. "Experience suggests it won't just be personal taxes that are raised but increased borrowing from the wholesale market to cover its spending plans."

A repeat of the Truss turmoil is "unlikely," he thinks, but we got an inkling that the new government is alive to the gyrations of the markets when Commons Leader Lucy Powell said yesterday the government had had to cut winter fuel payments — its most controversial decision yet — because they feared a "run on the pound."

Yet that belief is not universal. Philip Aldrick and Greg Ritchie today write about internal Labour opposition to both the move and the claim, quoting a tweet pointing out the £1.4 billion saved from axing winter fuel payments is from a budget of £1,200 billion – hardly credibility-critical.

The government is also getting grumblings from companies over putative changes to employment law and higher taxes. The Readout's Julian Harris writes about an Institute of Directors survey of 715 company bosses, which finds that a July post-election score of +7 (a three-year high), has now fallen to -12 as worries about tax rises loom.

It all adds to the view that the pessimistic vibes of Keir Starmer and his team are becoming counterproductive. Starmer's aides are briefing that they know exactly what they are doing: a period of miserableness early in the parliament is needed to get the public's permission to do the difficult things that will eventually yield positive results.

This weekend's local election results in Germany – which have given the Olaf Scholz government, still only in its first term, a bloody nose — is a reminder of how little time governments actually have.

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The stories you need to know about this evening

Israelis go on day-long strike as anger over hostages builds.
VW considers first-ever Germany plant closures to cut costs.
Kemi Badenoch pledges Tory renewal as she launches leadership bid.
Rightmove draws takeover interest from Rupert Murdoch's REA.

One of the many clichés the Readout tries not to use is that politics is showbusiness for, ahem...less attractive people. But today, politics and showbusiness are coalescing, in an epic battle over the proposed building of film studios in Marlow, Buckinghamshire.

Bloomberg Opinion's Matthew Brooker has a nose for industrial wrangles that tell a bigger tale, and today he brings to our attention the most dramatic yet. The column features anecdotes like Oscar-winner Jeremy Irons rocking up at a local council hearing.

The 36-hectare redevelopment of a former quarry and landfill site is predicted to create 4,000 jobs and bring in billions in investment to one of the UK's great success economic stories, the movie business. You might think this would make the application a no-brainer for approval.

But the area is also in the wealthy and attractive — posh and lush — Thames Valley, and part of the greenbelt. It is thus opposed by environmental groups, and could become a test case of this government's determination to build, baby, build. Marlow Film Studios has appealed their rejection, leaving the application now being kicked to the planning inspectorate. In her role as housing secretary, Angela Rayner has the power to approve it.

Matthew thinks she'll go for it. The National Planning Policy Framework recognizes the importance of industry clusters, something this government has strengthened. Here's his conclusion: "My betting is that the film studio will get built. The case is rightly regarded as a test of how serious the new government is about ripping up planning rules to unblock development. Allowing such an opportunity to slip would be an embarrassment."

$4 billion

Damages being sought by HP against the estate of Mike Lynch, after winning a British civil case over the collapse of Lynch's Autonomy Corp.

One key story, every weekday

Every six hours, somewhere in the world, a shipment of liquefied natural gas controlled by a Japanese company leaves a port. The vessels — giant, floating thermoses that keep the fuel super-chilled — cross the globe, destined for pipelines in energy-hungry countries in every hemisphere.

These tankers, which handle a quarter of all LNG shipments, are only the tip of Japan's increasingly dominant gas empire. With the enthusiastic backing of the government, corporate Japan now offers a complete package for countries looking to replace aging, and near-unfinanceable, coal power stations with gas: Its engineering firms will provide technology and parts, its utilities some fuel, and the banks will offer financing.

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Allegra Stratton worked for former Prime Minister Rishi Sunak when he was chancellor and runs an environmental consultancy, Zeroism.

Please send thoughts, tips and feedback to readout@bloomberg.net. You can follow Bloomberg UK on X.

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