Charlotte Street Partners




Written by Juan Palenzuela, associate
Edited by Iain Gibson, partner
21 July 2020

Good morning,

Late last week, OpenAI, a research lab, made the headlines for granting some lucky developers access to its newest text generator and predictor, GPT-3.

These few developers put their access to good use to test what the API could do for them, and they were not disappointed. Some of the results have been spectacular: the API has been able to write creative fiction from short snippets of textfunctioning code from basic non-technical descriptions and thoughtful business memos from notes. In most instances, the text has proved to be indistinguishable from that of a trained human. 

GPT-3 is able to identify and predict the topic by synthesising language from all over the internet, and then match the prompt’s writing style. It can do so because it has been trained on an archive of the internet called the Common Crawl, which contains nearly one trillion words of data. But GPT-3 does not copy paragraphs or even sentences from that archive. Instead, it learns the patterns contained within it and uses them to create new content.  

As accurate as this new tool is, however, it doesn’t actually understand its inputs and outputs. GPT-3 possesses no internal way of knowing anything because its models are strictly based on the patterns from the dataset that it is fed. This is, in essence, what machine learning is about. Type anything that would be common sense to a human and GPT-3 might easily fail the test in spectacular fashion

GPT-3 is not able to reason abstractly or to understand what is being told, or the chunks of text that it produces. It is not even mildly close. But, will that matter to the human reader when the models get good enough for there to be almost no scope for recognisable errors?


A new vaccine for coronavirus developed by the University of Oxford appeared to be safe and effective after a series of human trials involving 1,077 people. Although the findings are promising, it is still too soon to know if the vaccine will offer enough protection against the virus. Larger trials are underway, but the UK has already ordered 100 million doses of the vaccine nonetheless. 

Nearly 900,000 public sector workers, including NHS staff, doctors, teachers and police officers; are about to get an above-inflation pay rise of up to 3.1%, the chancellor has announced. The Treasury explained that the resources would come from existing departmental budgets. 

After nearly a year and a half since it was completed, the “Russia report”, on how the country poses a threat to the UK and what has been done to counter it, will be published by the Parliament’s Intelligence and Security Committee this morning. The report’s findings on potential Russian interference including in the Scottish independence referendum will be closely examined. 

Business and economy

According to Andy Haldane, chief economist of The Bank of England, Britain is underway for a V-shaped recovery, despite concerns among other central bankers that the economy is struggling as job cuts add to unemployment. The UK economy, Haldane says, has already recovered nearly half of the fall in output experienced in March, during the worst part of the crisis. 

EU leaders managed to sign a deal on the contested coronavirus recovery package. The €750bn package aimed at funding post-pandemic relief efforts across the EU will involve the European Commission borrowing from capital markets for the very first time. (£) 

RBS told nearly 50,000 staff to continue working from home until at least 2021, as the bank unveiled a “cautious” approach to returning to work. The announcement has made RBS one of the first major banks to maintain working from home policies for the rest of the year. 

Columns of note

On the Financial Times, Jeremy Farrar argues that the worst of the pandemic is still to come, as its effects are taking time to take full effect. They can be stopped, however, says Farrar. 

Also on the Financial Times, Robert Shrimsley argues that Boris Johnson’s place in history could be that of the leader that lost the Union.

Cartoon source: The Times


What happened yesterday?

While equity markets worldwide had mixed results yesterday following the increase in Covid-19 cases in the US, the announcement of the EU’s recovery fund will certainly cheer up the tone of investors today. 

In the US, the Dow Jones Industrial Average was up 0.03% at 26,680.87, while the S&P 500 was 0.84% firmer at 3,251.84 and the Nasdaq Composite rallied 2.51% to 10,767.09. 

Despite that, the benchmark Stoxx 600 was 0.75% higher at 375.51, alongside a 0.99% rise for the German Dax to 13,046.92 and a 0.99% gain on the FTSE Mibtel to 20,621.48. 

In the UK, FTSE 100 ended the session down 0.46% at 6,261.52, while the FTSE 250 rose 0.22% to 17,385.85. 

What’s happening today?

SDI Group

Audioboom Group

Dp Eurasia
Intermediate Capital
RPS Group

UK  Economic announcements
(09:30) Public Sector Net Borrowing

Source: Financial Times

did you know

Berlin, the capital and largest city of Germany with 3.8 million inhabitants in 2019, still hasn’t reached its pre-war population of 4.3 million in 1939.

Parliamentary highlights

House of Commons

Oral questions
Business, Energy and Industrial Strategy (including Topical Questions)

Urgent question
To ask the Secretary of State for Digital, Culture, Media and Sport if he will make a statement on changes to licence fee exemptions, programming and job losses at the BBC. – Daisy Cooper

Ministerial statement
Windrush lessons learned review update. – Priti Patel

Ten Minute Rule Motion
Death by Dangerous Driving (Sentencing) – Mrs Theresa May

Counter-Terrorism and Sentencing Bill: Remaining Stages
Tackling the misuse of nitrous oxide – Rosie Duffield

House of Lords 

Oral questions
Impact the COVID-19 pandemic has had on the childcare sector – Baroness Burt of Solihull
Inclusion of a human rights threshold in telecommunications legislation – Lord Alton of Liverpool
Impact of the COVID-19 pandemic on social mobility – Baroness Massey of Darwen
Political situation in Hong Kong – Baroness Northover

Private Notice Question
Action to address the rise of knife crime in England and Wales – The Lord Bishop of St Albans

Agriculture Bill – Committee stage (day 5) – Lord Gardiner of Kimble

Scottish Parliament 

In recess until 10 August (with the exception of 23, 30 July and 6 August 2020, on which dates business may be programmed by the bureau)

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