26 February 2024

The Government faces a challenge with young voters. They aren’t voting for the Conservative party. A recent YouGov poll revealed that only 1% of 18-24 year olds intend to support the Conservative party in the upcoming election, with slightly higher but still low levels of support among 25–49 year-olds. Given that those under 34 make up over two thirds of the electorate, Sunak recognises that their support is crucial for electoral success. And addressing the issue of home ownership is imperative if he is to win over their support, as housing consistently ranks as the second most pressing concern for young voters, following only the economy. 

A package for first time buyers  

Against this backdrop, the Chancellor is likely to unveil a home ownership package in the upcoming Budget. Speculation suggests amendments could be announced to the Lifetime ISA (LISA) to make it more amenable for property purchases over £450,000, along with the introduction of Government-backed 99% mortgage schemes. 

Timing-wise, the Government’s strategy appears astute. With young voters potentially receiving up to eight Government bonuses in their LISA accounts before the General Election, mooted for November, the investment seems relatively low-cost for the Government which hopes this sustained support will win favour where needed. 

However, concerns linger about the potential impact of widespread 99% mortgages on financial stability. Regulators at the Prudential Regulation Authority (PRA) are cautious, mindful of the lessons from 2008, and will need convincing that Government guarantees suffice to mitigate risks.  

What is more, a significant omission could undermine the effectiveness and popularity of the package. While assisting first-time buyers with deposit savings is valuable, addressing mortgage affordability is essential to tackle the housing issue comprehensively. 

Labour’s proposed solution 

Rachel Reeves believes she has a solution to that problem. Labour has indicated that it would increase the availability of long-term fixed rate mortgage schemes which it anticipates would remove the requirement for mortgage affordability tests. These can often stress test applicants on their ability to repay at rates of up to 9% and shut many prospective buyers out of the market.  

Long-term fixed rate mortgages are by no means a silver bullet and come with drawbacks for mortgage holders who risk finding themselves unable to enjoy the advantage of falling interest rates in the future. But Labour’s recognition of the complexity of the problem on the demand side (it would most likely maintain the upkeep of the LISA to ensure that it remains fit for the future alongside addressing mortgage affordability) and its commitment to address challenges on the supply side has allowed it to make a convincing case for itself as the party of home ownership, a message which is now beginning to be reflected in the polling. A recent Opinium survey found that 34% of voters thought Labour would do a better job managing housing and house prices compared to just 16% who put their trust in the Conservatives. 

But what has been forgotten?  

Whilst both Labour and the Conservatives have now all but set out their electoral stalls as far as housing policy and first-time buyers are concerned, there remain additional challenges in the broader housing arena that have been left without solutions. Slow progress on the Leasehold Reform Bill and the Renters Reform Bill (the latter is understood to be facing the chop after rebel amendments threatened to water down the Bill beyond recognition) leaves the future landscape for tenants’ rights uncertain.  

Elsewhere, there remains no comprehensive answer to the question of how to open up access to the housing ladder for those on low incomes for whom the LISA does not provide a solution to the challenge of saving for a deposit. And on the supply side, whilst Labour has pledged to build 1.5m new homes, a question mark hangs over the training and recruitment of sufficient skilled workers to deliver on that ambition.  

If you work in the housing sector, we would be interested to hear from you to get your views on the housing landscape and to understand the challenges that you are seeing play out. Get in touch here. 

Cicero is monitoring speculation in the run up to the Budget and will be providing comprehensive coverage on the day. Please get in touch with a member of the team to discuss how we can support your business to navigate the process.  

23 February 2024

For nearly two-thirds of global businesses, geopolitics is the top medium-term risk and they expect geopolitical events to impact the way they do business over the next five years. In 2022 alone, 93% of global companies reported losses due to political instability. As global firms navigate through the geopolitical fog, knowing how and what to communicate externally is crucial.

What are geopolitical events and what consequences do they have for business operations?

