Blog: Is UK Facing Recession on Brexit Anniversary? The Readout With Allegra Stratton – Bloomberg

Welcome to The Readout, the new daily newsletter from Bloomberg UK.

Prime Minister Boris Johnson is in Rwanda tonight as two by-election results come in. With a drubbing expected in at least one seat, if not both, it’s somewhat serendipitous that he’s 7,000 kilometers away.

Technically, Johnson is in Kigali for the Commonwealth Heads of Government Meeting, but of course Rwanda is even more central to UK politics right now. A European court last week blocked a first flight carrying asylum seekers from Britain to Rwanda.

We’ll explore the efficacy and the morality of it another day. For now, it’s a happy accident that Johnson finds himself in Rwanda, while the policy is his happy place. In public, Conservative MPs were furious that the flight was barred from taking off , but it was a fury that allowed them to rail against easy targets — foreign judges and “lefty” lawyers.

Consider yourself introduced to one of the themes of the next election campaign.

Boris Johnson at Commonwealth meeting in Rwanda.

Photographer: Dan Kitwood/PA Wire

What just happened

The stories you need to know about this evening

Looking for a Brexit ‘swoosh’

On the eve of Brexit referendum day in 2016, Vote Leave figurehead Boris Johnson told me in a TV interview that he endorsed the “Nike swoosh” argument — the idea, disputed by most economists, that Brexit would lead to a dip in UK growth before a strong uptick.

Today, on the sixth anniversary of the referendum, Bloomberg’s markets reporters show that Brexit has depressed UK assets, making it harder to recover from this year’s market meltdown.

With the pound down 10% in 2022 alone (and 18% since the referendum), Societe Generale’s chief FX strategist, Kit Juckes, told our team that sterling is now a “basket case”.

“It’s forecast to have weaker growth, higher inflation, and a bigger current-account deficit than the US, eurozone or Japan next year, not so much trilemma as tragedy.”

UK corporate bonds are on their longest losing run ever (and this Bloomberg survey suggests further woe to come). There is disruption to immigration and supply chains, plus poker -hot inflation.

UK businesses are also braced for a deeper economic slump. Steady yourself for a “ troubling combination” of recession and inflation, says the chief economist at S&P Global. “The economy is starting to look like it’s running on empty.”

It’s at this point that Conservatives cry “Project Fear” and rail against glass-half-empty City gloomery. The man who negotiated the UK’s trade deal with the EU, David Frost, tweeted as much this morning.

But the (Tory) chair of Parliament’s Treasury select committee says the current 10% plunge in the value of the pound is making the cost of living crisis worse. The mood on sterling may be shifting, our reporters say, from “indifference to alarm”. There are signs also of politics overriding prudent economics, which will worry the Bank of England and investors.

Clearly the pandemic poleaxed many advanced economies. As prime minister, Johnson points to a nimble UK response to the Ukraine crisis as among the benefits of Brexit. His spokesperson today highlighted new trade deals, the forthcoming bill of rights and plans to repeal EU laws.

Whitehall insiders also dare to hope that sterling’s slump might stimulate international firms looking for a bargain.

Even so, our reports suggest that today, six years on, the UK is still searching for its post-Brexit “swoosh”.

Antony Jenkins at the 10x offices in London.

Photographer: Chris J. Ratcliffe/Bloomberg

In an office not far from the Houses of Parliament, Antony Jenkins is plotting the future of global banking. His ambition is to serve one tenth of the world’s population — or one billion people — by providing the technology behind everything from checking savings to loans. 

In contrast to the 20 or 30-somethings seeking to make their mark in fintech, Jenkins is the 60-year-old former chief executive officer of Barclays Plc. After a turbulent three years when Jenkins received the nickname “Saint Antony” for his attempt to reform its culture, he was ignominiously ousted in 2015.

What we’re reading tonight

Get ahead of the curve

The women are missing The UK has a shortfall of 560,000 women in its managerial ranks, highlighting companies’ failure to develop female talent.

How to beat range anxietyThe world’s biggest maker of electric-car batteries unveiled a model it says can deliver 1,000 km on a single charge.

Consumers in Japan who make climate-friendly purchases are getting points to be used on goods or investments. 

Watch and earn Here’s the deep-dive we all need on reselling luxury watches, now apparently the most lucrative asset class of all. 

Is polio back? And should we worry? 

This week on our In the City podcast: Former Chancellor of the Exchequer Philip Hammond tells David Merritt and Francine Lacqua that the UK has “missed a trick” on cryptocurrencies. Subscribe on Spotify or on Apple Podcasts.

The big number

  • 24,239 Size of the Conservative majority in Tiverton & Honiton at the 2019 general election. The Liberal Democrats are hoping to win the seat in today’s by-election.

One key story, every weekday

Binance CEO Changpeng Zhao.

Photographer: Laura Stevens for Bloomberg Businessweek

Changpeng Zhao built Binance into the world’s biggest digital currency exchange. Depending on who’s talking, he is either a) pioneering a revolutionary system that will replace not only the world’s stock exchanges but also the entire global financial order, or b) running the world’s largest unlicensed casino.

The thing is, despite seeing Binance’s stake in Terra USD, a so-called “stablecoin,” crash from $1.6 billion to almost zero, Zhao remains unmoved. “I don’t really care much about money,” he said in an interview.

The comment, made as Zhao sipped a $14 glass of orange juice at a French restaurant in a Four Seasons hotel in Dubai, was hard to believe, coming as it did from the richest man in an industry that’s entirely about money.

Read The Big Take.

What happens next

Your early warning system for the day ahead.

Overnight By-election results in Wakefield and Tiverton & Honiton.

12 a.m. GfK Consumer Confidence figures

7 a.m. Retail sales figures

Follow all tomorrow’s corporate news in The London Rush, live on Bloomberg UK from 8 a.m.

 

Please send thoughts, tips and feedback to readout@bloomberg.net. You can follow Allegra on Twitter. The Readout is edited by Adam Blenford.

 

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