11 October 2018

Stuart Taylor

11 October 2018

Good morning,

They say a week is a long time in politics. For Theresa May it’s a statement that will feel all too real this morning. Seven days on from shimmying on stage to close what was widely considered a successful conference for her party, the Dancing Queen discovered yesterday that leaders past and present were having trouble dancing to her tune.
 
Her latest Brexit concerns began in the afternoon when news broke that the DUP, the party for which May’s minority government depends on, was threatening to vote down the Budget later this month if they felt the prime minister would breach their “red lines” in the negotiations, most notably on barriers in the Irish Sea and the look of any future arrangement with the customs union.
 
The DUP’s hardened stance, which came a day after leader Arlene Foster met with Michel Barnier in Brussels, will no doubt leave the PM feeling short-changed on the £1bn deal for Northern Ireland that was meant to secure the party’s support on key votes. Also, with the potential that this withdraw of support could bring down her government, it raises the prospect that the prime minister faces a vote of no-confidence.
 
May will respond later today by briefing key ministers on the current state of negotiations. She will approach those discussions with not only the DUP’s warnings ringing in her ears but those of former occupant of 10 Downing Street, Tony Blair. He has warned May that her Chequers plan would hurt the UK services sector almost as much as if the country crashed out of the EU without a trade deal. A report by the National Institute of Economic and Social Research found that lost services trade would reduce the size of the economy by 1.9% by 2030, marginally better than the 2.1% contraction were the country to trade on WTO terms. For Blair, this is evidence enough that any recovery from the impact of Brexit is going to be extremely prolonged process.
 
And if that’s not enough on the PM’s plate, her judgement on non-Brexit matters is also coming under pressure from her predecessors. Sir John Major and Gordon Brown have both come out strongly against universal credit, the government's key welfare reform. Major compared the policy to the poll tax, cautioning against the speed in which it was being rolled out and said the fact that people were due to lose money as a result of its introduction would only lead to “deep political trouble” for the government.
 
As the pressure mounts from all angles, the PM would be forgiven for turning to ABBA again and asking Why Did It Have to Be Me?

News 

At least two people are dead and hundreds of thousands of homes are without power as a result of the most powerful hurricane to ever hit north-west Florida. Hurricane Michael, a category four storm, caused havoc as 155mph winds battered the state's Panhandle region.

A Russian investigative website has uncovered a third Kremlin secret agent who was believed to be involved in the attempt to kill the former Russian spy Sergei Skripal in Salisbury. Sergey Fedotov, 45, arrived in Britain a day after the two other suspects who have already been identified. (£)

Xinjiang, a north-western region in China, has retroactively legitimised the use of internment camps to incarcerate “people influenced by extremism”. It is believed that up to a million Muslims are currently being held in “education and training centres”, while Chinese authorities have denied their existence.

Business & Economy

Standard Life Aberdeen is believed to be close to appointing Douglas Flint as its new chairman. The City of London heavyweight is expected to be announced as Gerry Grimstone’s successor in the coming weeks. 
 
Theresa May is expected to reveal plans that would force private companies and public sector employers to reveal their ethnicity pay gap. In a move that mirrors last year’s gender pay gap audit, companies will have to reveal how much employees from ethnic minorities are paid compared with their white counterparts. (£)
 
The owner of Patisserie Valerie faces a fight for its future after discovering "significant, and potentially fraudulent, accounting irregularities", as well as finding out that HMRC has filed a winding-up petition against one of its subsidiaries. Patisserie Holdings, where Luke Johnson is chairman and a 37 per cent shareholder, is understood to have notified the findings to the Serious Fraud Office. (£)

Markets

What happened yesterday?

After Tuesday’s gains yesterday saw a complete reversal in fortune for European stocks as each of the main indexes recorded losses.

The FTSE 100 ended the day 1.1% lower at 7,156 points, while there was near 2% declines in both Frankfurt and Paris. The pan-regional Stoxx 600 index was also 1.1% lower. A gloomy Morgan Stanley note on its sales prospects in China was enough to make Burberry the biggest faller of the day, with the luxury fashion label reporting a drop of 9%. The more UK-focused FTSE 250 was down 1.59%.

It was a similar story in Wall Street as markets tumbled in the wake of a rise in US producer prices last month, fuelling suggestions that there is no relief on inflation pressures in sight. In the first half hour of trading, the S&P 500 and Xetra Dax were down, falling 1.1% and 1.8% respectively, and the Dow Jones sinking by 1 per cent.

On the currency markets, the pound was strong against the dollar as hopes increase over an agreement on Brexit negotiations in the coming weeks. Sterling reached $1.3190, up 0.4% to its highest level since September 27.

Finals              
Volution Group (WI)
WH Smith
 
Trading Announcements   
Countryside Properties
Dunelm Group
Discoverie Group
Hays
Jupiter Fund Management
Mondi
Moneysupermarket.com Group 

Interims          
Brown (N.) Group
OnTheMarket

UK Economic Announcements
(00:01) RICS Housing Market Survey

Intl. Economic Announcements
(13:30) Consumer Price Index (US)
(13:30) Continuing Claims (US)
(13:30) Initial Jobless Claims (US)
(16:00) Crude Oil Inventories (US)

Columns of Note

Science commentator Anjana Ahuja laments the international silence that has followed this week’s landmark statement by the International Panel on Climate Change that warned there is only a dozen years for global warming to be kept to a maximum of 1.5C. Writing in the Financial Times, Ahuja says ignoring the warnings now will only lead to more drastic and untested measures being introduced further down the line, polices which will lead to the manifestation of international governance and security issues. (£)

Also in the FT, Janan Ganesh credits Senate majority leader Mitch McConnell as the “craftiest politician in America” and says that the Democrats must learn from his tactical successes if it is to shed its reputation of being too innocent and civilised for its own good. (£)

Did you know?

A martini cocktail should be stirred, and a shaken martini is called a Bradford. It is for this reason that James Bond always has to specify his martini be made the wrong way. 

Parliamentary Highlights

TODAY

House of Commons
Oral questions
Transport (including Topical Questions)

Business statement
Business Questions to the Leader of the House

General Debate
Victims strategy

House of Lords
Oral questions
Impact of changes in the Sudanese government on the UN-African Union operation in Darfur, on President Omar al-Bashir's future in office and on US policy towards Sudan -  Lord Chidgey

Debate
Impact on the Good Friday Agreement of the UK’s withdrawal from the EU -  Lord Dubs

Scottish Parliament
In recess until 22 October

TOMORROW

House of Commons
No business scheduled

House of Lords
No business scheduled