Daily Commentary

MarketMinder’s View: As always, MarketMinder’s discussion of politics is nonpartisan and zeroes in on the economic effects (or lack thereof). The article reports the UK Treasury is preparing to U-turn on planned changes to business rates (basically a commercial property tax) for pubs. For some context, Chancellor Rachel Reeves’s Budget last year initially pledged across-the-board cuts for small business, but details released the next day revealed the expiration of COVID-era relief, alongside a property revaluation, would result in major tax hikes for the hospitality sector even with the headline rate cuts. Regarding the end of COVID policies in particular: “This would exacerbate the impact of a revaluation of property valuations, the basis for business rates, which has caused a rise in the taxable value of pubs and restaurants from their Covid-affected lows. Starting from April, rates will rise by 115% for the average hotel and 76% for a pub, compared with 4% for large supermarkets and 7% for distribution warehouses.” But after a sharp outcry from the hospitality industry, the government reportedly plans to climb down from its original plan. Now, from a macroeconomic perspective, hospitality comprises approximately 3% of total UK output (on a gross value added basis, per the Office for National Statistics), so tax changes here aren’t economic gamechangers. More interesting to us is that, “… it will be another U-turn [from the government], following those on curbs to winter fuel payments for older people, and on changes to inheritance tax for farms, the latter announced two days before Christmas.” Government policy isn’t set in stone, worth keeping in mind for those investors who may act based on prospective (or even announced) changes. And together, these changes may help reduce uncertainty and boost sentiment modestly even though their scope is small. For more, see our November commentary, “Few Surprises: Leaks and Trial Balloons Mute the Market Effects of Britain’s Tax Shifts.”

MarketMinder’s View: Moods in Europe’s largest economy are downbeat in the new year, as many experts have lowered their 2026 growth expectations. Besides headwinds weighing on Germany’s export-driven economic model (e.g., US tariffs and cooler relations with China), the article also points out doubts about the effectiveness of Chancellor Friedrich Merz’s spending and investment program. Some are a little optimistic (e.g., the Bundesbank anticipates growth will pick up later in the year), while others question the speed of implementation and its effect (or lack thereof) on output. Interestingly, “It's not only Germany that is banking on a boost from the planned fiscal expansion. A recent survey of 88 economists by the UK's Financial Times newspaper found that many believe Europe's wider hopes of economic recovery hinge on the German plan.” That seems a tad excessive, considering public investment often takes a few spends to reach those who can deploy the capital most effectively—if it gets there at all. The back half of the article touches on a couple other developments, including fears about rising public debt and the potential growth boost from an increase in working days. Folks, if you need more evidence about the relative pessimism in Europe, read the end of that last sentence again: Some project higher 2026 growth because of more working days, i.e., a function of the calendar. That hope depends on a calculation quirk, not better-than-appreciated economic conditions, tells you expectations are low indeed. Now, we aren’t saying German growth is gangbusters, but against this sentiment backdrop, even tepid expansion can positively surprise. For more, see last week’s commentary, “A 2025 Political Lesson to Take to 2026.”

MarketMinder’s View: As a reminder, MarketMinder isn’t for or against any specific policy—we focus on the potential economic, market and personal finance implications only. In that spirit, remember President Donald Trump’s pledge last year to send some Americans a “$2,000 dividend check” funded by tariff revenue? Here is an update on both the economic and political feasibility. “A one-time $2,000 per-person tariff rebate for those making less than $100,000 would cost $450 billion, the Yale Budget Lab estimated. That’s about twice as much as the total revenue that will be raised by the administration’s tariff hikes in 2026, according to the Yale findings.” So, economically, tariff revenues aren’t likely to suffice in servicing those checks. On the legislative front, “Last July, Sen. Josh Hawley, R-Mo., introduced the American Worker Rebate Act of 2025, which proposed a rebate check funded with tariff revenue. The Senate referred that bill to the Committee on Finance, where it remains. ‘Similar to the stimulus checks issued during and after the Covid pandemic, any broad-based benefit program would require legislation passed by Congress,’ [financial analyst Stephen] Kates also said. ‘No such legislation currently exists.’” Lastly, Trump has also talked of deploying tariff revenue in other policy proposals, like funding increased defense spending. So there is competing talk. Remember, readers, talk isn’t action, regardless of which party is in office. Whether you cheer or fear what politicians propose in press conferences or social media, monitor politicians’ actions and ability to do what they say they will. For more, see our November commentary, “For Investors, Public Political Brainstorming Is Noise, Not News.”