2 July 2019

Javier Maquieira

2 July 2019

Good morning,

The number of decisions we face every day can seem endless with often contradictory outcomes: we want to end the use of single use plastic for the sake of our planet but our tasty choice of lunchtime sandwich comes in more packaging than Christmas. And even when the bigger decisions are labelled as ‘life choices’ - those with a greater impact on our career paths and personal lives - it only makes us more hesitant and self-conscious.
 
Nowhere are choices knottier than in group decision-making and in particular among political leaders. As it happens, seeking consensus has traditionally proven difficult at all political levels, with differences in interests, ideas and personal ambitions often accounting for diplomatic failures, disagreement and, ultimately, conflict.
 
Despite the progress made during the second half of the last century in terms of global governance and deal-making, recent developments in politics point to a new age of distrust and misunderstanding among world leaders which may help to explain the unpredictability and uncertainty that permeates current affairs. The inability to reach deals has intensified in international relations, as not only Brexit but also high-profile meetings in the last week bear witness.
 
Although the host of the G20 summit that took place in Osaka over the weekend, Japan’s Prime Minister Shinzo Abe, may have described the meeting as a success, it certainly had its fair share of uncomfortable moments. Among other things, US President Donald Trump disagreed with everyone and re-stated that the climate crisis doesn’t need to be tackled, while the presence of Saudi Arabia’s crown prince, Mohammad bin Salman, caused much controversy following the international outrage over the killing of journalist Jamal Khashoggi nine months ago. What’s more, Prime Minister Theresa May and Russian President Vladimir Putin staged an awkward handshake due to confrontations over the Salisbury novichok poisonings, with Mr Putin also announcing the end of liberalism, to the obvious disdain of European Council President Donald Tusk.
 
Back in the EU (at least for now anyway), indecision and disagreement are also at the centre of the current institutional transition. On Sunday evening, EU leaders failed to agree on a new European Commission president after the conservative European People's Party (EPP) rebelled against a plan hatched on the sidelines of the G20 summit to choose the social democrat Frans Timmermans for the top job. In spite of efforts to reach an agreement through one-on-one consultations with Tusk, if the 27 EU leaders are still unable to overcome their differences before the European Parliament elects its president later this week, an open contest for the post will surely complicate further deliberations.
 
Notwithstanding crippling uncertainty, one thing remains clear: as functioning treaties and agreements continue to deteriorate and negotiations come to a halt, the ability to build multilateral consensus and enhance global governance institutions continues to be as fundamental to avoiding war and collateral damage to relations as it has always been.

News

Hundreds of protesters stormed into Hong Kong’s Legislative Council building on Monday as the region celebrated the 22nd anniversary of its handover from British to Chinese rule. Inside the legislature, some protesters vandalised the emblem of Hong Kong with spray paint and raised a British colonial flag featuring the union jack. Although police officers decided not to move against the crowd at first, they later used tear gas, leaving the air outside Hong Kong’s government headquarters filled with smoke and protesters screaming and running away. Hong Kong’s leader, Carrie Lam, condemned what she called the ‘extreme use of violence’ by protesters in a pre-dawn conference.
 
Iran’s Foreign Minister Javad Zarif announced yesterday that the country’s stockpiles of enriched low-grade uranium had surpassed the 300-kilogram limit set by the 2015 nuclear deal in what is considered the first major breach of the agreement since Donald Trump pulled out of the accord in May 2018. The announcement comes after Tehran said a month ago that it had quadrupled its production of low enriched uranium as a response to heightened US economic sanctions.
 
