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Britain’s Labour Budget: bold ambition, uncertain prospects

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Britain’s chancellor Rachel Reeves inherited a deeply troubled economy: slow growth, strained public services and high debt. After months of confidence-sapping speculation, at Wednesday’s Budget she delivered a budget that was dramatic in scale: around £40bn in higher taxes — the largest increase for a generation — £70bn in higher spending, and £30bn more in borrowing, per year. This marks a turning point for Britain, towards a significantly stronger role for the state in its economic model, with the tax-to-GDP ratio set to rise to a postwar high by the end of the decade. Much of the tax burden is set to fall on business.

Reeves’ package has begun the hard work of stabilising public services, raising capital investment and improving the fiscal rules. But, when so much of the heavy lifting she envisages falls to the state, the question is whether the reality of her growth strategy matches the rhetoric.

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The main beneficiaries of the chancellor’s dramatic fiscal loosening are public services, particularly the broken health service and underfunded schools. Long hospital waiting lists, chronic illness and teacher shortages impose strains on the economy. The major tax change was to raise £25bn from higher employers’ national insurance contributions. The move raises the costs for business but there must be no illusion: working people will still suffer as higher business costs translate into weaker wage growth and less hiring.

True, tax rises were inevitable. But the benefits remain uncertain. First, the Office for Budget Responsibility expects the chancellor’s spending measures to deliver a near-term boost, but reckons GDP will be largely unchanged in five years’ time. The government’s admirable plans to unlock the planning system and an ambitious capital investment agenda, if delivered, may yet convince the fiscal watchdog that Britain is on a better trajectory.

The chancellor listened to concerns, and contained some of the hit to the UK’s competitiveness by watering down rumoured plans to raise significant levies on private equity and wealthy investors. But businesses and investors — which power economic growth — will still feel squeezed. The NICs increase comes alongside capital gains tax increases, a minimum wage hike, and a costly workers’ rights bill. And although Reeves made some sensible tweaks to inheritance tax, she missed an opportunity to outline a broader plan for growth-enhancing tax reforms.

Second, if subdued growth — and strains on the private sector — continue, rising demands on Britain’s public services risk pushing taxes even higher. Reeves boosted day-to-day funding for public services by 1.5 per cent in real terms, which will still leave some services with tight budgets. Vague plans to make cuts by boosting public sector productivity and reduce welfare fraud and errors must actually deliver reasonable savings.

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Third, driving growth, and improved tax revenues, will also depend on how well Reeves can execute on her plans to boost investment. She outlined important plans to spend £100bn over the next five years on transport, housing and research and development. Her new fiscal rules are an improvement on the old ones, and help maintain fiscal discipline while also freeing up additional space to borrow for much-needed public investment. Though gilt yields have hit a five-month high, for now it seems she has retained the confidence of financial markets.

The chancellor has opened the door to higher investment, which if sustained, could be game-changing for Britain’s growth trajectory. But it is now essential that new funds are channelled efficiently to productivity-enhancing projects. With her inaugural Budget, Reeves has begun to fix the foundations of Britain’s economy from a difficult starting point. But if this government is to live up to its branding as “pro-growth, pro-business, and pro-worker” it has a lot more to prove.

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Davos entourages will face 10-fold price increase next year

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The World Economic Forum has increased the price of admission 10-fold for some guests at its annual meeting in Davos as it tries to grab a greater share of the corporate activity on the sidelines of the elite gathering.

The organisation is also expanding the number of passes available and revamping the access they provide. The shake-up, planned for the 2025 meeting in January, was discussed with sponsors at a meeting in Geneva this week, according to people who were there.

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The WEF offers access passes, or badges, for second-tier attendees in the entourage of the corporate leaders who make up Davos’s official participants. These will rise in price from SFr100 ($115) in previous years to SFr1000 from 2025.

The badges provide access to some parts of the WEF meeting but not the main conference centre where world leaders and chief executives can hobnob in between panels on the global economy, inequality and climate change. An elite badge costs SFr27,000 per person.

