"Boris Johnson made his first in person keynote speech to the Conservative Party Conference yesterday but failed to win over doubters who see his high wage, high productivity mantra as flawed.

The speech has been described as economically illiterate by some business groups, as he reaches for the unattainable.

The UK economy has historically promoted high employment and low productivity; this has suited the country as promoting an elevated level of employment has meant that the cake is shared around. Fewer people receiving a higher wage for increasing productivity is self-defeating.

Boris Johnson made his first in person keynote speech to the Conservative Party Conference yesterday but failed to win over doubters who see his high wage, high productivity mantra as flawed.

Johnson continues to believe that the shortages of workers in the logistics sector is due to the beginning of the post-Brexit levelling up process that is now beginning in earnest.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The Prime Minister is setting out the Government’s agenda at his Party’s annual conference and using the time to try to set in motion the policies that were in the 2019 election manifesto but have been blown off course by the twin issues of first Brexit and then the Pandemic.

Johnson believes in a lower rate of taxation as a way of increasing productivity, but he fails to address the fact that by trying to put in place an economy where innovation and scientific advances are to the fore, he is effectively abandoning a large part of the workforce.

Manufacturing only makes up 20% of the country’s GDP, and that is set to fall further.

The Prime Minister is setting out the Government’s agenda at his Party’s annual conference and using the time to try to set in motion the policies that were in the 2019 election manifesto but have been blown off course by the twin issues of first Brexit and then the Pandemic.

He went on to say that issues with supply chains are due to the pace of the recovery from Covid-19 and admitted that just 127 foreign lorry drivers had applied for emergency visas to return to the UK.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The Prime Minister spoke yesterday of his determination that the UK won’t return to being a low-skilled low wage economy, while his Chancellor speaking at the Conservative Party Conference claimed that the country has become drunk on cheap labour.

Ministers, who have been facing criticism of the policies they have introduced recently, have tried to deflect the blame onto businesses, claiming that they were ill-prepared for Brexit.

That is likely to draw a backlash, given that the apparent transition period was mostly taken up with continued negotiation.

The Prime Minister spoke yesterday of his determination that the UK won’t return to being a low-skilled low wage economy, while his Chancellor speaking at the Conservative Party Conference claimed that the country has become drunk on cheap labour.

Sunak went on to say that the country simply cannot afford to continue to add to its debt, having reached a critical point whereby it would be unfair to saddle future generations by putting them at a disadvantage.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"Last week, Bank of England Governor Andrew Bailey jokingly compare the troubles facing the economy with the biblical plague of locusts.

As the week wore on, his comment became more prophetic as traders and investors dumped their holdings in Sterling, driving it to new year’s lows versus both the dollar and euro.

Johnson’s Chancellor will be speaking at the Conservative Party Conference, which begins later today in Manchester. It is expected that he will announce a £500 million fund to support the jobs market.

Last week, Bank of England Governor Andrew Bailey jokingly compare the troubles facing the economy with the biblical plague of locusts.

Sunak is expected to say that the Government plans to begin to reshape the economy following the Pandemic, utilizing the country’s strengths in technology and innovation.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The market’s perception of the state of the UK economy has seen a rapid decline over the past couple of weeks. While there were concerns about the recovery slowing down through the third and fourth quarters, following the second quarter where the UK saw GDP growth that was the strongest of any G7 country, the market has seen a series of headwinds develop that are not all Covid related.

The entire G7 is suffering from logistics issues that have been caused by demand outstripping supply as the global economy emerges from the Pandemic. The fact that vaccination programmes in the developed world all started at roughly the same time means that each nation was chasing a finite number of raw materials and spare parts, with inevitable consequences.

In the UK fiscal support via Government initiatives has been a success, but that clearly has to end at some point and with the furlough scheme, additional Universal credit payment and VAT reduction all having ended or are about to end, there is concern about the true state of the economy.

The market’s perception of the state of the UK economy has seen a rapid decline over the past couple of weeks. While there were concerns about the recovery slowing down through the third and fourth quarters, following the second quarter where the UK saw GDP growth that was the strongest of any G7 country, the market has seen a series of headwinds develop that are not all Covid related.

