UK’s fiscal position as tight as ever but expect a different focus from Rachel Reeves at the spring statement

Published

4 days ago

March 25, 2025

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Remember “securonomics”? It was the buzzword Rachel Reeves gave to her economic philosophy back before the election.

The idea was that in the late 2020s, the old ideas about the way we run the economy would or should give way to a new model.

For a long time, we ignored where something was made and by whom and just ordered it in from the cheapest source. For a long time, we ignored the security consequences of where we got our energy from. The upshot of these assumptions was that over time, we allowed our manufacturing base to become hollowed out, unable to compete with cheap imports from China. We allowed our energy system to become ever more dependent on cheap Russian gas.

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The whole point of securonomics was that it matters where something is made and who owns it. And not just that – that revitalising manufacturing and energy could help revitalise “left-behind” corners of the economy, places like the Midlands and the North East.

Back when she came up with the coinage, Joe Biden was in power and was pumping billions of dollars into the US economy via the Inflation Reduction Act – a scheme designed to encourage green tech investment. So securonomics looked a little like the British version of Bidenomics.

That’s the key point: the “security” part of “securonomics” was mostly about energy security and supply chain security rather than about defence.

But when Rachel Reeves became chancellor, it looked for a period as if securonomics was dead on arrival. Most glaringly, Labour dramatically trimmed back the ambition and scale of its green investment plans.

But roll on a year or so, and we all know what happened next.

A new era

The Democrats lost, Donald Trump won, came into office and swiftly triggered a chain reaction that panicked everyone in Europe into investing more in defence. Today, much of the focus among investors is not on net zero but on defence.

All of which is to say, securonomics might be about to resurface, but in a markedly different guise. In the spring statement, I expect the chancellor to bring back this buzzword, but this time, the emphasis will not be on green tech but on something else: the defence sector.

Expect to hear about weapons

This time around, the chancellor will say securonomics 2.0, which is to say government investment in the defence sector will also bring an economic windfall, as old naval ports like Plymouth and Portsmouth see regeneration. This time, the focus will not be on solar and wind but on submarines and weapons.

Whether this rendition of securonomics is any more successful than the last remains to be seen. For the chancellor hardly has an enormous amount of money left to invest. While this week’s event is billed as a mere forecast update, the reality, when you take a step back, is more serious.

The chancellor will have to acknowledge that, without remedial action, she would have broken her fiscal rules. She will have to confirm significant changes to policy to rebuild the “headroom” against these rules. These will stop short of tax rises. Instead, the spending envelope in future years will be trimmed (think 1.1% or so spending increases rather than 1.3% or 1.4%). Those welfare reforms announced last week will bring in a bit of extra cash. And thanks to an accounting quirk, the decision (announced a few weeks ago) to shift development spending into defence will also give her a bit more space against her rules.

The austerity question

But even these changes will raise further awkward questions: is this or is this not austerity? Certainly, for some departments, that spending cut will involve further significant sacrifices. Are those benefits gains really achievable, and at what cost? And, most ominously, what if the chancellor has to come back to parliament in another six months and admit she’s broken her rules all over again?

The return of securonomics might be the theme she wants to focus on in the coming months – but that, too, depends on having money to invest – and the UK’s fiscal position looks as tight as ever.

Business

Coulthard and Humphrey-backed TV producer Whisper screens bidders

Published

3 hours ago

March 29, 2025

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The television production company founded by broadcaster Jake Humphrey and former racing driver David Coulthard is in talks with potential buyers about a sale.

Sky News has learnt that Whisper Group, which was established in 2010 and won a BAFTA for its coverage of the Women’s Euros in 2022, is working with advisers on a deal.

The company is said to be open to a range of options, including the sale of a majority or minority stake to either financial investors or a strategic buyer.

Corporate financiers at KPMG are orchestrating talks with potential bidders.

Whisper is already 30%-owned by Sony Pictures Television, which acquired the stake in 2020.

It replaced Channel 4’s Indie Growth Fund as an investor in the business.

A majority of the shares in Whisper are owned by its founders and management team.

The company is best-known for its sports productions, and is responsible for Channel 4’s Formula One coverage as well as international cricket, boxing and the Paralympics.

Whisper employs about 300 people, and has operations in London, Cardiff, Manchester and Riyadh.

Its chief executive, Sunil Patel, co-founded the producer alongside Mr Coulthard and Mr Humphrey.

It is said to be plotting further expansion in sport in the form of bigger events and rightsholders, as well as in events, where its clients include Red Bull.

Whisper is also focused on growing its presence in the US, where it currently works with Tom Brady’s Religion of Sport, and the Middle East, where it is partnered with Neom and Saudi Pro League teams.

Outside of sports rights, it has produced documentaries about Ben Stokes, the England Test cricket captain, and Sven-Goran Eriksson, the late England football manager.

It has also diversified into entertainment programming, producing the Wheel of Fortune gameshow hosted by Graham Norton.

Its most recent accounts disclosed a £4.3m pre-tax profit for the year to March 31, 2024.

“Whisper has successful diversified into factual, entertainment and events to complement the wider blend of work across its sports broadcast contracts,” it said in a statement accompanying the accounts.

“It has been another successful year for contract wins, with a series of renewals with key clients and a new range of significant projects which will help ensure visibility over the next few years.”

