Some business stories are useful economic signals, some are not. For example, I’m not building any hopes on news that Ferrari sales are up 15 per cent thanks to buyers demanding ‘cashmere and corduroy’ interiors. Indicative of greater realism among the very rich is the statistic that superyacht sales are down by a third following a spectacular two-year boom. And far more worrying are other maritime bulletins, one from the Danish shipping giant AP Moller-Mærsk, the other from the fiefdom of the Hong Kong billionaire Li Ka-shing.

Maersk has downgraded its forecast for global container demand this year to a fall of 1 to 4 per cent, on the basis of slowdown in China and lower stock-holding by western companies. The latter are afflicted by higher borrowing costs, illustrating how raised interest rates combat inflation: reduced demand (coinciding with a freeing-up of logjammed shipping) has brought Shanghai-to-Rotterdam container rates down by 80 per cent from their post-pandemic spike. Meanwhile, CK Hutchison – the logistics-to-telecoms group created by Li Ka-shing – reported a 7 per cent first-half fall in traffic through its 50 ports around the world and downbeat prospects for the second half.

All of which spells misfortune for an industry which ordered more than 200 new vessels when container rates were sky-high, for delivery this year and next – adding huge new capacity in the teeth of what may be a looming trade recession that will drive shipping rates even lower. Bad news for banks that finance ships, which will turn cautious on lending to all kinds of businesses.

So there are gloomier global signals beyond the cheery domestic ones I’ve lately highlighted. But at least plastic toys from China should be cheaper this Christmas.

Nuclear spin

Energy Secretary Grant Shapps has launched a competition to develop small modular nuclear reactors (SMRs), in the hope that these compact power plants can be planned, built and replicated much faster and on tighter budgets than monsters such as the four-years-delayed Hinkley Point C in Somerset. The objective is to rebuild nuclear capacity to meet a quarter of UK electricity demand – and among a field of otherwise foreign contenders, the likeliest winner of the state-funded SMR prize is our own Rolls-Royce, which has been touting its prowess in this field for years.

So far, so good. I hate to sound cynical, but all recent governments, both Conservative and Labour, have a pathetic record on nuclear delivery – and if a decade hence the spin around SMRs has delivered nothing but an excuse to cancel the unfundable Sizewell C mega-project in Suffolk, we’ll be more dependent than ever on imported energy – or more at risk of shivering in the dark.

Celebrating profits

Let’s talk about profits. How outrageous is it that British Gas made £969 million in first-half operating profits compared to £98 million in the same period last year? And that both French-owned EDF Energy and Spanish-owned Scottish Power also reported red-hot results, all three suppliers attributing their good fortune to the regulator Ofgem’s lifting of the consumer price cap from £1,370 in 2021 to a peak of £4,279 last winter.

‘While families across Britain have struggled to pay their bills,’ declared Paul Nowak of the TUC, ‘Energy companies have been allowed to laugh all the way to the bank.’ But guess what, the bank is laughing even louder, especially if it is HSBC, which reported that its half-year profits more than doubled to $18 billion; or even sin-binned NatWest, up from £1.9 billion to £2.3 billion with its return on equity boosted from 13 to 18 per cent.

Rising bank profits are largely due to higher interest rates that cause pain to businesses and mortgage borrowers. And bumper profits mean bigger rewards for shareholders. Yet in these two sets of examples, the bumper element is a ‘windfall’ function of global energy price spikes and official interest rate rises, not of the skill of managers or shrewdness of investors. So doesn’t it all show the brutal unfairness of capitalism – I can almost hear the kids back from uni arguing across your family lunch table – and shouldn’t those windfalls be taxed to the hilt?

Well, no it doesn’t; and no they shouldn’t. Profit – you might reply – is fundamentally good, so long as it’s honest. Within regulated industries, profit is effectively determined by the regulator, in this instance allowing energy suppliers to recoup what they were forced to forego during a period of suppressed pricing that busted several smaller players.

In banking, the test of fair profits is not how much is distributed to shareholders but whether deposit interest rates rise in line with lending rates, and whether struggling customers, business or personal, are decently treated. Finally, if government does not subsidise businesses that suffer losses caused by adverse external factors, why should it super-tax windfalls when fate goes the other way? In summary, let us always scrutinise leaping profits – but let us sometimes also celebrate them.

Bon appetit encore

This column comes to you from France, where the weather is pleasantly cool, inflation (thanks to lower energy costs, partly nuclear) fell to 4.3 per cent on first estimates for last month – and the big companies that make up the CAC 40 Index reported a collective 13 per cent first-half profit rise, prompting Le Figaro to praise ‘l’excellente santé des entreprises’, which have passed on inflated input prices without shedding sales or crushing margins. ‘Broken France’, the Telegraph likes to call it, but to me it not only feels healthier than broken Britain but also offers better value for holiday money. Speaking of which, and to be more precise, this column comes to you from La Recréation, a charming restaurant at Les Arques (in the Lot) where I have just enjoyed a delicious €35 menu du jour.