The lower-tier badges will be made available to a wider range of participants than in previous years, including much smaller sponsors, and are designed to lure mid-tier executives with the promise of new opportunities to network with other attendees.

“It feels like a cash grab,” said an executive at one large WEF sponsor.

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“As if a marketing person has gone in and told them they are underselling Brand Davos. Frankly, I have no idea where they are going to put all these people. You already cannot move.”

The WEF meeting overwhelms the little Swiss ski resort every year for one week in January, when local businesses rent out space to corporations who want to set up “store fronts” where they can market their services and host client meetings.

For 2025, the WEF is erecting a new building near the conference centre in the middle of town to house its own administrators and to get in on the real estate frenzy. It has told sponsors they can rent meeting space in the container-style modular building for about SFr150,000 for the week.

The non-profit WEF counts many of the world’s largest companies among its top tier of 120 “strategic partners”, from tech giants to banks to professional services firms. But it also has a growing number of smaller corporate sponsors, taking the total number of partner companies to 900.

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The WEF is also launching a programme allowing this wider circle of corporate sponsors to put on events of their own under the official Davos umbrella — for a fee. Under the plan, companies would be able to livestream and market up to 10 panel sessions on the app for Davos participants if they pay SFr45,000, although the fee structure is likely to change after feedback in Geneva this week, according to people familiar with the discussion.

The WEF will have to vet that the sessions align with its mission of promoting human ingenuity, entrepreneurship and innovation. They will remain distinct from the official programme involving world leaders and CEOs. The idea is to put a WEF stamp of approval on some of the activities that have sprung up on the outskirts of the event in recent years and sideline the opportunistic corporate marketing gimmicks that have also crowded into Davos.

“The goal is to give more opportunities to recognise partners’ thought leadership outside of the official programme,” a WEF spokesperson said.

The expanded badge system “will offer access to exclusive locations within the security zone and full-event digital services to navigate the Davos ecosystem, interact with each other and be listed on the World Economic Forum app alongside official participants”.

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The spokesperson added: “The accredited programme, accredited badges and offices are provided to partners at cost.”

The WEF says that the 2025 annual meeting, which takes place from January 20 to 24, will address challenges “responding to geopolitical shocks, stimulating growth to improve living standards, and stewarding a just and inclusive energy transition”.

Preparations are unfolding against a backdrop of scrutiny of the WEF’s own culture, after allegations of workplace discrimination and sexual harassment against founder Klaus Schwab, which it denies. Its board of trustees has engaged an outside law firm to conduct a review of its workplace culture, which is yet to conclude.

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Cruise companies pour money into lucrative private resorts

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The world’s biggest cruise groups are pouring money into private destinations for their customers as booming demand rubs up against a backlash against overtourism in many popular spots.

The biggest operator, Carnival, is in the midst of developing the $600mn Celebration Key on the island of Grand Bahama. The “first-ever exclusive destination to be purpose-built” for the company will open next year.

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Meanwhile, rival Royal Caribbean is planning to spend a similar amount building the 200-acre Perfect Day Mexico resort on Mexico’s Caribbean coast in Mahahual. It will have beaches, water parks and other entertainments and is scheduled to open in 2027.

Another major operator, Norwegian Cruise Line, is building a two-ship pier to its own private island Great Stirrup Cay to allow it to double visitor numbers to 700,000 from 2026.

By 2025 passenger capacity at cruise company-owned private islands in the Caribbean will have more than doubled from 2019, according to Christian Savelli, cruise analytics director at Tourism Economics.

The industry is hoping to emulate the success of Royal Caribbean’s Perfect Day CocoCay private island, which reopened in 2019 after a $250mn redevelopment. Barclays’ analysts attribute a nearly 8 per cent rise in the cruise operator’s net yield — the main industry measure of profitability — to this relaunch.

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“One of the value points of us adding more [of] these destinations or creating them is to really spread or distribute our guests more broadly,” chief executive Jason Liberty told the Financial Times. This can help reduce congestion in traditional hotspots.

Royal Caribbean is also developing two beach clubs on islands in the Bahamas and Mexico to be opened by 2026, which are smaller than the larger Perfect Day resorts.