The Chancellor of the Exchequer Philip Hammond warned the two Tory leadership contenders, Boris Johnson and Jeremy Hunt, against throwing away the party’s reputation for fiscal prudence after their insistence on their ability to lead the UK out of the EU without a deal on October 31. Mr Hammond tweeted that the ‘fiscal firepower’ put in place for a no-deal Brexit by the current government would only work under ‘an orderly transition’, telling BBC that Conservative hopefuls need to ‘live within their means’. In related news, Mr Hunt promised on Monday ‘a plan’ to decide by the end of September whether the country has ‘a realistic’ chance of a new deal with the EU. (£) 

Business & Economy 

According to new data, June was the worst month for the UK’s manufacturing sector since 2013 – a downturn blamed on Brexit stockpiling and reduced exports due to a global slowdown. The performance of the industry has led to factory job cuts for the third month in a row and has increased fears over the wider economy, with some forecasters indicating that the UK GDP may have shrunk in the April-June period and customers elsewhere thought to be losing confidence in the future of the British market.
 
The UK government has plans to make reporting of climate risks mandatory for listed corporations and pension funds from 2022 in efforts to reduce carbon emissions among firms in the City of London. Britain’s new green finance strategy, which is expected to be published today, will count on the expertise of regulators to explore the most effective way of developing ‘green finance’, as ministers commit themselves to reach the ‘net zero’ target by 2050. (£)
 
Investors will remain locked into the Woodford Equity Income Fund for at least another 28 days after an extension of a block on withdrawals. Neil Woodford’s flagship fund will be closed until the next review data on July 29, leaving hundreds of thousands of customers unable to access their money, as the fund claims the suspension is aimed at ‘keeping investors’ interests protected.’

Markets

What happened yesterday?

London stocks were higher on Monday as the trade truce reached between China and the US boosted sentiment over the weekend. The FTSE 100 reached its highest level since September with a 0.97% increase at 7,497.50, while the pound was weaker against the dollar by 0.37% at $1.2648 and stronger on the euro by 0.23% at €1.1192 following new data from the month of June showing the worst contraction of the UK’s manufacturing sector in more than six years.
 
In a meeting between Donald Trump and Chinese leader Xi Jinping on the sidelines of the G20 summit, the US president offered concessions to China, including not imposing any new trade duties and lifting restrictions on Chinese tech giant Huawei. Meanwhile, Xi agreed to make new purchases of US farm products and resume negotiations. The apparent rapprochement between the world’s two biggest economies gave investor sentiment a boost, as fears of an escalation in the Sino-US trade war appear to have eased.
 
Miners BP (up 1.7%) and Royal Dutch Shell (up 1%) were among the risers as an increase in the oil price lifted stocks following the agreement between OPEC and other oil-producing countries to extend supply cuts. In corporate news, industrial group Melrose (up 2.5%) and Asia-focused financial companies Prudential (up 1.11%) and HSBC (up 0.90%) all made gains. Specialist media platform Future (up 6.91%) closed in the green after announcing annual results would exceed expectations, while Aston Martin (up 1.99%) also saw its stocks rise following plans by Strategic European Investment Group to buy a 3% stake in the luxury car market.
 
In the US, Wall Street indices were considerably higher, with the S&P 500 reaching an all-time high, surpassing a previous record set in June, and the tech-heavy Nasdaq Composite and Dow Jones Industrial Average rising 1.1% and 0.4% respectively.

Finals
Hml Hldgs
Solid State
 
Interims
St. Modwen Properties
 
AGMs
Assura
B.s.d Crown Di
Icg-longbow

UK Economic Announcements
(09:30) PMI Construction
 
Int. Economic Announcements
(07:00) Retail Sales (GER)
(10:00) Producer Price Index (EU)

Columns of Note

Guardian columnist John Harris argues that Conservative candidate Boris Johnson doesn’t conform to the role of online-rooted ‘hyperleader’ that Donald Trump and others display despite his ambitions to become one. According to Harris, the reasons why Johnson is not a hyperleader is that he doesn’t use the internet to try to change the conversation or ensure that politics and the media are constantly distracted nor he doesn’t count on a ‘superbase’ of followers outside the usual forums of representative democracy. He further contends that Johnson represents the terminal crisis of the Tory party in the face of modernity, while he suggests that the case of hyperleadership provided by the Brexit Party’s Nigel Farage might eventually replace Toryism.
 
