23 November


Good morning,

‘Spreadsheet Phil’ has done the sums, and may have just done enough to save his own skin.
Delivering his second Budget as chancellor yesterday, Philip Hammond will have been acutely aware of the pressures facing him – Brexit, his party’s slim governing minority, even a rumoured mutiny by some of his own cabinet colleagues. As he took the podium, the Office for Budget Responsibility added to those worries by delivering a damning forecast of lower GDP growth and prolonged borrowing on the near horizon.
But despite this, the chancellor struck a quietly upbeat tone, announcing that greater investment is firmly back on the agenda. He found a few rabbits to pull out of his hat, including plans to build 300,000 new homes each year of this parliament, cutting stamp duty for first-time buyers, an extra £10 billion for frontline NHS services before 2022 and a £3 billion addition to the so-called Brexit ‘war chest’. Gone it seems are Tory austerity budgets of old.
And yet totally absent were the big, blue-sky-thinking policy ideas that usually characterize the first Budget of a parliament – the ones that incur the wrath of the electorate early on in the hope of bearing fruit before the next election. Three decades on since Nigel Lawson cut the top rate of income tax from 60 per cent to 40 per cent in the 1988 Budget, Mr Hammond’s decision to increase tax-free personal allowance by £350 to £11,850 – or near enough the rate of inflation - seems, somehow, less bold.
In this respect, a general feeling of lukewarm approval to most of Mr Hammond’s announcements should raise alarm. If a government is not prepared, or indeed able, to rock the boat in pursuit of radical policy change at this early stage, can it ever?


Germany’s Social Democratic party is facing growing pressure to consider joining a renewed centrist ‘Grand Coalition’ with Angela Merkel’s Christian Democrats in order to avoid fresh elections following the breakdown of three-party coalition talks. Led by the former leader of the European Parliament, Martin Schulz, the Social Democrats had previously ruled this out after posting the party’s worst postwar performance in October’s federal election, but today it is thought that Germany’s president and fellow Social Democrat, Frank-Walter Steinmeier, will make an appeal to Schulz in order to break the impasse.
Outrage is building in Zimbabwe over plans for ousted president Robert Mugabe and his wife Grace to receive immunity from prosecution, allowing their estate in the capital of Harare to remain untouched. The Times reports that Mr Mugabe is planning to write his memoirs while his wife would run the family’s dairy business and establish a university in his name, refusing to leave the country and remaining the country’s biggest landowners.
Ratko Mladić, the former Bosnian Serb commander nicknamed the ‘butcher of Bosnia’, has been sentenced to life imprisonment following convictions of genocide, war crimes and crimes against humanity. In an angry appearance at a United Nations-backed international criminal tribunal in the Hague yesterday, Mladic was found guilty of 10 offences involving genocide, murder and persecution of civil populations.

Business & Economy

Greybull Capital, the former owner of failed holiday company Monarch Airlines, is to receive a £60 million windfall following a Court of Appeal ruling that it has the right to sell its remaining airport infrastructure. The ruling could allow Greybull Capital to use the funds to help with the estimated £60 million bill which the airline incurred after repatriating tens of thousands of Monarch passengers when the company ceased trading in October.
The world’s first two-drug pill to treat HIV has won approval from regulators in the US. The news is seen as a boon for Emma Walmsley, chief executive at Glaxosmithkline, whose firm will manufacture the drug and are looking to bolster declining sales by pursuing radical new treatments. Approval for two other drugs, including a shingles vaccine and a three-in-one inhaler for chronic lung disease, has been granted in the past two months.
Policymakers at the US Federal Reserve have given their biggest hint yet that another rise in interest rates could be on the way despite persistently low inflation. Minutes from the latest meeting of the Fed’s policymakers held between October 31 and November 1 showed that although not the unanimous view, another increase would be needed ‘in the near term’ if the US economy stayed on track. The record also revealed serious worries over the central bank’s ability to influence the economy as long-term sub-target inflation sets in.