Most geopolitical events fall into one of the following categories:

1. Political instability and conflict: This includes risks from war, terrorism, coups, civil unrest, and wider political instability, disrupting business operations, supply chains, and markets. Such instability can also lead to the imposition of sanctions, expropriation of assets, or changes in government policies that negatively affect businesses.
2. Geopolitical tensions and trade wars: Rising tensions between countries can lead to changes in trade policies that start trade wars, sanctions and embargoes, disrupting global supply chains and affect commodity prices.
3. Cybersecurity and information warfare: In the digital age, geopolitical conflicts can also manifest in cyberspace through state-sponsored cyber-attacks, espionage, and information warfare. Attackers can target critical infrastructure and steal intellectual property, posing significant risks to companies’ security and competitive position.

These events, whether on their own or in unison, disrupt business operations and force firms to shift strategies – with a tailwind effect on their external communications.

National responses to geopolitical risks – how should business communications react?

We are seeing nations increasingly use their own policy toolkits to mitigate the risks from conflict and competition on the world stage. For example, countries are using more protectionist and autarkic measures to insulate their economies from shocks to the global economic system. This is not just responses to the immediate challenges at hand. Rather, it represents a proactive approach to safeguarding national interests and promoting the strength of domestic enterprises in the face of a systemic shifts away from globalisation.

For businesses, this evolving landscape means communicating through an economic “fog of war”. Unpredictability and the potential for rapid change necessitate a solid understanding of geopolitical dynamics, especially in key markets.

Here are four geopolitical issues and business communications strategies to tackle them:

• Diversification of supply chains

The push for semiconductor reshoring, highlighted by the CHIPS and Science Act in the US and the European Raw Materials Alliance (ERMA), illustrates the strategic pivot by both blocs to secure their supply chains. For many firms, this requires uprooting operations and moving to either a friendlier country, one close to the home market, or back to the home market itself.

Firms need to navigate the complexities of disclosing strategic moves, balancing transparency with competitive considerations.

• Strategic trade agreements

Several countries are actively pursuing diversification through agreements like the CPTPP, the EU and MERCOSUR and the ongoing US and UK trade talks. This reflects a calculated effort to broaden economic ties and reduce dependency on a single, potentially hostile, entity.

Companies should develop targeted communication campaigns to leverage these agreements, emphasising their operation in safer markets and the benefits of reduced trade barriers.

• Trade barriers and protective measures

The trade tensions between the United States and China and Carbon Border Adjustment Mechanism (CBAM) are displays of a broader strategy to protect industries and assert a geopolitical stance through economic means. These actions are the inverse of trade agreements as they decrease access to markets for firms from less favourable jurisdictions.

Decisions on how to address these barriers require careful planning to align communication with business interests and those of the wider public.

• Industrial policy

The United States’ Inflation Reduction Act and the EU’s Net-Zero Industry Act (NZIA) exemplify how nations are using policy tools to drive domestic production of critical technologies and green infrastructure. The widespread adoption of industrial policies across 84 countries, representing 90% of global GDP, highlights a global trend towards reinforcing economic sovereignty.

Businesses should communicate how they align with or benefit from these policies, emphasising their role in supporting the aims of such policies.

Navigating through the fog

What businesses require is a communications strategy that is not only reactive but also anticipatory, allowing firms to operate effectively amid uncertainty. Businesses that excel in developing such a communications strategy are better positioned to not just weather the storm but to emerge more robust, ready to lead in the new economic realities that lie ahead.

Leverage your business communications in managing geopolitical challenges in three ways:

• Be proactive: Develop a communications strategy that anticipates geopolitical shifts to ensure effectiveness amidst uncertainty.
• Engage with external stakeholders: Maintain open lines of communication with public leaders and external stakeholders to secure support during geopolitical upheavals.
• Navigate sensitivities with finesse: Craft messages with careful consideration of emotional and political sensitivities to manage your company’s reputation effectively.

