21 January 2019

Adam Shaw

21 January 2019

Good morning,

T-minus 66 days, and still no sign of a Brexit deal being (a) proposed by the UK government, (b) accepted by the EU, and (c) supported by the UK parliament.
 
The prime minister is due to present a revised plan in a House of Commons statement today, following the overwhelming rejection of her deal by parliament last week.
 
It is expected that Theresa May will attempt to force a modified version of her deal through by seeking changes to or the removal of the Irish backstop, with the hope that this would sufficiently “decontaminate” the deal to gain the support of Conservative rebels and the DUP, rather than finding a cross-party consensus which would likely result in a “softer” Brexit.
 
However, she’s reportedly found it difficult enough to convince her own inner circle of this new approach, let alone sceptics in parliament. According to yesterday’s edition of The Sunday Times, Gavin Barwell, the Downing Street chief of staff, urged May to support a permanent customs union with the EU in order to secure the support of Labour MPs. Instead, May sided with Brandon Lewis, Tory chairman, and chief whip Julian Smith, who warned that such a move would destroy the Conservative Party – ironic considering her claim that she’s putting the national interest first. 
 
Meanwhile, the lack of clarity surrounding Labour’s Brexit position is beginning to bite after reports it has lost up to 150,000 members over the last few months, fuelling claims that the party is alienating its base, which is considerably more pro-EU than its leadership. A Labour spokesperson said that the party doesn’t give a running commentary on membership figures, although some party sources disputed the numbers. Sir Keir Starmer, the shadow Brexit secretary, left open the possibility of Labour backing a second referendum on the Andrew Marr Show yesterday.
 
Amidst the political wrangling, it’s easy to forget the direct impact Brexit is having on people’s lives. No more so than the settled status programme, the registering of 3.5 million EU citizens living in the UK, which opens today. EU nationals and their family members who wish to remain here beyond 2021 must apply to the settlement scheme by June 2021 and pay £65 per adult (half that cost for children) for the pleasure.
 
With the Home Office needing to process 5,600 applications every day, it’s understandable that concerns about the process have been voiced, particularly following the Windrush scandal.

News

The Israeli military attacked Iranian positions near Damascus last night in response to the launch of “dozens” of missiles from Syrian territory towards the Israeli controlled Golan Heights. A statement from the Israeli Defence Forces said it had hit targets belonging to the Iranian Revolutionary Guards' elite unit Quds Force, including weapons warehouses, a training camp and an intelligence site. Israel’s policy of ambiguity regarding its strikes in Syria has changed recently, with Benjamin Netanyahu’s government expressing alarm at Iran's deployment in Syria in support of President Bashar al-Assad.
 
China’s economic growth slowed in the final quarter of 2018, increasing concerns about the state of the global economy. Official figures showed that the world’s second largest economy grew 6.4% in the three months to December, down from 6.5% the previous quarter and the weakest quarterly growth rate since the financial crisis. For the full year, China expanded at 6.6%, its slowest rate since 1990. Continuing trade tensions with the US have added to the gloomy outlook.
 
Authorities in Northern Ireland are continuing to question four men arrested in connection with a car bomb planted outside a courthouse in Londonderry on Saturday. The “crude device” exploded shortly after 8pm on Saturday as police were evacuating the area in response to a warning they had received. There were no casualties. Mark Hamilton, assistant chief constable of the Police Service of Northern Ireland, said the New IRA, a dissident republican group, was the main line of inquiry.

Business & Economy

Retail entrepreneur Mike Ashley is poised to rescue HMV by buying the entertainment retailer out of administration. HMV went into administration for the second time in six years at the end of last year and Ashley was one of a handful of parties to lodge formal offers with KPMG ahead of the deadline last week. If successful in his bid, it would be Ashley’s third pre-pack acquisition, following deals for House of Fraser and Evans Cycles.
 
Brexit has left UK companies vulnerable to being bought on the cheap by activist investors, according to leading fund managers. The share price of many large British companies has fallen due to Brexit uncertainty and concerns about the wider global economy. Alan Custis, head of UK equities at Lazard Asset Management, highlighted that several large companies are “trading at significant discounts to overseas peers”. Meanwhile, Chris White from Premier Asset Management said “domestic UK consumer cyclicals are friendless and valuations have started to look very cheap”.
 
Property in some of the UK’s wealthiest areas has had 25% wiped off its value in the last 12 months amid the Brexit turmoil, according to data from estate agent Your Move. Meanwhile, figures from property website RightMove has shown that the average asking price in London has fallen below £600,000 for the first time since August 2015. This follows the publication of statistics from the Royal Institution of Chartered Surveyors last week, which revealed that house prices were falling at their fastest rate in six years and that the outlook for sales was the weakest in two decades.

Markets

The week ahead

Brexit continues to dominate the agenda here in the UK with Theresa May due to present a revised plan in a House of Commons statement today.
 
