If Meghan and Harry’s baby news has left you feeling warm and fuzzy, I apologize in advance for starting your Tuesday on a downer. Yesterday, Theresa May - with her persistent, unsettling zeal - described a Brexit deal as “achievable”. Yikes.
The Prime Minister faced the House of Commons, calling for “cool, calm heads” as negotiations came to a chaotic impasse over the weekend. She was tasked with explaining herself after Brexit Minister Dominic Raab disengaged from talks with Michel Barnier on an EU exit agreement.
The sticking point was the Irish border. The EU is insisting on a string of “backstops”. This jargon basically means agreeing a contingency plan within an insurance policy (I think). Both sides want to avoid a physical border – they just can’t agree how.
Brussels insists that a customs border can exist down the Irish Sea with Ireland remaining in the customs union, but this was unanimously rejected in parliament as a threat to the integrity of the UK.
In response, the government proposed a “temporary customs arrangement”: the whole of the UK will adopt the EU’s common tariff policy from 2021 if no comprehensive free-trade deal can be signed before then to avoid the re-emergence of a hard border in Ireland. But, this must have a hard deadline to avoid the UK ending up in “permanent limbo”; stuck in a customs union and unable to negotiate meaningful trade deals. Brussels has rejected the plans.
If that isn’t disheartening enough, the EU responded by enforcing a 24-hour deadline for the UK to clarify its position on Brexit, warning that no-deal is “more likely than ever before”.
And Jeremy Corbyn isn’t much impressed either. He described the developments as “another nothing-has-changed moment from this shambles of a government”. Meanwhile, Laura Kuenssberg, BBC political editor, reported that the mood in parliament was “hardening against her efforts to find a compromise”.
May is convening a cabinet meeting today to ease tensions and clarify the government stance, although hopes that tomorrow’s summit will be a key turning point seem increasingly out of reach. Still, ever the optimist, Theresa May is confident that she can nurse this fragile Brexit back to good health – it just might take a little longer.
Saudi Arabia has vowed to retaliate if US sanctions threats come to fruition. It is alleged that journalist Jamal Khashoggi, a critic of the Saudi regime, was murdered and dismembered after walking into the Saudi consulate in Istanbul at the beginning of this month. President Trump warned of “severe punishment” for Riyadh if the accusations are proven. But, Saudi Arabia affirmed its “total rejection of any threats or attempts to undermine it, whether threats to impose economic sanctions or the use of political pressure” and promised to “match any action with a bigger one”. (£)
The UN has warned that Yemen is on the brink of the “world’s worst famine in 100 years” if the war continues. It is estimated that 13 million people could die from starvation if fighting does not come to an end, with an officially declared famine just weeks away. A Saudi coalition began bombing in 2015 in an effort to oust the Iran backed Shia Houthi rebels and reinstate the Sunni ally president Abedrabbo Mansour Hadi. Currently, the near-famine in Yemen is the world’s largest humanitarian crisis.
Microsoft co-founder Paul Allen has died, aged 65, following complications from non-Hodgkin’s lymphoma. The billionaire philanthropist and investor announced the return of the cancer only two weeks ago. Bill Gates said that he was “heartbroken by the passing of one of my oldest and dearest friends”.
Business & Economy
It was reported yesterday that the unseasonably warm weather has had its effects on fashion chain Superdry. The brand saw a 20 per cent fall in its autumn/winter “sweats and jackets” sales, which usually account for 45 per cent of total annual sales. The company now expects to make profits of £83 million this year, considerably short of the projected £109 million. Euan Sutherland, chief executive, said: “Superdry is a strong brand with significant growth opportunities…but we are not immune to the challenges presented by this extraordinary period of unseasonably hot weather.” (£)
American department store chain Sears filed for bankruptcy yesterday after years of struggling to compete with cut-price retailers such as Walmart and ecommerce competitors. Finally succumbing to their “crushing debt burden” and unable to agree on a revival plan, thousands of Sears workers now face uncertainty. Since 2010, the chain has accrued more than $10 billion in losses and lenders have finally had enough of second chances. At this point, it is unclear if Sears is heading for outright liquidation or a restructuring scheme. (£)
The chief executive of Grant Thornton, Sacha Romanovitch, has stepped down just weeks after “insisting she would stand for re-election”. Senior partners at the accounting firm have questioned her leadership for some time and called for a new chief executive to “create long-term sustainable profits for the firm”. Sacha Romanovitch’s departure marks the end of a 30-year career with the firm. (£)
The Institute for Fiscal Studies has issued a word of warning for Phillip Hammond today, as he scrambles to find £11 billion in the budget to end austerity. It is expected that the Chancellor might reduce pension tax relief for the higher paid to raise funds, in a move that the IFS deems “a step in the wrong direction”. Taxing higher earners on their pensions would be “unfair and inappropriately distort behaviour” and there are far better ways to tax the well off, including doubling council tax rates on the four top bands of property. (£)
What happened yesterday?
