UK Businesses Suffer from Policy Changes and Geopolitical Instability, Scotland Prepares Debut Bond Sale, and Italy Declares Emergency Amid Storm Damages

EXCERPT: In the UK, large businesses are facing profit erosion due to policy changes and geopolitical instability. In Scotland, the ruling party is seeking banks and lawyers to run its debut bond sales. Meanwhile, in Italy, the government has declared a state of emergency to aid storm-hit areas.

CONTENT:

UK Businesses Brace for Policy Changes and Geopolitical Instability

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According to research carried out by consultancy firm EY, large UK businesses are seeing their profits eroded by policy changes and rising geopolitical instability. The findings come as the Greater Manchester seat of Gorton and Denton, which has been Labour for more than 90 years, is set to go to the polls.

Across the Atlantic, Europe’s largest money manager Amundi SA has revealed that increasing US isolation from other nations is convincing many investors to cut holdings of dollar assets and switch to gold. This comes as the government in the UK is expected to announce a cap for ground rent in England and Wales, with campaigners believing a £250 a year cap is likely.

The Economic Impact of Government Policy and Political Uncertainty

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The UK pub and bar group Revolution Bars is facing administration with 2,200 jobs at risk, blaming government policy for its issues. Elsewhere, the Scottish government has started a search for banks and lawyers to run its debut bond sales, as Japan’s bond market remains fragile and volatile.

In Japan, investors are on guard for the risk of another meltdown in Japan’s bond market when the government sells 40-year notes. Some see a possible answer in the $1.8 trillion Government Pension Investment Fund, which could shift its portfolio to help calm the market and prop up the yen.

Meanwhile, Japanese insurers are staying away from bonds on the view that yields will rebound. The situation is not unique to Japan, as mid-sized life insurers in the country join their larger peers in avoiding the nation’s super-long government debt.

Policy Changes and Their Impact on the Economy

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Fallout following the decision to block Andy Burnham from standing in a forthcoming by-election has continued, with fifty Labour MPs signing a letter objecting to the decision. In Italy, the government has declared a state of emergency, unlocking €100 million in funds to help repair damage after a sea storm battered parts of the country’s south.

Hedge fund Bridgewater Associates favors stocks over bonds given the risks posed by governments ramping up public spending and the inflationary impact of artificial intelligence. As a result, US stocks opened higher Monday morning as traders weighed a combination of fresh trade and policy risks against a strong start to fourth-quarter earnings.

Former Home Secretary Suella Braverman is the fourth sitting Tory MP to join the Reform party since the last election, adding to the momentum behind the party.

Sources:

• UK Firms’ Profits Hit by Policy Changes and Geopolitics, EY Says
• Academic unveiled as Reform by-election candidate
• US Policy Threats Fuel Shift to Gold From Dollars, Amundi Says
• Cap for ground rent in England and Wales due to be announced
• Anxiety in Labour as by-election set to go ahead
• Revolution Bars to enter administration with 2,200 jobs at risk
• Scotland Kicks Off Search for Banks to Steer Debut Bond Sale
• Turkey Hits Banks With New Curbs to Target Offshore Lira Market
• How 'Premier League' Galatasaray can derail Man City
• Japan’s 40-Year Bond Sale to Test Fragile Debt Market, Weak Yen
• Japan’s Bond Meltdown Spurs Speculation of GPIF Portfolio Shift
• Japanese Insurers Stay Away From Bonds on View Yields to Rebound
• The Papers: 'Burnham rebellion growing' and 'Clan united'
• Fifty Labour MPs sign letter objecting to Burnham decision
• Italy to Aid Storm-Hit South as Sicily Sees €1.5 Billion Damages
• Bridgewater’s CIOs Are Wary of Bonds on Fiscal, Inflation Risks
• Treasuries Rise Led by European Bond Markets With Auctions Ahead
• Over 700,000 graduates out of work and claiming benefits, analysis suggests
• US Stocks Rise as Traders Look Beyond New Washington Risks
• Chris Mason: Another big beast defection shows momentum is with Reform