These approaches to managing geopolitical risks not only ensure business continuity but will also open new avenues for growth. In 2024, those who are bold and equipped with a strategic communications framework are not just surviving; they are set to thrive.

You can get in touch with Charles and the rest of our communications team here.

8 February 2024

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With a month to go until Jeremy Hunt delivers his Spring Budget on 6 March – his fourth fiscal event as Chancellor – the Government expectation-management machine is already kicking into gear.

Caution – low fiscal headroom

The previous Autumn Statement saw the Government utilise some of its £30.1bn fiscal headroom, introducing headline reductions to National Insurance and permanently extending the full expensing capital allowance regime for UK businesses. Initial indications from No 11 over the Christmas period suggested that this momentum would continue into the spring.

Tax cuts will undoubtedly remain a priority, but, as the Budget approaches, signs indicate that Government will steer a more cautious approach than had been anticipated. It is reported that internal Treasury forecasting suggests that Hunt will have just £14bn of headroom against his self-imposed target of reducing debt as a share of gross domestic product in five years’ time.

Against this backdrop and heeding the advice of the International Monetary Fund (IMF), which last week urged the Chancellor to prioritise addressing pressures on UK spending and aligning with Office for Budget Responsibility (OBR) calculations, Hunt is understood to be keen to downplay the scale of any giveaways. The recent decision by the Bank of England to maintain interest rates at 5.25%, amid suggestions that wages remain too high for inflation to come down “sustainably”, will further entrench this position.

Last chance saloon for cutting tax?

A promise of a final pre-election tax-cutting event in the early autumn – the last chance saloon – and more tax cuts to come might just placate factions on the right of the Conservative Party for whom this deceleration won’t sit well.

But given the narrow window between an Autumn Statement and the speculated General Election date of 14 November, it’s likely that voters won’t experience the impact of tax modifications before the election. Instead, the changes will serve merely as a signal to voters and MPs of the Government’s intended course of action should it be re-elected.

Labour’s response

On the Opposition benches too, expectation management has been a major feature of recent weeks. Labour has sought to cool down its rhetoric around the £28bn spending commitment on the Green Prosperity Plan, which is expected to be withdrawn further still from Labour’s policy slate in response to the publication of official OBR forecasts around Budget Day.

While a clearer picture of the fiscal landscape will provide the party with a firm basis from which to begin to flesh out spending commitments across the board, the legacy of its miscalculation on green spending will be a millstone for the party as it continues to establish its credentials on fiscal responsibility.

Cicero will be keeping a close watch on developments ahead of the Spring Budget.

Feel free to get in touch with a member of the team to discuss how we can further support you to navigate speculation ahead of the day.

7 February 2024

The City of London is a small place. You can walk across EC3, the postcode that houses one of the global insurance hubs, in fifteen minutes or less: the real 15-minute City. About 200,000 people work in the British insurance sector, and a large proportion of them work in this corner of London.

In January 2024, EC3, normally wrapped in its own bubble, saw a sudden flurry of interest and attention: the globally renowned press agency Reuters announced its acquisition of a trade publication, The Insurer, one of the leading titles serving the London insurance market.

Leading the insurance market

EC3 isn’t often the centre of national media attention. When global events require or a scandal rocks the market, the eyes of the national press may occasionally turn to insurance. But most news about those 200,000 people and their workplace is more likely to be read by the insurance community themselves, who are directly affected by it.

To get that information, they will turn to the extensive insurance trade press. This is where quality journalism – from breaking news stories, leaks and loss reports and detailed and expert analysis of long-term market trends – still finds a home. Their success is continuing, despite the widely publicised withering of many generalist national news titles.

Insurance trade publications have always led, rather than followed, wider trends: for example, Post Magazine, a general insurance title, is so called because it was the first magazine to be delivered by post, way back in 1840.

It’s easy to see why The Insurer made for an attractive target for a global agency threatened with a fragmenting media market: The Insurer has a captive audience of peers in a significant yet narrowly understood sector of the economy, and an expert crew of journalists. This means continued advertising revenue is likely to keep titles buoyant for years to come.

