22 October 2018

Stuart Taylor

22 October 2018

Good morning,

When David Cameron promised to hold a referendum on the UK’s future relationship with Europe back in 2013, one of his principal motives was to heal the damaging division that had torn his party apart for decades. However, for anyone who has been living on a different planet for the five years following this, this morning’s headlines give yet another indication that the reality paints a radically different picture as his successor continues to be consumed by this long-running feud. 

‘Tory unrest’, ‘Brexit rebels plot’, ‘’Nasty party’ rounds on May’ all set the tone for start of the prime minister’s week, as she faces her most challenging seven days since, well, last Monday. She will come to the Commons later today to inform MPs that a Brexit deal with the EU is 95% settled, with a number of agreements in place on issues as wide ranging as security, services and a military base in Cyprus.

The idea is to present the impression that a deal is within reach and to implore colleagues to keep their eyes on the prize. However, it is notable that for all that has been agreed, proposals over a ‘backstop’ to guarantee no hard Irish border remain highly contentious and very much unresolved. 

Time is running out for May to quell the revolt, with The Times reporting this morning that she faces a rebellion by more than 40 of her Brexiteer MPs if she does not yield to their demands that Northern Ireland is not granted different regulatory and customs conditions as the rest of the UK. There have already been appeals to summon the PM to appear before the 1922 Committee of Conservative backbenchers on Wednesday evening, while as many as 40 MPs are believed to be in favour of calling for a vote of no confidence in her, just eight short required to trigger a vote. 

While number 10 battles its own backbenchers, 11 Downing Street is taking aim at offshore gambling companies as Philip Hammond prepares plans to increase the so-called remote gaming duty paid by overseas operators who offer online casino-type games such as blackjack. The proposals would raise around £1bn over the next five years, helping the Treasury fill the gap created by the government’s decision to reduce the maximum stake on fixed-odds betting terminals from £100 to £2.

The proposal will be one of a number of revenue-raising proposals included in the chancellor’s Budget next week, not that the normally set-piece event in the political calendar is likely to get much airtime this week. When Cameron made his fateful pledge of an in/out referendum, the aim was to put the European issue to bed and focus on the day job. Five years on, this scenario remains a distant utopia.

News

Saudi Arabia’s foreign minister has said that journalist Jamal Khashoggi was murdered as the result of a "rogue operation". Adel al-Jubeir told Fox News the that act was a "tremendous mistake" and denied that the crown prince ordered the killing. Angela Merkel has called for a halt to arms sales to Saudi Arabia following the journalist’s death. 

Liverpool’s mayor has said that attacks on people who are sleeping rough should be treated as a hate crime. In a letter to the home secretary, Joe Anderson said that rough sleepers should be a "protected category". Homeless charity Crisis has said that "changing the label... is not the answer", insisting it was more important that victims feel they can ask authorities for support.

Donald Trump has said that he would end the Intermediate-Range Nuclear Forces (INF) Treaty, an act that has caused Russia to threaten a new arms race. The US president has said that Russia has violated the deal, signed in 1987 by President Reagan and Mikhail Gorbachev, while the Kremlin’s deputy foreign minister said Trump’s move was a dangerous step. (£)

Business & Economy

Baroness Vadera, the chairwomen of Santander UK and a former minister in Gordon Brown’s government, is the favourite to lead a government-backed review into the future of auditing in Britain. The former investment banker will lead an investigation into whether the model for auditing is fit for purpose. (£)

Philip Morris, one of the biggest tobacco firms in the world, has been accused of "staggering hypocrisy" after unveiling a new ad campaign that urges smokers to quit. The company, which makes Marlboro cigarettes, claimed that the move was "an important next step" in its aim to "ultimately stop selling cigarettes". However, Cancer Research has criticised the move, pointing out that the firm was simply trying to promote its smoking alternatives, such as e-cigarettes, as the firm still promotes smoking outside the UK.

