THE NOTE BOOK

Fashionomics: The Good, The Bad and The Ugly

SINCE the dawn of time, clothing has been an important part of our human experience. We lost our fur at least 1.2m years ago according to reports by scientists. What we wear is now a key part of the identity we convey. The issue today is the sheer quantity of clothes we produce and throw away.

How many of you look at your closet full of clothes and feel like you have nothing to wear?

Adverts are all trying, desperately, to quench our insatiable thirst and desire ‘to dress to impress’. Collection launches are no longer seasonal. Many low-cost clothing stores offer new designs every week. Reports by the Ellen MacArthur Foundation show that, in 2000, the industry made 50bn new garments; nearly 20 years later, that figure has doubled. This is even more alarming as the fashion industry is responsible for 10 per cent of global

A FEW MUSINGS ON INFLATION...

carbon emissions, more than all international flights and maritime shipping combined!

When it comes to the water footprint, further reports show it takes roughly 3,800 litres of water to make your favourite pair of jeans.

Now, it gets worse. According to the United Nations Environment Programme, of the total fibre input used for clothing, 87 per cent is incinerated or disposed of. Every year, we drop half a million tonnes of plastic microfibers into the ocean –the equivalent of 50bn tonnes of plastic bottles. Can sustainable fashion reach net zero and defeat the irresistible forces of ‘fashion economics’? And could the future of fashion be a world where we wear the same super durable clothing, like Marvel’s superheroes? It’s a topic we dig into a recent 2050 Investors podcast, Fashionomics: The Good, The Bad and The Ugly.

In 2020/2021, governments in the US and Europe launched a “fiscal whatever it takes” response to the war against Covid-19 by supporting their respective economies, put in hibernation to save human lives and livelihoods. In 2022, further spending targeted at lower income households was made to address the cost of living crisis in the aftermath of an unprecedented increase in energy prices caused by Russia’s war against Ukraine.

FEAST YOUR EARS ON THIS: OUR BROKEN FOOD SYSTEM

THAT LED TO AN ‘INFLATION OUTBREAK’

The combination of negative supply shocks, supply chain disruptions with China’s zero Covid policies, substantial cumulative excess savings in the US and Europe reaching record levels (8-10 per cent of GDP) and greedflation (higher profit margins led by strong pricing power by corporates) have all contributed to excess demand vs constrained supply, thus causing higher headlines and core inflation. China’s reopening has failed to trigger an economic rebound similar in magnitude to what was observed in the West despite household excess deposits reaching close to eight per cent of GDP.

Announcements

Legal And Public Notices

CITY OF LONDON CORPORATION HIGHWAYS ACT 1980, SECTION 256

PROPOSED AGREEMENT WITH OWNERS OF LAND FOR THE ADJUSTMENT OF THE BOUNDARIES OF THE HIGHWAY ON ELDON STREET AND FINSBURY AVENUE LONDON EC2M 2QS ADJACENT TO 1 BROADGATE

NOTICE is given that in accordance with the provisions of Section 256 of the Highways Act 1980 the City of London Corporation (“the City”) as highway authority for the highways known as Eldon Street (part) and Finsbury Avenue (part) in the City of London (“the highway”) proposes with Bluebutton (12702) Limited, B.L.C.T. (PHC 2) Limited (“the Owners”) as the owners of the land adjoining and lying near to the highway to enter into an agreement to adjust the boundary of the highway. particulars of the proposed agreement are as follows: shown hatched purple on the plan numbered 15156 (SK) 2512 (“the Plan”) which at present forms part of Eldon Street, and situated adjacent to 1 Broadgate, shall be dedicated as public highway by the Plan which at present forms part of Eldon Street, and situated adjacent to 1 Broadgate, shall be dedicated as public highway by the owners and shall be transferred to the City of London by owners. costs of entering into the agreement.

4. Any apparatus of statutory undertakers under, in, over, along or across any area of land which ceases to be highway pursuant to the agreement shall have the same rights as respects their apparatus after that area of highway ceases to be highway as they had immediately beforehand an estate right interest in or charge on the land to be conveyed by the Council to the Owners may claim compensation under the Highways Act 1980 Section 256(5).

A plan of the proposed adjustment of boundaries of the highway showing the land to be conveyed as hatched and cross hatched on the plan and a full Schedule of the owners and the relevant titles will be

BUT HAVE CORPORATES DEVELOPED A NATURAL IMMUNITY?

Central banks’ response to fight the ‘inflation outbreak’ has been sharp and aggressive. Headline inflation has now normalised in 2023. However, core inflation remains a concern as wage growth continues to be sticky in the US and in Europe as unemployment rates remain at record lows because of a tight labour market and corporates having developed a ‘natural immunity against higher rates’ because of healthier balance sheet and resilient profit margins.

Imagine your taste buds could hear. Eating your favourite meal would have the same sensory stimulation as listening to classical music. A Filet Mignon with a nice glass of red wine would be like listening to Eine Kleine Nachtmusik by Mozart. However, the food industry also has a significant and ‘fat’ carbon footprint (27 per cent of global emissions), generates a lot of waste, chemical pollution with significant adverse impact on biodiversity. The current food system is unfortunately not sustainable. How do we feed a world population that is expected to reach 10bn by 2050? That’s the crux of our latest 2050 Investors podcast, Carbon-Free Calories.

SPORT Looking ahead to the Ryder Cup in Rome, US captain

Zach

Open win

SAM TORRANCE ON THE OPEN AT ROYAL LIVERPOOL AND THIS AUTUMN’S RYDER CUP CONTEST PAGE 19

BANK Of ENGLAND governor

Andrew Bailey would not have been the only person in the City last week breathing a sigh of relief after the better-than-expected inflation numbers.

It was the first time the Office for National Statistics’s (ONS) calculations have undershot analysts’ forecasts since January’s numbers. It was also the first time the Bank has nailed its own projections in ages.

Its economists correctly guessed inflation would fall to 7.9 per cent in June. The City thought it would fall to 8.2 per cent from 8.7 per cent in May.

Just six of the last 18 inflation prints have come in lower than market expectations, according to calculations by investment bank Nomura.

What a nice way to sign off for the summer holidays.

Lifting the bonnet on the data extracts yet more good news. Core inflation slipped to 6.9 per cent, below an expected fall to 7.1 per cent.

Declines in global commodity prices are finally feeding through to prices, most notably in food cost growth slipping, although the rate is still very high at over 17 per cent.

Petrol prices also yanked headline inflation lower, signalling supermarkets and other forecourt operators are finally handing over savings to customers (perhaps due to intense government pressure).

Businesses are now playing a greater role in taming inflation, which could weaken the pressure on the Bank to lean on demand with sharp rate rises. About time. But don’t read too much into one set of data. To conclude that the cost of living crisis has turned a corner, there needs to be yet further good news.

One reason UK inflation has hugged closer to eight and nine per cent while European and US rates have stepped lower is due to the state energy regulator Ofgem only changing its price cap every three months.

July’s inflation calculation will incorporate the lower £2,074, helping to pull inflation possibly below seven per cent.

More timelier economic indicators have pointed toward deflationary pressures gathering momentum.

Research firm Kantar’s latest estimate of grocery price growth fell to around 14 per cent in July, while recent purchasing managers’ indexes show input costs are rising at the slowest pace in over two years.

Under-reported last week was the ONS estimating the cost of components used by factories to make products falling 2.7 per cent over the year to June.

All this points to a downsized recession risk in the UK, a judgement that has oscillated seemingly with every new set of economic data from the ONS.

The looming hit to mortgagors that will play out from the second half of this year and last until at least 2025 could be blunted