13 April 2018


13 April 2018

Good morning,

There is a “need to take action” in Syria. That is the agreed view of the UK Cabinet, according to Downing Street, after it was deemed “highly likely” that the Assad regime was responsible for Saturday’s chemical attack on Douma.
What type of action will be taken is still to be officially confirmed. However, all the signs indicate that there will be some type of military intervention. Despite President Trump’s contradictory statements and tweets in recent days, The Times reports that the US is amassing the largest air and naval strike force since the Iraq War in 2003.
Furthermore, Syrian government forces have reportedly dispersed their infantry units and moved key assets within the protective bubble of Russian anti-aircraft defences, in anticipation of Western attacks.
According to the BBC, the government is planning a “genuinely joint” effort with the US and France, rather than a support role in the form of surveillance, intelligence and air-to-air refueling.
Meanwhile, pressure is building for a House of Commons vote on the use of force. It has been reported that Theresa May is willing to authorise action without parliamentary approval, although that was when a strike was expected imminently. If no action has been taken before Monday, when parliament returns from recess, the clamour for a vote will likely grow.
With a lack of clarity over whether she would win such a vote, and mindful of the impact that losing a similar vote had on her predecessor in 2013, the prime minister may wish to avoid asking parliament its view.
However, questions remain over what can be achieved. What is the strategic purpose? How long would any campaign last? What would be considered success? More significantly, might it risk conflict with Russia?
At the same time, and perhaps the biggest question of all, can we tolerate the use of chemical weapons with impunity?


Amid the prospect of military action, it’s worth remembering that Syria isn’t the only issue on President Trump’s plate. In a surprise development, the president has told Republican lawmakers he is considering whether the US should rejoin the Transpacific Partnership – an Obama initiative that he made much fanfare of withdrawing from – in a move designed to put pressure on China following the tit-for-tat trade dispute.
Health secretary Jeremy Hunt has apologised for an “honest mistake” by his accountant after failing to declare a 50% holding in a property firm to Companies House – a breach of anti-money laundering legislation. Hunt also failed to disclose the interest to the Parliamentary Register of Members’ interests within the required 28 days. The Cabinet Office has ruled that he did not breach the Ministerial Code of Conduct and a Downing Street spokesperson said the matter is considered closed. However, Hunt could still face an investigation by the Commons’ Committee on Standards and Privileges.
Nearly half of the councils in England have seen their financial reserves eroded over the last two years as they battle with cuts to central funding and rising social care costs. According to analysis in the Financial Times, 169 of England’s 353 local authorities saw real-terms falls in their reserves between March 2015 and March 2017. The biggest fall was seen by Conservative-led Thurrock in Essex, which reported a drop of 65% to £11.8 million. The other 184 councils did manage to increase reserves but most are smaller district councils that do not manage social care.
One alcoholic drink a day could shorten your life, according to a new study led by the University of Cambridge. An analysis of 600,000 drinkers found that drinking five to 10 alcoholic drinks a week increases the chances of a person’s life being shortened by up to six months, challenging the idea that light drinking is good for your health.


Business & Economy

Herbert Deiss is to replace Matthias Mueller as chief executive of Volkswagen. Mueller was handed the top job in September 2015 after Martin Winterkorn resigned over the emissions scandal, and went on to oversee record annual sales in 2017. However, he is being replaced after failing to refocus the group’s portfolio of car brands and transform the manufacturer into a leader in cleaner cars. Diess is a former BMW executive who has been at the helm of the core Volkswagen brand since 2015.
IAG, the owner of British Airways, has taken a 4.61% stake in Norwegian Air ahead of a potential takeover bid – a move described as a “bolt from the blue” by one analyst. Trading of Norwegian Air shares on the Oslo stock exchange was halted after they surged almost 40% on the news. In a statement, IAG said “the minority investment is intended to establish a position from which to imitate discussions with Norwegian, including the possibility of a full offer,” but added that “no decision has been taken to make an offer at this time”.
The London Stock Exchange Group has appointed David Schwimmer as its new chief executive. Schwimmer will take up his role on 1 August 2018. He previously spent 20 years at Goldman Sachs, where he was most recently global head of market structure and global head of metals and mining in investment banking. The appointment follows the high profile departure of Xavier Rolet.


What happened yesterday?
US and European stocks were up after President Trump had toned down his rhetoric regarding a missile strike on Syria, and investors began looking towards the beginning of the quarterly corporate earnings season.
The FTSE 100 climbed 0.02% to 7,258.34. Micro Focus, the software maker, led the gainers, rising 7.56%, after it was reported that activist investor Elliot Management had taken a stake is set to push for changes.
Airlines also performed well, with Easyjet and Wizz Air gaining 3.2% and 3.26% respectively following the news that IAG has taken a stake in Norwegian Air, possibly ahead of a bid. However, IAG ended the day down 1.14%.
Pets at Home Group suffered, dropping 4.92%, after Morgan Stanley questioned the viability of its joint ventures with veterinary practices.
Across the pond, the S&P 500 was up 0.83% to 2,663.99, the Dow Jones Industrial Average gained 1.21% to 24,483.05 and the Nasdaq rose 1.01% to 7,140.25.
On the currency markets, the pound was up 0.03% against both the dollar and the euro at $1.4229 and €1.1542.


ROS Agro GDR REG S, Low & Bonar
RM2 International S.A. (DI)
Trading Announcements
XP Power Ltd. (DI)

Annual Report
Forterra, Ferrexpo
International Economic Annuncements
(07:00) Consumer Price Index (GER)
(10:00) Balance of Trade (EU)
(15:00) University of Michigan Confidence (Prelim) (US)


Columns of Note

In The Times, Philip Collins set out six tests for the success of a new centrist political party. It should clearly define what it is for. Ideally, it should not simply be a split from the Labour Party. It must have credible leadership but at the same time its candidate for prime minister should be exciting and novel. It must speak without illusions about the UK’s immediate future outside the EU and, finally, it must know where it can win and aim for 100 seats.
Writing in the Financial Times, Patrick Leahy argues that fixing the housing problem is the key to helping the UK’s struggling retail sector. He says that the retail sector relies on consumers with long-term, stable living arrangements. An increasing number, particularly young people, live in short-term rentals – homes they do not feel are worth investing in, meaning they are more likely to spend their money on experiences. Furthermore, rising rents restrict consumer spending.

Did you know?

It is illegal to own only one guinea pig or one parrot in Switzerland. Both animals are highly social so keeping them isolated is considered animal cruelty. 

Parliamentary highlights

House of Commons
In recess until 16 April 2018
House of Lords
In recess until 16 April 2018

Scottish Parliament

In recess until 16 April 2018