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UK Credit Card Debt Is Swelling For All The Wrong Reasons | Philippe Inman

OWhen credit card balances start to skyrocket, analysts are generally confident that the trend indicates consumers are gaining confidence and the economy is doing well. In normal times, consumers feel less concerned about paying a super expensive interest rate if it means they can buy what they want right away.

These are not normal times. Britain’s economic recovery has stalled and a crisis in the cost of living means that most things we buy are becoming less affordable by the day. It’s no surprise, then, that City economists agreed that the £1.4billion rise in credit card balances in April was most likely an act of desperation by middle-income households and weak.

Those who have money save it rather than spend it, according to figures covering March from the Bank of England. The total amount of liquid assets held by households in banks, building societies and national savings and investment accounts increased by £6.3bn to stand well above the average for £4.9bn from 2017-19. Meanwhile, there was a further drop in mortgage approvals for home purchases in April, below the 2015-19 average of 66,500. In April there were 66,000 transactions, down from 70 000 in March.

Overall, it is clear that households lack confidence. They borrow to live and, where they can, save more because they don’t believe the current inflationary pressure will end any time soon. As if that weren’t enough, they aren’t buying homes in the usual numbers, often citing the risk of a recession that could drive prices down.

There is misguided hope inside No 10 that the negative trends could be reversed by Rishi Sunak’s £15billion bailout announced last week. Normalcy, or something like that, would supposedly be restored when the June numbers appear. But once the chancellor had delayed his bounty so long that consumer confidence had been all but destroyed, there was no way Britain could bounce back so easily.

His decision to spend part of the £15billion package on the better off could also persuade the Bank of England to raise interest rates at an even faster pace, further hurting the housing market and would crucify low-income people with unpaid debts.

Sunak claims to be nimble in his response to the crisis and someone who likes to use the latest data to make his decisions when it is clear that he is wracked with doubt, and more importantly, trapped by countervailing forces within his own left.

It’s a sorry mess and it’s not all the fault of the government. Yet the ministers, through their disjointed and disorderly actions, manage to make a bad situation worse.

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Investing ‘streetfighter’ takes on Unilever

Nelson Peltz, who ran for the Unilever board after buying just 1.5% of the company, is a minnow in the investment management industry.

A cursory glance at the website of his company, Trian, only reveals that it ranks as a “multi-billion dollar” company – further investigation shows it to be worth around $8.5 billion. It’s obvious that he’s a bit stealthy, while many of those operating in the same space have a lot more firepower.

For example, the management of Elliott Investment, known for buying Argentina’s debt and then demanding that the bankrupt country repay loans in full, has $51 billion to spend. The world’s largest fund manager, Blackrock, has $10 billion under management.

Peltz, however, should not be underestimated. He emerged victorious from his bloody and acrimonious fight with US consumer products company Proctor & Gamble in 2017, despite holding just a handful of shares.

He may have been born into the money, inheriting his father’s food business, but he’s still a street fighter. After spending 15 brutal rounds with Peltz, an intimidated P&G board room gave him a role on the board and gave in to his demands to serve on the innovation committee and redesign its management structure.

Nelson Peltz, founding partner of Trian Fund Management, photographed in 2016. Photograph: Mike Blake/Reuters

After four years of Peltz’s involvement, P&G was streamlined into six vertical businesses, ending the company’s complex matrix structure. At least it meant establishing greater accountability up and down the management chain. Today, P&G is worth double what it was in 2017.

Unilever, bruised by the failed £50billion takeover of GlaxoSmithkline’s consumer business last year, wisely read P&G’s script and capitulated without even a crossword when asked. de Peltz for a place on the board of directors.

Still, if the maker of Dove soap, Pot Noodles and Knorr bouillon cubes thinks playing nice will discourage Peltz, he’s probably wrong.

Peltz might be a bit distracted by his daughter Nicola’s marriage to Brooklyn Beckham, and Unilever might claim to have ditched its matrix management structure, but even that probably won’t stop him from getting into the business for better or for better. the worst.