Siemens and General Electric have signed agreements for large power generation deals in Iraq, a move that will allow both companies to win multibillion-dollar contracts in the Middle East.  Neither agreement is binding or expected to be profitable, but the German and US groups hope that it will lead to large deals in future, when Iraq’s new government is sworn into office. (£)

Markets 

The week ahead

There is a noon deadline for the Italian government to reply to the European Commission’s response to their draft budget proposals, after the commission deemed them to be in serious breach of EU budget rules. If pushed through, the budget would see net government expenditure increase by 2.7%, far greater than the 0.1% growth limit set for the country under eurozone rules. Also today, Ryanair announce their second-quarter results, where investors will be looking for an update on negotiations between the airline and trade unions.

On to Tuesday and, not for the first time in recent days, attention will be on Saudi Arabia as the three-day Future Investment Initiative conference gets underway in the country. Numerous global companies and high-profile politicians have already withdrawn from the conference dubbed ‘Davos in the Desert’ following the death of Jamal Khashoggi. Also on Tuesday, we’ll hear more about Costa Coffee’s £3.9bn sale to Coca-Cola when Whitbread announce results for the first half of the year.

As we reach the half way point of the week, Barclays will kick-off the UK bank reporting season, with forecasts expecting the bank to report pre-tax profits of £1.1bn.

Lloyd’s Banking Group report on Thursday, as do other well-known names including Amazon, Alphabet and WPP. Finally, RBS will report their third-quarter results on Friday, with Ireland going to the polls in a presidential election on the same day.

Trading Announcements
PCF Group 

AGMs
City of London Investment Group
CPL Resources
Vast Resources
Zibao Metals Recycling Holdings

Columns of Note

The FT’s Big Read focuses on the impact that the killing of Jamal Khashoggi will have on Saudi Arabia’s Public Investment Fund. The project is the brainchild of the crown prince and aims to reshape the kingdom’s economy by attracting investment from overseas. The article examines the ways in which the scandal has put this objective in jeopardy.

Using his weekly column in The Sunday Times, Kevin Pringle writes that the almost comical inability of Tory MP Sir Paul Beresford to understand David Linden’s Glaswegian accent in the House of Commons last week is a metaphor of Theresa May’s experience at the EU summit, where leaders had no idea what she was talking about. Pringle also has advice for the prime minister, imploring her to listen more closely to the views in the rest of the UK, Ireland and Europe and stay in the single market and customs union. (£)

Did you know?

In Scotland, the Queen is personally entitled to any stranded whales which are "too large to be drawn to land by a wain pulled by six oxen". This is understood to be whales over 25 feet long. 

Parliamentary highlights

TODAY 
 
House of Commons
Oral questions
Defence (including Topical Questions)

Legislation 
Offensive Weapons Bill - Remaining Stages
 
House of Lords
Oral questions
Reducing youth crime in London - Baroness Hussein-Ece
 
Mitigation of VAT evasion by operators of online marketplaces - Lord Leigh of Hurley
 
Withdrawal from service of the Batch 1 river-class offshore patrol vessels HMS Tyne, Severn, Mersey and Clyde - Lord West of Spithead
 
Reports received on information about (1) outside interference in, and (2) irregularities in the conduct of the EU referendum - Lord Foulkes of Cumnock

Scottish Parliament
No business scheduled

TOMORROW

House of Commons
Oral questions
Health and Social Care (including Topical Questions)

House of Lords
Oral questions
Impact on children of the £1,012 fee to apply to register their entitle to British citizenship - Baroness Lister of Burtersett
 
Food security following Brexit - The Lord Bishop of St Albans
 
Prevention of anonymous social media accounts - Lord Balfe
 
Shortage of flu vaccines - Lord Naseby

Scottish Parliament
Ministerial Statement
Ministerial Statement: Response to Recommendations on Financial Redress for Survivors of Child Abuse in Care

Ministerial Statement: NHS performance

Culture, Tourism, Europe and External Affairs Committee Debate: Making Scotland a Screen Leader, Report Examining the Scottish Screen Sector