It’s also an expression of confidence in the future of industry-specific reporting: competition for talent, the need to differentiate and add value to your proposition and the critical importance of your reputation vis-à-vis your peers will remain business-critical in coming years and decades. So, the need for expert and specific news from a niche sector will only grow.

Why others engage, and you should too

That principle – of speaking to your sector in the media your peers read, and in the language they speak – also applies to organisations that want to be seen as market leaders: if you want to stake your claim of breaking ground in your industry, make sure you appear in the titles your peers and competitors are reading.

That means finding, where appropriate, national outlets where a national audience is required for your story. It means identifying broadcast opportunities where a family settling down to Channel 4 News, or an early-rising Today Programme listener, or an avid Ian King Live watcher on Sky News, would be your intended target.

But if your intended audience is your peers, the most effective, the most direct, the best value-for-money editorial opportunity can be in the trade press.

Whether you’re a fintech looking to attract outstanding talent from competitors or a financial advisor seeking to build consensus around a policy proposal, you can be sure that telling that story in a trade publication is going to reach your intended audience.

”One for the trades” – for valuable coverage look to your own sector first

Fundamentally, this comes down to a restatement of the bare essentials of the PR process: identifying a story and its intended audience, and creating a strategy that will most effectively tell that story.

Trade publications remain influential, vibrant and effective; the sheen and prestige of appearing in a national title shouldn’t take away from a basic principle of PR: do what adds value to your company, rather than getting coverage for its own sake.

At H/ Advisors Cicero, we can help you on that journey. Perhaps the next time we work with you, our advice will be: “That one’s for the trades” – do something that makes your peers jealous. And that’s a good thing.

Discuss targeting your audience through trade media with our team – get in touch.

5 February 2024

The Democratic Unionist Party (DUP) has revealed it will return to power-sharing at the Northern Ireland Assembly following a two-year hiatus. DUP leader Sir Jeffrey Donaldson confirmed the party has backed a deal with the UK Government aimed at addressing its concerns over post-Brexit trading arrangements set out in the Northern Ireland Protocol and Windsor Framework. The development sets the stage for MLAs to return to Stormont as early as this weekend and end the paralysis that has plagued Northern Irish politics for 23 months.

What does the deal mean?

Despite admitting the agreement with the UK hadn’t achieved everything the DUP wanted, Donaldson negotiated what he believed would be enough for his party executive to return to Stormont. The DUP leader has insisted that many controversial post-Brexit customs checks will be scrapped, that Northern Ireland’s status in the UK’s internal market has been secured, and, crucially, that the new agreement “takes away the border within the UK between Northern Ireland and Great Britain”. These achievements, however, refer only to goods that remain in Northern Ireland, rather than those that continue over the Irish border and into the EU. He also said that the deal would end “dynamic alignment”, under which trade law in Northern Ireland is required to align automatically with EU law. With the full details of the deal yet to be released, unionists and nationalists alike have only Jeffrey Donaldson’s word with which the judge the new agreement.

The UK Government will be hoping that in having Chris Heaton Harris and Steve Baker – staunch Brexiteers at the Northern Ireland Office – say that there are no commitments in the deal to align GB with EU law, prevent GB from diverging from retained EU law, or increase alignment in Northern Ireland beyond the strictly limited scope Parliament has approved, enough succour has been provided to Leave-voting Parliamentarians and activists to support the deal.

Managing the DUP’s internal fractures

Donaldson, a relative moderate by the DUP’s standards, has been battling for months to secure a compromise deal that will placate party hardliners who fiercely oppose the current post-Brexit trading arrangements in the region. The party executive has endorsed the agreement, but it is not clear how much opposition there was and will continue to be. The new agreement seemingly fails to meet the “seven tests” by which the DUP had been measuring any proposal to allay its concerns over trade. The key challenge for Donaldson now is to manage the fallout. Handling the internal discipline of the DUP nearly fell apart completely, with one attendee of the meeting seemingly having worn a wire to leak to unionist activist Jamie Bryson who live-tweeted its contents. The Party’s primacy in the unionist community is under threat in its most serious challenge since it overtook the UUP in the early part of this century.

