UK not to be a target of Donald Trump’s tariffs, Chancellor Rachel Reeves says
Chancellor Rachel Reeves has indicated she will overrule environmental objections to a third runway at Heathrow in order to prioritise economic growth, a position likely to bring her into conflict with colleagues including energy secretary Ed Miliband.
Speaking as she began a 48-hour pitch to international investors at the World Economic Forum in Davos, Ms Reeves said she would back infrastructure projects even where they are unpopular.
The expansion of Heathrow has been debated for almost 20 years but despite the consistent support of business groups and a consensus it would boost economic activity, environmental and political objections have prevented it.
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Asked directly if she would now put the runway, along with expansion at Gatwick and Luton ahead of the UK’s net zero commitments, Ms Reeves said: “I’m not going to comment on speculation, but what I would say is when the last government faced difficult decisions about whether to support infrastructure investment, the answer always seemed to be no.
“We can’t carry on like that, because if we do, we will miss out on crucial investment here into Britain. You’ve already seen a number of decisions, including on Stansted and City Airport, on energy projects, on transport infrastructure, because we are determined to grow the economy.”
The chancellor’s trip to Davos comes with her economic program under increased scrutiny after a bumpy start to the new year, including a rise in borrowing costs and data showing the economy has stagnated since the election.
Business groups have also questioned the increase in employment costs in the budget, but Ms Reeves insisted the UK is competitive internationally, and has a strong case to make to international markets.
“If you look at the UK’s taxation compared with countries around the world, we remain highly competitive, we have the lowest corporation tax in the G7. Amongst European countries, we have some of the lowest employment taxes, So Britain is an attractive place to invest.”
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Ms Reeves also hailed the removal of the chair of the Competition and Markets Authority, a regulator regularly blamed for unnecessarily slowing down deals, as a sign she was serious about growth.
“We’ve got huge strengths as a country and this government is reforming the planning system, reforming the regulation system, making it easier for businesses to get things done, all with the purpose of making working people better off,” she said.
UK not a target
The chancellor said she did not think the UK would be a target for tariffs threatened by president Donald Trump, largely because Britain has a trade deficit with America, and that she planned to meet the incoming Treasury secretary once he is confirmed.
Growth trade offs thrown into stark relief
The saga of a third runway at Britain’s biggest airport encapsulates, perhaps better than any, the trade-offs required to prioritise growth.
Airport expansion is a proven vehicle for growth. Heathrow’s current investors are desperate to expand, despite the cost of complications.
But for a decade political opposition, from Boris Johnson to Sadiq Khan, has stood in the way.
Of course, there are sound environmental arguments against that a government committed to net zero by 2050 might consider, and Ed Miliband can be expected to make.
But if growth really is the priority then at some point they have to choose.
Given the multiple avenues for objection and the strength of feeling inside and outside cabinet, Ms Reeves’ position does not mean that a runway is now more likely than it was six months ago.
It may however be less unlikely, and as a short-term signal to the investors she is courting in Switzerland, that is a start.
“I believe in free and open trade, and I’ll be making that case to my counterparts in the United States. I’m excited about the opportunity to work with the new Trump administration.
“Trade between the UK and the US is worth £300bn a year, a million Brits work for American firms, a million Americans work for British firms, so our economies are closely intertwined, and I look forward to enhancing and strengthening that relationship.”
Privately some international investors and British company bosses in Davos have questioned the clarity of Ms Reeves’s message, but she has received public support from significant companies.
Bill Winters, the chief executive of bank Standard Chartered, told Sky News: “I think the chancellor is doing the right thing in terms of putting the sign out that the UK is open for business.
“She’s also made very clear statements about the fact that we’re going to reduce some of the red tape set back to regulation in a way that’s safe and sound. Exactly how that’s going to work through, we’ll see. So I’m encouraged, but obviously, she’s got a huge, huge challenge.”
Tesla’s board has signed off a $29bn (£21.8bn) share award to Elon Musk after a court blocked an earlier package worth almost double that sum.
The new award, which amounts to 96 million new shares, is not just about keeping the electric vehicle (EV) firm’s founder in the driving seat as chief executive.
The new stock will also bolster his voting power from a current level of 13%.
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He and other shareholders have long argued that boosting his interest in the company is key to maintaining his focus after a foray into the trappings of political power at Donald Trump‘s side – a relationship that has now turned sour.
Musk is angry at the president’s tax cut and spending plans, known as the big beautiful bill. Tesla has also suffered a sales backlash as a result of Musk’s past association with Mr Trump and role in cutting federal government spending.