The Miami-based cruise line is “taking pressure off of the system . . . [by] putting up new experiences” for its guests at destinations where otherwise “there is not enough to do”, Liberty added. 

“You deliver the experience, you have the [passenger] volume, and people want to pay more money to go to those destinations. So we see a higher return profile on the destination than we do on the ships.”

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Norwegian chief executive Harry Sommer recently said the new pier on Great Stirrup Cay should ultimately generate “higher guest satisfaction, higher revenue, higher repeat rates [that] becomes a virtuous cycle”.

Operators are spending money to build their own resorts as they try to balance a rise in demand since the pandemic and a backlash against the growing number and size of cruise liners in crowded tourist destinations.

In 2023, 31.7mn people worldwide went on cruise trips, up 7 per cent from 2019, according to the Cruise Lines International Association. It expects passenger numbers to have reached 39.7mn by 2027. Carnival, Royal Caribbean and Norwegian all recently increased their profit forecasts for this year, driven by rising bookings.

Savelli said passenger numbers were growing faster in the Caribbean than in all other major regions including the Mediterranean, driven by the popularity of private resorts.

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While more people want to go on cruise trips, fewer locals are happy to see big ships full of people in places that already have a lot of tourists.

Larger cruise ships have been banned from docking in Venice and earlier this year the city started charging day-trippers an entrance fee of €5. In September, authorities in Ibiza announced that no more than two cruise ships would be allowed to dock at the same time. Alaska is set to impose a cap on the number of cruise passengers visiting the major port of Juneau from 2026.

Royal Caribbean’s Liberty played down congestion caused by cruise ships, blaming Airbnb and local population growth instead. But Bob Levinstein, chief executive of cruise holiday marketplace CruiseCompete.com, said overtourism worries had “cruise lines thinking more seriously about how they can have more control over the destinations, and private islands are a smart way to do that”.

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Kamala Harris stakes closing election pitch on joy, warnings and women voters

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Kamala Harris stakes closing election pitch on joy, warnings and women voters

With only days to go until the election, Kamala Harris made a closing pitch to voters that sought to balance joyful optimism with dire warnings about the threat posed by her Republican opponent.

“We have an opportunity in this election to finally turn the page on a decade of Donald Trump, who spends full time trying to keep us divided and afraid of each other,” the Democratic vice-president told an estimated crowd of 12,000 at a park in downtown Atlanta on Saturday.

It is a message Harris has hammered home in the final stretch of a presidential campaign powered by surging support from women and younger voters that would have seemed improbable at the start of the year.

But Harris now has an even chance of becoming America’s first female president after a frenetic four months that started with a disastrous debate performance from Joe Biden that led him to step aside in favour of his vice-president.

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What followed was a mad-dash autumn of campaigning in which Harris has erased Trump’s polling lead and surpassed his fundraising advantage.

The Financial Times poll tracker now shows Harris leading the former Republican president nationally by just over one point.

Critically, the candidates are in a statistical tie in the seven swing states that are likely to determine the election. That has led many analysts to conclude the next US president could be decided by a few thousand voters in just a handful of states. Four years ago, Biden won Georgia’s 16 electoral college votes by a razor-thin margin of less than 12,000 votes.

Harris and her advisers insist they have the momentum heading into polling day and that undecided voters making their choice in the final days were breaking their way.

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“Every single one of our battleground states are absolutely in play,” said a senior Harris campaign official. “We continue to see multiple pathways to 270,” the official added, referring to the number of electoral college votes needed to win the White House.

Harris has criss-crossed the country in the final days of her campaign, hitting every swing state at least once.

On Thursday and Friday, Harris whipped through Nevada, Arizona and Wisconsin. On Saturday, she flew straight from Georgia to North Carolina. On Sunday, she is expected to run through Michigan before rounding out her last day of campaigning on Monday with three major rallies in Pennsylvania.

“We still have work to do,” Harris told the crowd in Atlanta. “But here’s the thing, we like hard work . . . and make no mistake, we will win.”