What happened yesterday?
In a day dominated by focus on the chancellor’s budget announcements, the most notable movers included a fall across the board in housebuilders’ shares after the chancellor announced a review of unused planning permissions.
Barratt Developments was the biggest faller on the FTSE 100 yesterday, finishing down 3.7% while Berkeley Group dropped 2.6%. A lack of detail on possible planning reform and a threatened use of compulsory purchase powers as hinted by in the Budget added to uncertainty. 
Despite the falls, the FTSE 100 ended the day slightly up 0.1% at at 7,419 points, having traded up as much as 0.5% earlier in the day. Elsewhere, banking giant Royal Bank of Scotland (RBS) also suffered, falling 0.9% to 270.8 points as it emerged the Government plans to begin selling off its stake by March 2019.
On the currency markets, the pound rose 0.4% against the greenback to finish at $1.33, and was broadly flat against the euro at €1.13.

Mitchells & Butlers
Paragon Banking Group

Caledonia Investments
CMC Markets
First Property Group
Greencoat Renewables
Hogg Robinson Group
Liontrust Asset Management
Shires Income
Severn Trent
TR Property Inv Trust
Majestic Wine
Worldwide Healthcare Trust

Trading Updates
Empiric Student Property
Menzies (John)

CAP-XX Limited
Crystal Amber Fund Ltd.
Hotel Chocolat Group
South32 Limited (DI)
Thorpe (F.W.)
Atlantis Japan Growth Fund Ltd.

UK Economic Announcements
(09.30) Gross Domestic Product
(11.00) CBI Distributive Trades Surveys
International Economic Announcements
(07.00) Gross Domestic Product (GER)

Columns of Note

Janan Ganesh writes in the Financial Times that pay-outs to the young and Brexiteers may have done enough to save the chancellor in a speech overshadowed by focus on his own job security. But for the first budget of this parliament, Philip Hammond was noticeably more cautious than his predecessors, betraying the government’s need to survive month-by-month rather than pursue bold policy ideas for the long-term. A sensible budget, nonetheless, Ganesh concludes; no chancellor can be expected ‘to write a symphony in the middle of a cage fight’.
For all their recent success at the polls, Democrats in the US are still just as discredited as Trump’s Republicans, writes Justin Webb for The Times. Webb comments that the party is still struggling to find a galvanizing leader to lead it into the 2018 mid-term elections, and suffers from an establishment culture that has failed to come to the terms with the fall-out of the sexual harassment scandals sweeping Western countries.

Did you know?

On this day in 1869, the clipper Cutty Sark was launched in Dumbarton, Scotland – one of the last clippers ever built, and the only one still surviving today.

Parliamentary highlights

House of Commons
Oral questions
International Trade (including Topical Questions)
Woman and Equalities (including Topical Questions)
Business Statement
Business Questions to the Leader of the House – Andrea Leadsom
Continuation of the Budget Debate
1979 same roof rule for familial sexual abuse cases - Iain Stewart
House of Lords
Oral questions
Discussion with the devolved administrations establishing an intergovernmental forum to decide on appropriate competence for powers relating to devolved functions repatriated from the EU following Brexit – Lord Wigley
Long-term needs of the Rohingya refugees in Bangladesh - Lord Foulkes of Cumnock
Mental health research funding after the UK leaves the EU - Lord Brooke of Alverthorpe
Recent developments in Zimbabwe - Lord Hayward
Maintaining UK defence forces at a sufficient level to contribute to global peace, stability and security - Lord Soley
Challenges facing problem gamblers, online gambling and the Multi-Operator Self Exclusion Scheme - Lord Browne of Belmont
Short Debate
Reviewing section 42 of the Armed Forces Act 2006 - Lord Morris of Aberavon
Scottish Parliament
General Questions
First Minister’s Questions
Members’ Business
The Day of the Imprisoned Writer, 15 November – Ivan McKee
Local Government and Communities Committee Debate 
Building Regulations and Fire Safety in Scotland – Bob Doris
House of Commons
No business scheduled

House of Lords
Equality Act 2010 (Amendment) (Disabled Access) Bill [HL] – 2nd reading – Lord Blencathra
Home education (Duty of Local Authorities) Bill [HL] – 2nd reading – Lord Soley
Creditworthiness Assessment Bill [HL] – 2nd reading – Lord Bird
Scottish Parliament
No business scheduled

But, with an impatient electorate and cabinet colleagues such as his, planning year-by-year is a luxury the chancellor can ill afford. Instead, this is a budget that aspires to survive month-by-month and, perhaps - given the circumstances - Mr Hammond can be applauded.