Opponents have voiced frustration at the prime minister’s apparent refusal to compromise on her red lines. Suggestions of a UK-Ireland bilateral treaty that would avoid a hard border and the need for a backstop were described as a “non-starter” by the Irish government.
 
On Tuesday, the World Economic Forum in Davos begins, however, neither President Trump nor Theresa May will be present, with domestic issues (the US government shutdown is starting to bite) taking precedence. As a result, Wang Qishan, China’s vice president, will likely be the focus, whilst the right-wing Jair Bolsonaro, Brazil’s new president, will be introduced to the world stage.
 
Monetary policymakers at the European Central Bank meet on Thursday and are expected to keep rates on hold for now amid concerns of faltering growth.
 
In corporate news, Easyjet, Ford, Starbucks, Johnson & Johnson, IBM, American Airlines and Burberry are amongst the companies reporting results.

Finals
Premier Veterinary Group
 
AGMs
Avacta Group, easyHotel

EGMs
Plus500 Ltd (DI)
 
International Economic Announcements
(07:00) Produce Price Index (GER)

Columns of Note

The Duke of Edinburgh’s car crash is fast turning into a PR disaster when it didn’t need to be. That’s the view of Harry Mount writing in The Telegraph. Whilst stating that Prince Philip’s spirit and desire for independence is to be applauded, Mount contends that his stubbornness is proving an issue in this case and that the Royal household’s public response has been ham-fisted; crassly taking delivery of a replacement Land Rover and driving again the next day without a seatbelt, with no personal contact with others involved in the crash. However, he states that the situation can still be resolved with “a phone call, an apology and a few days with his feet up”.
 
In The Sunday TimesKevin Pringle argues we should have more referendums, a view he accepts many will not share following the last two and a half years. He argues that their infrequency – there have only been three referendums on a UK-wide basis – is the problem, “saddling future generations with the views and prejudices of the past” regardless of changes in opinions and circumstances. Pringle contends that having more plebiscites would require the development of “proper, consistent, enforceable arrangements for them”, including the option of reviewing the outcome in another vote.

Did you know?

The average life span of a major league baseball is seven pitches. 

Parliamentary highlights

TODAY
 
House of Commons
 
Oral Questions: Home Office (including Topical Questions)
 
Ministerial Statement: European Union (Withdrawal) Act 2019 – Theresa May
 
Legislation: Healthcare (International Arrangements) Bill – remaining stages
 
House of Lords
 
Oral questions
 
Government discussions with the BBC about ending free television licences for those over 75 - Lord Naseby
Implementing the recommendations in the Annual Report of the Chief Medical Officer 2018 - Lord Hunt of Kings Heath
Performance of pupils taking the subjects that make up the English Baccalaureate - Lord Black of Brentwood
Cross-channel transport planning exercises post-Brexit - Baroness Smith of Basildon
 
Motion: Trade Bill - an amendment to the motion that this House do now resolve itself into a committee on the bill, at the end insert “and resolves that the committee’s report be not received until Her Majesty’s Government has presented to both Houses proposals for a process for making international trade agreements once the United Kingdom is in a position to do so independently of the European Union, including roles for Parliament and the devolved legislatures and administrations in relation to both a negotiating mandate and a final agreement.” - Baroness Smith of Basildon
 
Legislation: Trade Bill - Committee stage (day 1) - Baroness Fairhead
 
Short Debate: Measuring UK poverty - Baroness Stroud
 
Scottish Parliament
 
No business scheduled
 
TOMORROW
 
House of Commons
 
Oral Questions: Foreign and Commonwealth Office (including Topical Questions)
 
Ten Minute Rule Motion: Green Deal (Conduct of Home Energy and Lifestyle Management Ltd) - Alan Brown
 
Consideration of Lords Amendments: Counter-Terrorism and Border Security Bill
 
House of Lords
 
Oral Questions 
 
Funding for children with special education needs - Lord Blunkett
New regulations on the use of drones – Baroness Randerson
Shortage of common medicines - Baroness Thornton
 
Orders and Regulations
 
Justification Decision Power (Amendment) (EU Exit) Regulations 2018 - Lord Henley
Transfrontier Shipment of Radioactive Waste and Spent Fuel (EU Exit) Regulations 2018 - Lord Henley
Nuclear Safeguards (EU Exit) Regulations 2018; Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) Regulations 2018 - Lord Henley
Invasive Non-native Species (Amendment etc.) (EU Exit) Regulations 2019 - Lord Gardiner of Kimble
Floods and Water (Amendment etc.) (EU Exit) Regulations 2019 - Lord Gardiner of Kimble
 
Scottish Parliament
 
Topical Questions (if selected)
 
Scottish Government Debate: City Deal and Regional Economic Partnership
 
Committee Announcements