Martin Vander Weyer

What with headlines focused on the Strait of Hormuz and scare stories about out-of-control AI, forecasts of a storm in the less vivid field of ‘private credit’ have dropped down the news agenda. But thunder continues to rumble since the collapse in London of the short-term property lender Market Financial Solutions, now being investigated for fraud – and there are connections between private credit, Iran and AI that could turn a storm into a hurricane. Governor Andrew Bailey of the Bank of England first talked of ‘alarm bells’ in the US private credit sector last October. The latest indicator is a stampede of investor withdrawals from Blue Owl, a prominent New York private lender.

Welcome to the new tax year, with its overflowing hamper of half-baked, growth-eating, enterprise-crushing Labour measures. And if you happen to be one of the 4.4 million self-employed who scrape an independent living despite rising costs and red tape, welcome to what must surely be one of Whitehall’s longest-running but least funny sitcoms, Making Tax Digital (MTD). If your income from self-employment (or rents as a landlord) exceeds £50,000 a year, you must henceforth submit quarterly digital updates to HMRC; next year the threshold will drop to £20,000. You’ll have less time to pursue your trade but your costs will rise, because you’ll need new software and more professional advice.

As chairman of the value-for-money Iceland frozen-foods chain, Richard Walker might be expected to know what he’s talking about in his newly ennobled role as the government’s ‘cost of living champion’. But he was also one of the few recognisable names on the list of 121 ‘business leaders’ who endorsed Labour’s clueless economic programme ahead of the 2024 general election. So we should be wary of his intervention on Rachel Reeves’s behalf, warning ‘profiteers’ not to ratchet up prices in response to the Iran crisis, having already ‘hauled petrol retailers and energy producers into Downing Street’ to tell them ‘opportunistic rip-offs will not be tolerated’.

There’s very little to celebrate in Downing Street these days but it must have been vodka shots all round in Chancellor Rachel Reeves’s office last week when Revolut, the City’s glossiest fintech start-up, finally secured the banking licence it has been pursuing for the past five years. Founded as a currency payments app in 2015 by two tech entrepreneurs, Russian-born Nik Storonsky and Ukrainian Vlad Yatsenko, Revolut acquired customers at an explosive rate and first sought recognition as a UK bank – able to accept deposits under the umbrella of the Financial Services Protection Scheme – in 2021.

Shares everywhere dived for cover as missiles started flying. But one stock ahead of the pack, and responding to a different alarm, was Barclays, which has dropped 20 per cent since early February, having quadrupled over the preceding two years. I’ll declare an interest as custodian of a modest family holding – making me all the keener to understand what this rise and fall is telling us. All banks were deeply devalued after the 2008 financial crisis and remained so, long after their balance sheets were repaired in the 2010s. More recently, the market narrative was that they were behaving sensibly again and their shares were shiny bargains. Barclays – run since 2021 by C.S.

All eyes on the Strait of Hormuz, the 24-mile-wide choke point between Iran, the United Arab Emirates and Oman, through which moves, in normal times, around a fifth of the global supply of liquified natural gas and a quarter of all seaborne oil. But with Iran threatening to set fire to any ship in the strait, LNG production halted in Qatar after missile attacks, and gas stocks in user countries low at the end of winter, prices are soaring as they did at the outbreak of the Ukraine war. You may hear it said that the UK is relatively well placed for this supply crunch because we import only a small portion of LNG from the Gulf and much more from the US and Norway; and because almost half of UK electricity now comes from renewables, with wind to the fore.

There are elements of economic life, such as the impact of President Donald Trump’s ever-changing tariffs, that are far beyond national control; others, including the supply of most consumer goods, that are best left to free markets; and others which naturally benefit from state intervention. New housing, wholly dependent on planning and building regulations, clearly falls into the last category. So we might well ask how the Labour government plans to solve a homebuilding crisis so extreme that its target of 1.5 million new homes within this parliament is likely to be undershot by 50 per cent or worse.

‘Nostalgia is not a strategy,’ declared Schroders chief executive Richard Oldfield after announcing that the investment firm, descended from a City banking house founded in 1804, is to be sold for £9.9 billion to Nuveen – which sounds like a brand of cooking oil but turns out to be a Chicago-based manager of retirement savings. The two together will hold £1.8 trillion of assets, placing them tenth in a global league headed by the giant American ‘passive’ investors BlackRock and Vanguard. Oldfield is right that there’s no point looking backwards in a tech-driven sector that’s rapidly consolidating to keep pace with those leaders.

