15th November 2022
Bite-sized business news from the UK and beyond
- London loses stock market top spot to Paris
- Tense G20 summit kicks off
London loses stock market top spot to Paris
Paris has overtaken London to become Europe’s biggest stock market, according to new analysis from Bloomberg. The total value of companies on the French exchange is $2.823tr just edging the UK stock market which is worth $2.821tr, the first time this has happened since records began in 2003/
How did we get here?
Back in 2016 UK stocks were worth $1.5tr more than France. Then, that year, the UK voted to leave the EU, a decision that “permanently damaged” the British economy, according to former Bank of England policy maker Michael Saunders. He said that “if we hadn’t had Brexit, we probably would not be talking about an austerity Budget this week, the need for tax rises, spending cuts would not be there if Brexit had not reduced the economy’s potential output so much.”
Trade from the EU to the UK has dropped since 2016 and the departure of hundreds of thousands of European workers has led to labour shortages.
The public finances watchdog, the Office for Budget Responsibility, estimated that Brexit has resulted in a 4% permanent hit to the economy.
But it’s not just economic growth concerns that have weighed on UK stocks. France has benefited from the rebound in demand for luxury goods following the relaxation of Covid rules in China – the world’s second largest luxury market.
This has helped shares of Paris-listed companies like Louis Vuitton owner LVMH and Gucci owner Kering. By contrast UK retailers are mainly mass-market brands that have been hit hard by squeezed household budgets.
Differences in currencies have also hurt UK shares. The pound has fallen by 13% against the dollar, whereas the euro has dropped 9%.
Zooming out: The City of London has always prided itself as among the world’s top financial centres so losing the top spot by stock market valuation to Paris will be a blow to its prestige.
Other stories to keep you in the loop
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- Klarna launches price comparison engine
- Amazon founder Jeff Bezos plans to give most of his £110bn fortune away
- Amazon 'to axe 10,000 workers' after forecasting weaker growth
- Primark website crashes as it launches click and collect
- Retailer Joules nears collapse risking 1,600 jobs
- EY to delay partner votes due to complex legal wrangling
- Staff at Jacob’s Cream Crackers factory go on ‘permanent strike’
- Elon Musk says he has ‘too much on plate’ amid reports of more Twitter job cuts
Tense G20 summit kicks off
The G20 summit, an annual meeting of the world's 20 largest economies, kicked off yesterday in Bali, Indonesia, in what’s been described as a diplomatically delicate and stressful gathering.
US-China relations and the war in Ukraine will dominate the agenda
US president Biden held his first face-to-face meeting with Chinese president Xi Jinping which lasted three hours. The world’s two largest economies have had increasingly frosty relations in recent years as they clash over trade, human rights and security with fears it could spill into an all out war
Among the most controversial topics discussed between the two leaders was Taiwan. The US has warned China against invading the self-ruled island that China, despite having never ruled over it, has pledged to take it back. China has accused the US of encouraging Taiwanese independence.
Biden and Xi pledged more frequent communications with a trip to Beijing for the US Secretary of State Antony Blinken planned for follow-up talks.
Russia’s invasion of Ukraine has made Vladimir Putin somewhat of a social pariah on the world stage. The Russian president has sent his foreign minister, Sergei Lavrov, in his place.
British prime minister Rishi Sunak vowed to "unequivocally condemn Russia's hostile and illegal war" in Ukraine at the summit. He also said he will outline series of measures to hurt Russia including calling for greater investment in green finance to undercut Russia’s stranglehold on international energy prices.
This comes as the government ties domestic issues to global shocks
Over the weekend the chancellor Jeremy Hunt gave a preview of this Thursday’s budget, announcing that everyone will have to pay higher taxes and that public spending would be cut. The PM is seeking to frame these unpalatable policies as responses to the consequences of the war in Ukraine and less about poor domestic decision making.
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