The sale process comes as ITV holds talks about a merger of its Studios arm with RedBird IMI-owned All3Media, one of Britain’s biggest production companies.

A combination of the two businesses could be announced during the spring, according to banking sources.

This weekend, a spokesman for Whisper declined to comment.

Business

WH Smith high street arm sold to Hobbycraft owner in £76m deal

Published

1 day ago

March 28, 2025

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WH Smith high street arm sold to Hobbycraft owner in £76m deal

WH Smith has sold its 233-year old high street business to the owner of Hobbycraft in a £76m deal.

Sky News revealed in January how a sales process was under way for the arm, which employs roughly 5,000 people and has 480 stores.

Modella Capital won the final stage of the auction process in a run off against Alteri investors – both specialists in turning around troubled retailers.

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The deal will see the WH Smith name erased from town centres to become TGJones.

The sale allows the WH Smith business to focus fully on its lucrative travel retail arm.

That has around 1,200 stores, based mainly at airports and railway stations, in 32 countries globally and accounts for 85% of group profits.

Chief executive Carl Cowling said: “Given our rapid international growth, now is the right time for a new owner to take the High Street business forward and for the WH Smith leadership team to focus exclusively on our Travel business”.

There was no word on what the new owners may do to bolster profitability, with a question mark firmly hanging over employment and the store estate – often the subject of criticism over a perceived lack of investment.

WH Smith’s statement said: “All stores, colleagues, assets and liabilities of the High Street business will move under Modella Capital’s ownership as part of the Transaction.

“Under this new ownership, the business will be led by Sean Toal, currently CEO of the High Street business. The High Street business will operate for a short transitional period under the WHSmith brand whilst the business rebrands as TGJones.”

The sale to Modella represents an enterprise value of £76m on a cash and debt-free basis but will see WH Smith secure an estimated £25m on a net basis after several costs associated with the sale are accounted for.

Shares fell by more than 1% at the open.

Business

Port giant DP World ‘discredited’ by former minister despite £1bn investment in London Gateway

Published

1 day ago

March 28, 2025

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Port giant DP World 'discredited' by former minister despite £1bn investment in London Gateway

The chairman of P&O Ferries’ parent company DP World has told Sky News he went ahead with a £1bn investment in the UK despite feeling “discredited” by criticism from a cabinet minister.

P&O was widely criticised in 2022 when more than 700 seafarers were summarily fired and replaced by largely overseas workers without consultation.

Last October, the issue threatened DP World’s planned expansion of London Gateway, its deepwater port on the Thames Estuary, when the then transport secretary, Louise Haigh, described P&O as a “rogue operator”.

Her comments came as DP World was in the final stages of negotiating a £1bn investment in the port, due to be announced at the government’s investment summit.

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In response, DP World pulled the announcement and only relented following a personal intervention by the prime minister to keep his showpiece event on course.

Speaking exclusively to Sky News, Sultan Ahmed Bin Sulayem said the criticism was unexpected given the scale of his planned investment in the UK.

‘Water under the bridge’

“There was a misunderstanding. Someone, unfortunately, said something that was not what we expected.

“We were going to invest in infrastructure, a huge investment, and then we get the person in charge to basically discredit us. But it’s water under the bridge.”

Bin Sulayem confirmed that he had spoken with the prime minister and received “reassurances” that Ms Haigh was expressing a personal view. She subsequently resigned after admitting a fraud offence.

The chairman also defended P&O’s conduct, saying that having received no state support during the pandemic, the cuts were necessary to save the company.

“We had a choice. We either close down the company and 3,000 people or more lose their jobs, or we try to survive by letting 700 or so go. And we felt that was right,” he said.

“Maybe we didn’t follow the procedures, but most importantly, we compensated every employee with more than what the law said.”

Rebuilding relations

Bin Sulayem was speaking on a flying visit to the UK intended to rebuild relations with the government, meeting investment minister Poppy Gustaffsen at London Gateway to discuss an expansion that will make the port Britain’s largest by volume and offering encouraging words about the UK’s attractiveness to investors.

“We believe in the UK economy, in its strength, and we believe the economic fundamentals are strong. That’s why we invested,” he said.

“The UK has the best stock market in the world. You have English law, and you have the best universities in Oxford and Cambridge. If we look to the future, it will be the economy of the brain, not the economy of the hand.

“The world economy doesn’t want labourers, it wants brains. People want engineers. They want free thinkers. They want innovators. That is what’s here, and that’s why we invested in London Gateway.”

Tariff trade trouble

With ports and logistics operations in more than 70 countries handling around 10% of global trade, DP World’s chairman has a unique insight into global trade and the likely impact of the tariff war sparked by Donald Trump.

While confident that trade will find a way to navigate the disruption, he warned America’s trading partners to take the president seriously.

“I think psychologically it will [have an impact], but in reality it will not, because trade is resilient. I think of it like water coming from the mountain in the rain, nobody can stop it. If you can’t sell a product in one place, you can sell it somewhere else.

“Trump is a deal maker. He is making threats because that’s the way he negotiates. He comes with impossible demands because he wants people to come to the table.

“But he’s serious. He will do what he’s threatening if nobody makes a deal.”