While there is no real fear of the economy slipping back into recession yet, one of the market's greatest fears, that of stagflation, is being mentioned. In order for an economy to suffer from stagflation demand has to slow dramatically and that is not yet evident, while employment falls while inflation rises almost out of control. That is the doomsday scenario, since it is difficult for an economy to escape once it takes hold.

"

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The pound has been hit by a perfect storm of negative drivers over the past few days that has seen it plummet against both the dollar and Euro.

The market’s confidence in the UK’s recovery has been shattered by the crisis that has seen wholesale gas prices continue to rise, causing the collapse of several providers. In addition, a continuing shortage of HGV drivers has led to scenes not seen for many years of drivers queuing to fill their tanks with fuel.

Traders are concerned that the UK’s recovery from the Pandemic will be blown off course by these new issues, especially since the wider shortage of raw materials and spare parts is still unresolved.

The pound has been hit by a perfect storm of negative drivers over the past few days that has seen it plummet against both the dollar and Euro.

Bank of England Governor Andrew Bailey is sticking to his mantra concerning inflation. Bailey believes that the rise in inflation in the UK is temporary, although he did acknowledge that the timing of GDP returning to pre-Pandemic levels has been pushed back by a month or two.

"

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"Boris Johnson’s Government, in power since the 2019 General election, is in danger of squandering its record majority by being tentative, confused and seemingly unable to plan,

This began with Brexit negotiations that were ongoing when Johnson took over from Theresa May. Continued through almost every stage of the Pandemic and now, faced with both the wholesale gas price increase and the HGV driver shortage.

In many cases Johnson and his Ministers appear to be quick to comment, almost without either thinking or having all the facts to hand, but slow to decide a course of action.

Boris Johnson’s Government, in power since the 2019 General election, is in danger of squandering its record majority by being tentative, confused and seemingly unable to plan,

The number of changes that have had to be made to policies that have clearly not been thought through is bordering on the farcical.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The accusations that were levelled at the Government at the start of the Pandemic are rising again as the growing crisis over fuel deliveries continues to grow.

It is clear that there is an issue over the number of delivery drivers, but instead of admitting the issue and making plans to solve the problem, Ministers are either blaming the issue on panic buying or denying that there is an issue at all.

The lack of planning and foresight around the issues likely to occur post-Brexit is beginning to bite into the UK’s recovery from the Pandemic, but with driver shortages across the whole of mainland Europe, the UK is unable to compete with Germany or Poland where drivers pay and conditions are better than in the UK.

The accusations that were levelled at the Government at the start of the Pandemic are rising again as the growing crisis over fuel deliveries continues to grow.

It now seems likely that the army will be used to bridge the gap but that is only a temporary solution, and something will need to be done to provide a permanent solution.

"

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"According to various sources, there are close to 100k vacancies for HGV drivers across the UK. The Government’s plans to reduce the shortage look like they will fall well short of what is needed.

The reaction of the transport minister is similar to that of the health minister at the start of the pandemic, trying to ignore the issue until it was clear it wasn’t going away without intervention.

With the shortages in supermarkets slowly worsening and deliveries of fuel to petrol stations also becoming a significant issue, it wasn’t helpful when the only answer the transport minister had when asked for a comment at the weekend was the that the issue is being overplayed and the queues at petrol stations are merely being caused by the British penchant for joining a queue.

According to various sources, there are close to 100k vacancies for HGV drivers across the UK. The Government’s plans to reduce the shortage look like they will fall well short of what is needed.

The Business Secretary issued Government plans specifically aimed at the fuel supply sector yesterday. The plans include provision of short-term visas to drivers coming from abroad and the suspension of competition rules to allow better information sharing to ensure provision to those areas where supplies are particularly low.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The ongoing crisis in the logistics sector reached a new high yesterday as one major supplier began to ration petrol as supplies begin to run low.

Issues over supply as demand has returned following the lockdown have been exacerbated by the scarcity of HGV drivers. This has been caused by two factors that are linked by Brexit.

Since UK haulage firms could employ drivers from within the EU at a low wage in comparison to what was expected by British drivers, the sector failed to employ local workers.

The ongoing crisis in the logistics sector reached a new high yesterday as one major supplier began to ration petrol as supplies begin to run low.

As soon as the EU nationals began to leave the UK due to the changes to employment rules post-Brexit, the shortage began, and costs began to rise due to the demands of locally sourced drivers.

"

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.