Writing in the Financial Times, Jean-Pierre Landau opines that central banks should issue their own digital currencies in order to ensure financial stability, as well as access to public money. He argues that physical cash, banks’ main asset, may disappear as a form of exchange, with the prospect of ‘digital currency areas’ eventually fragmenting the monetary system. This would reshape the international monetary system in such a way that some governments may use digital payment networks to internationalise their currencies, whereas others would be receivers of digitalised foreign currencies, facing a risk of ‘digital dollarisation’. Landau concludes that sovereign governments need to ensure that the general public has an access to central bank money by being able to replace cash with a Central Bank Digital Currency that complements bank deposits and doesn´t carry interests. (£)

Did you know?

The centre of the Earth is hotter than the surface of the Sun.

Parliamentary highlights

TODAY
 
House of Commons
 
Oral questions
HM Treasury (including Topical Questions)
 
Ten Minute Rule Motion 
Breast Cancer Screening (Women under 40) – Andrew Griffiths
 
Estimates Day
7th Allotted Day - Estimates relating to the Department for Work and Pensions and the Ministry of Housing, Communities and Local Government – Jesse Norman
 
Main Estimates 2019-20 – Jesse Norman
 
Adjournment 
Unemployment among people with autism – Marion Fellows
 
House of Lords

Introduction(s) 
The Lord Bishop of Derby
 
Oral questions
Increasing the number of homes for social rent – Lord Evans of Watford
 
Ensuring that appropriate consideration is being given by all departments to other policy areas alongside the preparations for the UK's departure from the EU – Baroness Massey of Darwen
 
Government action to support access to justice for displaced people from the Yazidi community in Iraq and to enable survivors of Daesh violence to return home – Lord McConnell of Glenscorrodale
 
Ensuring that there is adequate provision of GP services in rural areas – Baroness McIntosh of Pickering
 
Legislation
Child Support (Miscellaneous Amendments) Regulations 2019 – Baroness Buscombe
 
Courts and Tribunals (Online Procedure) Bill [HL] - Third reading – Lord Keen of Elie
 
Debate
Augar Review of Post-18 Education and Funding – Viscount Younger of Leckie
 
Scottish Parliament
 
On recess until 1 September 2019
 
TOMORROW
 
House of Commons
 
Oral questions
Northern Ireland
 
Ten Minute Rule Motion
Plastic Pollution (No. 2) - Mr Alistair Carmichael
 
Legislation
Supply and Appropriation (Main Estimates) (No. 3) Bill: 2nd and 3rd Reading
 
Motion
To approve a Statutory Instrument relating to the Draft Capital Allowances (Structures and Buildings Allowances) Regulations 2019 - Jesse Norman
 
To approve a Statutory Instrument relating to the Misuse of Drugs Act 1971 (Amendment) Order 2019 - Sajid Javid
 
Backbench Business
Debate on a Motion on Whistleblowing - Norman Lamb, Stephen Kerr
 
Adjournment
Schools in Winchester - Steve Brine
 
House of Lords
 
Oral questions
Support to people suffering from asthma, including on access to medicines - The Earl of Clancarty
 
Bullying, harassment and abuse in the National Health Service in England - Lord Clark of Windermere
 
Removing any impediments to selling public land to local authorities or housing associations at below its market value - Lord Kennedy of Southwark
 
Debate
Further to the resolutions of this House on 14 and 28 January, and that of the House of Commons on 14 March, it is expedient that a joint committee of Lords and Commons be appointed to consider and report on the costs and implications for the UK of exiting the EU without a withdrawal agreement on 31 October 2019, and that the committee should report its findings by 30 September 2019 - Baroness Smith of Basildon
 
Short debate
Mitigating the risks posed by the wreck of SS Richard Montgomery - Lord Harris of Haringey