23 February


23 February

Good morning,

Cream of sweetcorn soup, Guinness short rib of Dexter Beef and lemon tart were all on the menu as Theresa May’s so-called “Brexit war Cabinet” convened for an away day at Chequers yesterday. And, according to one source, this was washed down with a helping of “unity”, as the 11 cabinet ministers in attendance hammered out an agreed position over eight hours.
No official detail has been provided regarding what “unity” means, however, according to the Financial Times, it centres on the “Canada plus plus plus” proposal championed by David Davis. Under this plan, the UK would seek to negotiate a free-trade agreement similar to the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada, but with embellishments such as better access to the single market for goods and services through close regulatory co-operation.
Theresa May will outline the details of her strategy in a speech next week. However, how long this fragile compromise can last remains to be seen.
The European Commission appeared to reject the thrust of May’s strategy before she even arrived at Chequers. In a document published online, the commission says her approach would “not be compatible with the principles” set out in the EU’s own guidelines and posed a risk to the “proper functioning” of the single market.
One of the slides shows that the red lines May has outlined so far means that the best the government can hope for is a deal similar to that with Canada, but without the “plus plus plus”.
The situation is further complicated by reports that Jeremy Corbyn is set to use a speech on Monday to endorse staying in “a customs union” before backing a rebel Tory amendment to inflict a government defeat.
Something tells me that there is still a long way to go.


A news study suggests that there are 237 million errors in administering medication in the NHS each year – the equivalent of a mistake for one in every five drugs prescribed. Whilst most cause no problems, the errors could be a factor in more than 22,000 deaths. Health Secretary Jeremy Hunt has said he is concerned by the findings and is expected to outline steps the NHS is taking to reduce mistakes in a speech today.
Counter-terrorism police are investigating a suspicious package that was sent to Kensington Palace, addressed to Prince Harry and Meghan Markle. The parcel contained a racist letter and white powder which was later found to be harmless. The incident is being treated as a hate crime.
Justin Forsyth has resigned as deputy chief executive of Unicef following accusations he behaved inappropriately towards female members of staff during his time as chief executive of Save the Children. He said he “apologised unreservedly” to the three women at the time, and his resignation was not because of past mistakes but due to the recent media coverage and the “attempt to do serious damage to our cause and the case for aid”.

Business & Economy

Royal Bank of Scotland has announced its first annual profit for the first time in a decade. The bank, which is majority-owned by the taxpayer, made a profit of £752 million in 2017 compared with a £6.59 billion loss the year before. Ross McEwan, chief executive, said it was a “really symbolic moment”.
Standard Life Aberdeen is to sell its insurance business to phoenix Group for £3.2 billion, marking the company’s exit from the insurance sector. The company, formed through the merger of Standard Life and Aberdeen Asset Management which was completed earlier this year, said it was part of its strategy of “building a world-class investment company”.



What happened yesterday?
The FTSE 100 was down 29.18 points, or 0.4%, to 7,252.39 at close of trading yesterday.
Centrica was the biggest gainer on the main index despite reporting a 17% drop in group profits. The British Gas owner also said that it would be cutting 4,000 jobs, citing the government’s proposed energy price cap as the reason for this.
Barclays was another strong performer, climbing 4.4%, after announcing a 10% in pre-tax profits.
British American Tobacco was the day’s big loser, shedding 2.15% due to weaker than expected sales growth in 2017.
On the FTSE 250, which dropped 52.38, or 0.27%, to 19,736.06, Go-Ahead Group soared 14.13% thanks to strong half-year results.
However, Moneysupermarket.com Group tumbled 13.75% after disappointing investors with a change in strategy.
Across The Atlantic, the S&P 500 and Dow Jones Industrial Average were up 0.1% and 0.66% respectively but the Nasdaq fell 0.11%.
On the currency markets, the pound was up 0.01% against the dollar at $1.3955 but was down 0.03% against the euro at €1.1316.

Afarak Group (DI), International Consolidated Airlines Group SA (CDI), Pearson, Royal Bank of Scotland Group, Rightmove, Standard Life Aberdeen, William Hill
Q4 Results
Royal Bank of Scotland Group


Caledonian Trust
International Economic Announcements
(07:00) Gross Domestic Product (GER)
(10:00) Consumer Price Index (EU)

Columns of Note

Scheherazade Daneshkhu, the Financial Times’ consumer industries editor, examines the factors which will affect Unilever’s decision over where to locate its unified headquarters. The consumer goods giant has operated as two separate legal companies, one based in Rotterdam, the other in London, since the 1929 merger between British soap maker, Lever Brothers, and Dutch margarine producer, Margarine Unie. However, it is simplifying its structure to appease investors and make it easier to issue new shares.
In The Times, Philip Collins contends that the obvious strategy for Labour MPs who want to stop Brexit is to join the Conservative Party. This, he says, would would pull the government to the left, prevent Jacob Rees Mogg or Boris Johnson becoming prime minister, and give them cabinet seats with a fair chance of victory in 2022. Collins argues that being a member of a political party is “working out who is the most dreadful person you are prepared to put up with” and points out that the likes of Liz Kendall and Chuka Umunna have far more in common with liberal Tories like Amber Rudd than they do with Jeremy Corbyn and John McDonnell. However, he accepts that the tribal nature of politics makes this scenario unlikely.

Did you know?

The Calcutta Cup is made from 270 silver rupees – the funds that remained in the Calcutta Rugby Football Club’s bank account when it disbanded – which were melted down. The first incarnation of the famous fixture was played at Raeburn Place, Edinburgh in 1879 and ended in a 3-3 draw.  

Parliamentary highlights

House of Commons
Organ Donation (Deemed Consent) Bill - 2nd reading - Mr Geoffrey Robinson
Overseas Electors Bill - 2nd reading - Glyn Davies
Legalisation of Cannabis (Medicinal Purposes) Bill - 2nd reading - Paul Flynn
Registration of Marriage (No. 2) Bill - 2nd reading - Dame Caroline Spelman
Service Animals (Offences) Bill - 2nd reading - Sir Oliver Heald
Tyres (Buses and Coaches) Bill - 2nd reading - Maria Eagle
Voter Registration (No. 2) Bill - 2nd reading - Mr Peter Bone
Clean Air Bill - 2nd Reading - Geraint Davies
Terms of Withdrawal from EU (Referendum) Bill - 2nd reading - Geraint Davies
Kew Gardens (Leases) (No.2) Bill - 2nd reading - Zac Goldsmith
House of Lords
Ecumenical Marriage Bill [HL] - 2nd reading - Lord Deben
Family Relationships (Impact Assessment and Targets) Bill [HL] - 2nd reading - Lord Farmer
Criminal Records Bill [HL] - 2nd reading - Lord Ramsbotham
Scottish Parliament
No business scheduled