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Kamala Harris at a rally in Charlotte, North Carolina, on Saturday © Charly Triballeau/AFP/Getty Images

The Harris campaign has for weeks sought to craft a message that paints an optimistic vision of America’s future and warns of what they see as the threat Trump — who is already casting doubt on the results of next week’s election — poses to US democracy.

Harris has made overtures to female voters by vowing to restore abortion access and protect reproductive freedoms that were stripped away after Trump-appointed Supreme Court justices helped overturn Roe vs Wade in 2022. She has extended an olive branch to centrist Republicans who are disillusioned with Trump, insisting she would put “country over party” as president.

Top Harris advisers maintain the strategy is working, in part because Trump has spent the final days of his own campaign wrestling with a backlash to racist and misogynistic remarks from speakers at his Madison Square Garden rally. He has courted controversy with a series of vulgar and incendiary comments, including musing over how anti-Trump former Republican congresswoman Liz Cheney would react if she had “guns trained on her face” and “nine barrels shooting at her”.

By contrast, the mood at Harris rallies has been relentlessly upbeat, with live music and celebrity appearances serving as warm-up acts. At the campaign stop in Atlanta on Saturday, throngs of voters — including many women who showed up with their young children in tow — coloured home-made signs and assembled friendship bracelets to show their support for Harris.

On Saturday night, she made an unscheduled stop in the Democratic stronghold of New York City for an appearance on Saturday Night Live.

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“We are so ready for a fresh change,” said Phyllis Hernandez, a 63-year-old Atlanta voter. “We are not going to be taken back into the dark ages. We are moving forward with hope and joy.”

A senior Harris campaign official said their private polling showed Trump’s antics were undercutting his own support.

“We are winning battleground voters who have made up their minds in the last week, and we are winning them by double-digit margins,” the official said.

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“We have believed all along that there were still undecided voters here, and that the close of this race was really, really important, and we are seeing that to be the case.”

Harris aides were also buoyed by Gallup polling out this week showing Democrats had a 10-point advantage over Republicans when it came to energy, with 77 per cent of Democrats and Democratic-leaning independents saying they were more enthusiastic about voting this year than in previous years, compared with 67 per cent of Republicans.

Donald Trump speaks at a campaign rally at Salem Civic Center in Virginia on Saturday © Hannah McKay/Reuters

If Harris wins on Tuesday, it could well be because of women. Her campaign cites data showing more women have submitted their ballots by mail or in-person ahead of election day than men. Polls have consistently shown women overwhelmingly back Harris, while a similar percentage of men support Trump.

Still, many presidential campaign veterans caution that opinion polling and early voting figures in the final days of such a tight race are not necessarily predictive.

“We are all in a dark tunnel. That is the reality,” said Bob Shrum, a longtime Democratic consultant who worked on Al Gore’s 2000 presidential campaign and John Kerry’s 2004 bid for the White House. “But there are some emerging signs that she is doing very well.”

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The Harris team maintains that their hundreds of millions of dollars’ worth of spending on targeted advertising and a robust “ground game” — the vast network of campaign volunteers and party organisers across the country — will help them turn out enough voters on Tuesday to push Harris over the line.

The senior Harris official said the campaign had knocked on more than 13mn doors across the seven battleground states to date. The Gallup poll found 42 per cent of registered voters nationwide said they had been contacted by Harris’s campaign, compared with 35 per cent who said they had heard from the Trump team.

“She has done the work. She has laid out what people need to hear,” said Brandi Wyche, chair of the local Democratic party in DeKalb County, just outside of Atlanta, who has worked for months to rally support for Harris. “Now it is just about making sure to get people to the polls to elect her as our next president.”

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Additional reporting by James Politi and Steff Chávez in Washington

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TotalEnergies chief warns Donald Trump against cutting climate rules

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TotalEnergies’ chief executive has urged Donald Trump not to axe climate rules if he wins the election, warning that taking a “Wild West” approach to regulating fossil fuels would provoke a backlash against the oil industry.

Patrick Pouyanné told the Financial Times that if the former US president pressed ahead with pledges to tear up rules governing methane and other emissions it would torpedo the sector’s reputation and fuel opposition.