The DUP are also not without organised challengers. Loyalists are keen to point out that not one word of the Northern Ireland Protocol has been altered, and Traditional Unionist Voice has lamented “a tawdry climbdown by the DUP on their own tests which have not been met” and accused the party of “accepting foreign law”. Indeed, the level of opposition within the DUP may still prove potent, with concerns remaining that the party may continue to lose votes to other unionist parties who oppose the Windsor Framework and insist a better deal is available.

Although there have been many false dawns in the restoration of power-sharing since 2022, the DUP’s decision to endorse the agreement, and the prospect of a return to Stormont, have been welcomed to varying degrees by Sinn Féin, the Alliance and the Ulster Unionist Party – but, as ever, the devil is in the detail and the atmosphere could always change after the UK Government publishes the deal.

This excerpt comes from our full analysis of the DUP deal. Get in touch with our consultants to learn more.

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12 December 2023

This is an excerpt from our full-length analysis on the Edinburgh Reforms. To find out more about our in-depth insight get in touch here.

As new City Minister Bim Afolami made his way up to Edinburgh last week to herald the anniversary of the reforms package from late 2022, the Government will no doubt be quietly happy with their progress. Of the 31 measures, we rate around half as green – denoting they are at or nearing completion.

And those that have seen significant progress are not simply the “low-hanging fruit”. The straightforward process of repealing regulations from the EU that are no longer felt to be appropriate – such as ELTIF and PRIIPS – is now in train. But significant new initiatives are also picking up momentum: the UK’s consolidated tape for the bond market alongside a new “Digital Securities Sandbox” are set to go live next year.

But there is still much to be done

Some reforms have been left in limbo following initial consultations, while others are unlikely to conclude fully before electioneering takes centre stage. Most of the reforms are uncontroversial – but that is not universally the case. Opposition to central bank digital currencies is picking up steam, with the Treasury Select Committee echoing their Lords’ equivalent in questioning their purpose. Meanwhile, work on pensions reforms could end up being superseded by the post-election review planned under a possible incoming Labour Government.

A General Election could disrupt reforms

But, as the UK political scene remains turbulent, speculation continues over the date of the next General Election. That decision will filter through to all policy areas.

Any legislation which has not passed into law will drop at the point of dissolution (6 weeks before a General Election). That does leave the risk that even those initiatives that have progressed well end up back at the drawing board for re-consideration under a new Government.

Regardless of which party takes office after the election, there will undoubtedly be delays as (presumably) new Ministers have to re-prioritise their in-trays and take another look at ongoing work to see where they can stamp their authority. Even initiatives with broad political consensus could remain in limbo for many months.

Labour starting to show dividing lines

While Labour has not signalled opposition to the Edinburgh Reforms as a whole, specific initiatives could face challenge or at least re-consideration. Shadow City Minister Tulip Siddiq made intriguing comments to the Financial Times last week, singling out ringfencing reform and changes to the Senior Managers and Certification Regime as areas that Labour may reconsider. Sustainability initiatives are more likely to see their time in the sun under a Labour administration, as the Tories’ interest has cooled.

The regulators are also expected to be relied on more heavily under a Labour Government, which would see regulatory independence as sacrosanct and won’t have the institutional knowledge of recent Ministers.

A lot will rest on the timing of the election. A Labour Government would be unlikely to use up limited parliamentary time unpicking reforms that have completed, but those that remain unlegislated are at risk of delay. If reforms fail to progress now, it could be some time before they come to fruition, if at all.

To speak to Tom about this analysis or any financial policy issue, email tom.harrison@h-advisors.global.

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