It’s a relief not to have been pressganged into joining the Prime Minister’s plane-load of business chiefs and reporters bound for Beijing this week. With Sir Keir Starmer are leaders of the likes of Astra-Zeneca, BP, HSBC, JLR and Rolls-Royce, and some billion-pound deals will no doubt be announced while they’re there – agreed in advance on the condition that Downing Street gave the green light for China’s Royal Mint Court mega-embassy-cum-listening-post on the edge of the City. The Chancellor is on the trip too, perhaps carrying a nice set of hunting prints as a housewarming gift for London ambassador Zheng Zeguang’s new office.

My Davos spy disguised as an Uber Eats driver sent word that this year’s World Economic Forum was rammed ahead of Donald Trump’s arrival. The Alpine resort was heaving with Saudis, Emiratis, AI snake-oil salesmen and US tech titans strongarmed into sponsoring USA House, the official showcase of America’s ‘unity, ingenuity and leadership’ that has its main venue in the town’s English church – ideal for Trump veneration. Attendance was so competitive that the market in fake VIP passes was hotter than precious metals and one African statesman was seen parting with €25,000 in cash for a rented apartment.

The phrase ‘trumped-up charges’ dates from the 18th century, I learn, and derives from the Old French tromper, to deceive. It has certainly acquired new resonance with the threat of criminal indictment against US Federal Reserve chairman Jerome Powell, somehow relating to the cost of Fed building renovations. The President says this Department of Justice action has nowt to do with him, but it’s plainly another exercise of what some commentators are calling ‘the Maduro option’: sod constitutional niceties, just drag your opponent into the dock. For all his foreign-policy fireworks, Donald Trump knows November’s US midterm elections will largely be driven by domestic cost-of-living concerns.

Of all the heavyweight books I’ve ever been asked to review, one that most influenced my view of how the world works was Why Nations Fail (2012) by two American academics, Daron Acemoglu and James A. Robinson. Their theory, drawn from a broad sweep of history, is that all state regimes fit patterns that are either ‘extractive’ or ‘inclusive’. To be inclusive is to be egalitarian in access to resources and rewards, and responsive to the will of the people. To be extractive is to rule despotically in the interest of corrupt elites, often profiting from ruthless extraction of natural resources. Inclusive economies are prone to occasional crisis but capable of self-renewal;extractive economies are destined to fail.

Forecasting is a mug’s game, as the Bank of England governor Mervyn King once said. But I’ll sketch a few trends for 2026 nevertheless, starting on a positive note in the stock market before moving on to some of the many choices on an à la carte menu of gloom. The FTSE 100 index will have ended 2025 almost 20 per cent higher than it started – slightly better than the US S&P 500 index – and the consensus of fund managers is that (having closed for Christmas at 9,870) it will carry on upwards, perhaps even towards 11,000. Why? In short because many UK blue-chips in traditional sectors such as banking, housebuilding and mining have been undervalued for too long, because interest-rate cuts will help, and because stock markets have a mind of their own.

God bless Netflix: I’ve just watched all 28 episodes of Foyle’s War, the 1940s detective series set in Hastings and London that first aired on ITV more than 20 years ago. Pedants may have spotted minor anachronisms or been irritated by London scenes filmed in Dublin, presumably for tax breaks. But for me, the whole oeuvre – Spitfires, ration books, moustaches and all – stands as a monument of meticulous and compelling period drama. And as an amateur actor who always struggles to keep a straight face on stage, I’m in awe of Michael Kitchen’s gift of expressing Detective Chief Inspector Foyle’s moral outrage and inner pain by the tiniest twitch of a cheek muscle.

‘Banks don’t vote and citizens don’t love them, so they’ll always be the Chancellor’s target of choice,’ I wrote in September when one of this autumn’s many false Budget trails pointed towards a left-pleasing extra surcharge on bank profits. But it didn’t happen: partly because Rachel Reeves was love-bombed by Goldman Sachs chief David Solomon and JPMorgan chairman Jamie Dimon, promising new investment in the UK if she held off; partly because she had evidently figured out that a raid on banks that already pay higher tax rates than in any other major financial centre – many of whose bosses are already packing to move to Dubai – would make them even less eager to help boost growth by lending more to British businesses.

When I first joined The Spectator under the proprietorship of Conrad Black, we operated in sisterhood with the Telegraph titles which he also owned, and no one objected to the Daily Mail ringing the Spectator house in Doughty Street most Fridays to buy the best of the week’s articles for re-publication or to commission the authors to rewrite them in humourless Mail house style. In short, there were frequent meetings of minds in our grove of the media forest.