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“I prefer to have good regulations in the US, for example, in methane I prefer the EPA [Environmental Protection Agency] to be stringent . . . I am not in favour of the Wild West,” he said.

“My view is that this will not help the industry, but on the contrary it will demonise, and then the dialogue will be even more antagonised.”

The comments from Pouyanné, whose France-based company is one of the biggest global oil producers, come as the industry considers the implications of a possible Trump victory over Kamala Harris in Tuesday’s US presidential election.

Trump has pledged to “rescind every one of Joe Biden’s industry-killing” regulations and withdraw from the 2015 Paris agreement — steps he says will “unleash American energy”, which is already at record levels of production.

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The oil industry has been an important source of fundraising for the Republican candidate as many executives oppose environmental restrictions that they say will hinder investment. A handful have publicly endorsed him, including Harold Hamm, the billionaire founder of Continental Resources.

In private, however, many leaders have expressed reservations about Trump’s policies, including plans to impose punishing tariffs on imports and gut the Inflation Reduction Act, Biden’s signature climate legislation.

Even if he wins the presidency, much of Trump’s ability to enact his plans could be limited by Congress and the courts. Some industry leaders expressed scepticism that the regulatory bonfire would come to pass.

“I think there’s a very low likelihood the US becomes a Wild West of deregulation,” said Mike Wirth, chief executive of US supermajor Chevron.

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He told the FT: “Based on 42 years in this industry, I’ve seen regulation move in one direction. Sometimes it moves faster, sometimes it moves slower, but I don’t think that we’re at risk of some sort of chaotic outcome of a deregulatory period of time.”

Trump has been particularly scathing about the IRA, which he has dubbed the “green new scam”, vowing to rescind all unspent funds issued under it.

But oil companies including Chevron and US rivals ExxonMobil and Occidental Petroleum are tapping into the $370bn in green tax breaks and subsidies available through the legislation to support investments in technologies including hydrogen and carbon capture and do not want the law repealed.

Some executives are hoping the flow of the majority of IRA funds into Republican congressional districts would prompt Trump’s party to temper his ambitions to kill it.

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“There’s a lot in the IRA that’s helping to support projects across the country, which also helps to support economic growth and job growth,” Kathy Mikells, Exxon chief financial officer, told the FT. “That gives a lot of people a lot of incentive to stand behind the IRA.”

Biden’s regulatory agenda would be easier to unpick, however, including tough new rules and penalties forcing the industry to curb methane leaks.

Most larger oil companies are investing in new technology to limit emissions of the planet-warming gas and have backed global efforts to slash them by at least 30 per cent by 2030 from 2020 levels.

But many smaller operators are opposed to the rules, arguing they lack the financial firepower to adhere to them, and want Trump to repeal them — as he did with regulations introduced by Barack Obama during his first term.

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Pouyanné said such a move would leave the industry exposed to attacks by climate groups and give the industry “again a bad reputation”.

Oil companies had accepted environmental rules in the past covering greenhouse gas emissions, air and water quality and should do so again and face up to the challenge of climate change, he said.

In 2021 Total quit the American Petroleum Institute saying the French group’s climate policies — support for the Paris agreement and belief in carbon pricing — did not align with those of the industry lobby group.

“We can produce fossil fuels with lower emissions and we have the technology,” he said. “I count on my large and big US peers to convince the rest of the industry.”

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Four Seasons Hotel New York reopens this month

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Four Seasons Hotel New York reopens this month

Only a selection of rooms across multiple room categories will be available at the time of the reopening, with the full collection of suites becoming available to book in 2025.

Continue reading Four Seasons Hotel New York reopens this month at Business Traveller.

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BrewDog opens bar at Edinburgh Waverley Station

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BrewDog opens bar at Edinburgh Waverley Station

The 175-capacity venue, operated by SSP, serves up to 16 of the company’s craft beers as well as cocktails under its BrewDog Distilling Co Wonderland brand.

Continue reading BrewDog opens bar at Edinburgh Waverley Station at Business Traveller.

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