The FTSE 100 started the week with a modest gain and closed higher, taking the index back above 7,000 following losses last week across global stock markets and Brexit uncertainty.
The lift was aided by the rising price of gold, which boosted miners Randgold Resources and Fresnillo by 5%. Gold gained 0.8% to $1,227.06 per ounce as people flocked towards what is seen as a safer investment amid Italy debt concerns and fried relationships between the US, China and Saudi Arabia.
European stock markets steadied on the whole, following a turbulent week, although there was an “underlying mood of nervousness”.
Meanwhile, Wall Street started trading lower and US retail sales were weaker than expected, rising just 0.1% in September rather than the projected 0.6% following the Sears bankruptcy announcement. The US deficit widened to $779 billion the year following Trump’s spending increases and tax cuts.
In currency, the pound dipped yesterday following the less positive Brexit projections, falling 0.02% against the dollar to $1.32. The pound rose 0.09% against the euro to €1.14.
B.P. Marsh & Partners
Ashley (Laura) Holding
UK Economic Announcements
(09.30) Claimant Count Rate
Intl. Economic Announcements
(10.00) Balance of Trade (EU)
(10.00) ZEW Survey (EU) - Economic Sentiment
(10.00) ZEW Survey (GER) - Current Situation
(10.00) ZEW Survey (GER) - Economic Sentiment
(14.15) Capacity Utilisation (US)
(14.15) Industrial Production (US)
Columns of Note
Edward Lucas has some interesting advice for the West in The Times this week. He claims that, unless your politicians feel free to meet the Dalai Lama, then you are part of the Chinese empire – “you just haven’t realized it yet”. Western leaders are reluctant to meet the Tibetan spiritual leader (or have apologised after doing so) as they fear repercussions from China. He goes on to examine other areas under China’s far-reaching control. (£)
Writing for the Independent, the Labour politician Chuka Ummuna declares that politics has not descended entirely into populism just yet. Progressive politicians are still out there, advocating modern solutions to today’s politics rather than “the stale, boring, polarized nonsense that characterizes too much debate in UK politics”. He talks of Justin Trudeau and Jacinda Ardern in the refreshingly positive take on the state of British politics.
Did you know?
There's a Native American lake named Chargoggagoggmanchauggagoggchaubunagungamaugg. It means, "you fish on your side, I fish on my side, and no one fishes in the middle." Located in the town of Webster, Massachusetts, it is known more commonly as Lake Chaubunagungamaug or Webster Lake.
House of Commons
Business, Energy and Industrial Strategy (including Topical Questions)
Ten Minute Rule Motion
Cold Weather Payments - Hywel Williams
Consideration of Lords amendments
Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill
Overseas Electors Bill
Opposed Private Business
Named for consideration by the Chairman of Ways and Means
Childhood obesity - Ms Nadine Dorries
House of Lords
Independent Age report 'A Taxing Question: How to fund free personal social care' - Baroness Wheeler
House of Commons International Development Committee report: 'Definition and Administration of the ODS' - Lord Collins of Highbury
Support for local authorities to set up private rented sector licensing schemes. - Lord Kennedy of Southwark
Courts and Tribunals (Judiciary and Functions of Staff) Bill [HL] - Report stage - Lord Keen of Elie
Orders and regulations
Regulation of Investigatory Powers (Juveniles) (Amendment) Order 2018 - motion to regret - Lord Paddick
In recess until 23 October
House of Commons
Prime Minister's Question Time
House of Lords
Number of pupils taking GCSE Music in the last academic year - Lord Black of Brentwood
Plans to increase the number of GPs in England - Baroness Kennedy of Cradley
Whether treatments for gender dysphoria offered to children by the NHS are evidence-based and do no long-term harm if the diagnosis turns out to be mistaken - Lord Lucas
Report from the EU Committee "Dispute resolution and enforcement after Brexit" - Baroness Kennedy of The Shaws
Religious intolerance and prejudice in the UK - Lord Bourne of Aberystwyth