15 April 2019

Stuart Taylor

15 April 2019

Good morning,

If there is a benefit to the B-word dragging on into the autumn, it is that it allows politics to return to some sense of normality and begin to focus on the important issues that have recently been starved of the attention they deserve.
 
With MPs beginning the start of Easter recess, we have to wait a week to see if this theory holds true in Westminster. On the continent, it’s business as usual for the European Union today and trade talks with the United States top the agenda.
 
All member states, excluding Britain, will today approve negotiating guidelines for talks, having granted initial clearance to begin discussions last Thursday. With the trade of goods and services relationship worth a massive $1.1 trillion a year, there’s certainly a lot at stake and the negotiations are not expected to be plain sailing. It’s the first attempt at reaching a deal after the TTIP, the last push for a major trade deal, ended in a stalemate in 2016.
 
France are expected to put themselves at odds with the rest of the bloc by rejecting today’s guidelines, citing their objections to the US position on climate change. President Emmanuel Macron has taken a stance over values, arguing that the EU should not be holding negotiations with a country that is not part of the 2015 Paris Agreement.
 
With Macron at odds with his European partners, it leaves the EU having to lead negotiations without the support of one of its most influential members. Berlin, on the other hand, is keen for the deal to progress as the set piece policy of a zero-tariff trade deal on industrial goods would stop the US president slapping punitive taxes on the EU car sector; the jewel in Germany’s commerce crown.
 
It appears the EU is trying to appease both sides by allowing France to vote against while also allowing the talks to progress. However, something fundamental has to change for success – which appears improbable and remote as it stands - to be achieved further down the line. That’s before we even consider the issues on the other side of the negotiating table, such as the US insisting that agriculture be part of the debate. This has always been a highly emotional issue in many parts of Europe, with fears that a trade deal with the United States would open the doors to lower food production standards and GM foods.
 
The parties have not yet met in the same room and the divisions are already appearing. It serves to underscore the difficulty of the task facing negotiators, and the complicated history of trade talks between the United States and Europe.

News

Members of the cabinet who will likely be in the frame to replace Theresa May as prime minister are believed to be backing the prime minister to stay in office into the autumn, even if she is unable to get her Brexit deal through parliament. Supporters of the PM’s contenders have privately said that a summer leadership challenge would hand the initiative to a Brexiteer candidate, such as Boris Johnson or Dominic Raab. (£)

Extinction Rebellion, a climate change activist group who recently stripped in the public gallery of the House of Commons, says it will “bring London to a standstill for up to two weeks” starting from today. The group are planning to paralyse London by blocking roads and glueing themselves to Tube trains as they campaign for the government to take action to cut emissions. (£)
 
Ecaudor’s president has said that Julian Assange violated his asylum conditions by using the Ecuadorean embassy in London as a "centre for spying”. Lenín Moreno said that no other nation had influenced the decision to revoke the WikiLeaks founder's asylum.

Business & Economy

The governor of the Bank of England has blamed Brexit uncertainty for new research that shows Britain is the only large advanced economy likely to see a decline in productivity growth this year. Figures from the Conference Board, a US non-profit research group, show that the UK’s annual growth in output for every hour worked fell from 2.2% between 2000 and 2007 to 0.5% between 2010 and 2017 and is likely to fall to only 0.2% this year. (£)
 
British American Tobacco is under pressure to replace Richard Burrows, its long-serving chairman, in order to comply with new corporate governance rules. Burrows has been in the role since November 2009 but the new code states that “the chair should not remain in post beyond nine years from the date of their first appointment to the board”. (£)
 
Germany’s telecoms regulator is expected to allow Chinese telecommunications giant Huawei to participate in the buildout of the country’s ultra-high speed 5G internet network. Jochen Homann , the president of the Bundesnetzagentur, said the company can participate if the company complies with security requirements, a stance that defies a call from the US to ban the firm over security concerns. (£)

Markets

The week ahead

Trade tensions will be at the forefront of minds when both the US and China host motor shows this week. Other talking points in Shanghai and New York, where the events are being held, will be the current downturn in global sales in the market, the first since 2009. In an attempt to reverse this trend, car manufacturers will seek to jump-start growth with new models and further investment is also likely for premium and electric vehicles, which are enjoying strong growth in China.
 
On Wednesday, Indonesians will head to the polls in a presidential election where the momentum gained by challenger Prabowo Subianto is unlikely to be enough to topple president Joko Widodo who is instead heading for a second and final term in office. India, Ukraine and North Macedonia will also be holding elections over this week.
 
On the corporate earnings front, Netflix are the headline name with analysts forecast suggesting the streaming service will report a year-on-year increase in paying members alongside higher revenues. A number of Wall Street banks also report as first-quarter earnings season gets underway, including Goldman Sachs and Bank of America.
 
In the UK, Rio Tinto, BHP and Unilever are among the companies reporting this week.

Finals
Crossword Cybersecurity
Filta Group Holdings
Mobile Tornado Group
 
Interims
Carr's Group

Trading Announcements
Petra Diamonds Ltd.(DI)
Rio Tinto
 
Int. Economic Announcements
(10:00) GDP (Preliminary) (EU)

Columns of Note

On its 21st anniversary, two key architects of the historic Good Friday Agreement write that agreement for peace in Northern Ireland is under threat from Brexit but can also serve as the key to unlocking the current impasse. Tony Blair and Bertie Ahern, leaders of both the UK and Ireland at the time of the agreement, say that a referendum took place following the conclusion of the Good Friday agreement and a confirmatory referendum is now needed on how we proceed with Brexit.
 
There’s praise for Donald Trump in the FT from global business columnist Rana Foroohar. Foroohar writes that Republicans should not be so dismissive of the president’s wish to have former White House aspirant Herman Cain on the board of the US Federal Reserve as while it may show Trump’s economic contempt, the president does appear to have an appreciation that monetary policy has done more for the markets than Main Street. (£)

Did you know?

The two forward slashes in website URLs are unnecessary, and Tim Berners-Lee, the founder of the internet, has apologised for their use.

Parliamentary highlights

TODAY
 
House of Commons
In recess until Tuesday 23 April
 
House of Lords
In recess until Wednesday 24 April
 
Scottish Parliament
In recess until Monday 22 April