Tesla’s Elon Musk is seen on stage during an event in Shanghai Pic: Reuters
The company is currently focused on the roll out of a new cheaper model in a bid to boost flagging sales and challenge steep competition, particularly from China.
The headwinds have been made stronger as the Trump administration has cut support for EVs, with Musk admitting last month that it could lead to a “few rough quarters” for the company.
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Tesla is currently running trials of its self-driving software and revenues are not set to reflect the anticipated rollout until late next year.
Musk had been in line for a share award worth over $50bn back in 2018 – the biggest compensation package ever seen globally.
But the board’s decision was voided by a judge in Delaware following a protracted legal fight. There is still a continuing appeal process.
Earlier this year, Tesla said its board had formed a special committee to consider some compensation matters involving Musk, without disclosing details.
The special committee said in the filing on Monday: “While we recognize Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging… we are confident that this award will incentivize Elon to remain at Tesla”.
It added that if the Delaware courts fully reinstate the 2018 “performance award”, the new interim grant would either be forfeited or offset to ensure no “double dip”.
The new compensation package is subject to shareholder approval.
Bank stocks have enjoyed a boost as traders digest the Supreme Court’s ruling on the car finance scandal.
Some of the country’s most exposed lenders, including Lloyds and Close Brothers, saw their share prices jump by 7.55% and 21.62% respectively.
It came after the court delivered a reprieve from a possible £44bn compensation bill.
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Banks will still most likely have to fork out over discretionary commissions – a type of commission for dealers that was linked to how high an interest rate they could get from customers.
The FCA, which banned the practice in 2021, is currently consulting on a redress scheme but the final bill is unlikely to exceed £18bn. Overall, the result has been better than expected for the banks.
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Car finance ruling explained
Lloyds, which owns the country’s largest car finance provider Black Horse, had set aside £1.2bn to cover compensation payouts.
Following the judgment, the bank said it “currently believes that if there is any change to the provision, it is unlikely to be material in the context of the group”.
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The judgment released some of the anxiety that has been weighing over the Bank’s share price.
Jonathan Pierce, banking analyst at Jefferies, said the FCA’s prediction was “consistent with our estimates, and most importantly, we think it largely de-risks Lloyds’ shares from the ‘motor issue'”.
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Bank stocks have responded robustly to each twist and turn in this tale, sinking after the Court of Appeal turned against them and jumping (as much as 8% in the case of Close Brothers) when the Supreme Court allowed the appeal hearing.
Concerns about this volatility motivated the Supreme Court to deliver its judgment late in the afternoon so that traders would have time to absorb the news.
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FCA considering compensation scheme over car finance scandal – raising hopes of payouts for motorists
Thousands of motorists who bought cars on finance before 2021 could be set for payouts as the Financial Conduct Authority (FCA) has said it will consult on a compensation scheme.
In a statement released on Sunday, the FCA said its review of the past use of motor finance “has shown that many firms were not complying with the law or our disclosure rules that were in force when they sold loans to consumers”.
“Where consumers have lost out, they should be appropriately compensated in an orderly, consistent and efficient way,” the statement continued.
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The FCA said it estimates the cost of any scheme, including compensation and administrative costs, to be no lower than £9bn – adding that a total cost of £13.5bn is “more plausible”.
It is unclear how many people could be eligible for a pay-out. The authority estimates most individuals will probably receive less than £950 in compensation.
The consultation will be published by early October and any scheme will be finalised in time for people to start receiving compensation next year.
The announcement comes after the Supreme Court ruled on a separate, but similar, case on Friday.
The court overturned a ruling that would have meant millions of motorists could have been due compensation over “secret” commission payments made to car dealers as part of finance arrangements.
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Car finance scandal explained
The FCA’s case concerns discretionary commission arrangements (DCAs) – a practice banned in 2021.
Under these arrangements, brokers and dealers increased the amount of interest they earned without telling buyers and received more commission for it. This is said to have then incentivised sellers to maximise interest rates.
In light of the Supreme Court’s judgment, any compensation scheme could also cover non-discretionary commission arrangements, the FCA has said. These arrangements are ones where the buyer’s interest rate did not impact the dealer’s commission.
This is because part of the court’s ruling “makes clear that non-disclosure of other facts relating to the commission can make the relationship [between a salesperson and buyer] unfair,” it said.
It was previously estimated that about 40% of car finance deals included DCAs while 99% involved a commission payment to a broker.
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Nikhil Rathi, chief executive of the FCA, said: “It is clear that some firms have broken the law and our rules. It’s fair for their customers to be compensated.
“We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.”
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