ALEX BRUMMER: Fuel costs batter stability

You might think the protests and vicious shoot-on-sight crackdown in Kazakhstan had little to do with Britain’s cost-of-living stresses. 

But the roots are the same as they were for the yellow-vests protests in France from 2018 onwards and the raucous demonstrations disrupting Chile’s political order. 

At the global level, Cop26, the IMF and the World Bank as backers of climate change action want to see higher carbon taxes and for business and consumers to pay realistic prices for energy. 

In Kazakhstan, a doubling of the super-low petrol price of 0.47 US cents a litre was enough to let all hell loose. 

Britain has made terrible choices on energy, ranging from the coolness towards opening up untapped offshore oil and gas resources such as Cambo, off the Shetland Islands, and by failing to invest speedily enough in new nuclear. Dependence on just-in-time imported oil and gas, without sufficient storage, exacerbates the problems. 

There is no escaping the reality that our cost-of-living problems are global in nature. This is illustrated by eurozone inflation, which zipped up to 5 per cent in November, the highest level it has ever been for the single currency bloc. In Germany, the historic exemplar of stable prices, it came in at 5.7 per cent last month. The same factors which have led to surging UK consumer prices are driving those on the Continent, with energy costs and post-Covid supply chain bottlenecks key factors. Energy prices across the eurozone are the main drivers. Average household gas and electricity bills on the Continent are forecast to climb by €650 (£542) to €1,850 (£1,541) in 2022. 

That may not be quite as big a shock as in the UK, but domestic users in Germany will still be required to stump up £19billion in extra charges, creating an early challenge for new Chancellor Olaf Scholz. 

Rather than face market realities ahead of France’s presidential elections in April, President Macron has responded by temporarily freezing electricity and gas bills, which is easier in a country where the government has a big stake in the main suppliers. 

The Tories, who cling on to the idea that shrinking the budget deficit is a good idea, don’t have that option. Electoral arithmetic, which dictates something must be done, should focus on the hardest pressed consumers rather than bailing out an under-capitalised industry.

In the aftermath of the financial crisis, there was a Titanic effort to make sure no bank would be too big to fail. Business Secretary Kwasi Kwarteng should adopt the same hair shirt approach to energy firms.

Digital do 

Martin Sorrell at S4 Capital is demonstrating with great skill where digital, tech and advertising meet. 

So the inside-the-tent assault by tech entrepreneur Vin Murria on M&C Saatchi looks to make sense. It is also reminiscent of Sorrell in his glory days at WPP and S4 in that Murria recognises that being in the public sphere offers the opportunity for the brave to make use of equity by issuing new paper. 

This is the converse of private equity, which operates a debt model. 

Murria, as deputy chairman of M&C, has a clear view of the value of the brand and its prospects having boarded the advertising group when it was in a pit of despair after the 2019 accounting scandal. She bought a commanding position directly through a 12.5 per cent stake and via an investment vehicle, AdvancedAdvt, which owns 9.8 per cent. 

Minority investors looking for a cash exit from M&C are distinctly cool on an all-paper deal which limits the escape route. If Murria really wants M&C, she must step back from her deputy chairman’s role, improve the offer and provide a cash alternative.

Sporting life 

The Athletic transformed sports reporting with the variety, range and quality of the analysis on its digital platform. 

It uses data well with a flair and intelligence of the kind first brought to public notice in Michael Lewis’s Moneyball.

In snapping up the San Francisco-based publication for £404m, the New York Times not only gains 1.2m subscribers (including this writer) but a reporting staff that understands finance and is prepared to expose sex abuse and other scandals. 

There is no immediate intention to merge with the NYT’s sports output. But the combination of two powerful franchises will create capacity to transform the quality and breadth of sports analysis.