23 October

@lyle_h_hill

23 October

Good morning,

With all the focus on Brexit deals and the machinations of the negotiation process, it can be easy to forget that in other places around the world politics goes on as normal.

Shinzo Abe last night secured a thumping super majority in snap Japanese elections he had called last month. Many in Japan had thought that Abe would win the election but lose seats, an inevitable cost of having been in power for two terms and with his approval ratings slipping.

Instead, Abe and his ruling Liberal Democratic coalition secured an historic third term with an increased mandate, and importantly, a parliamentary super majority.

This super majority gives 'Abenomics', the aggressive economic policy pursued by Abe since his election in 2012, a renewed life. However, the parliamentary arithmetic also allows Abe to follow through on his key election promise to revise Japan's post-war constitution.

 

NEWS

Philip Hammond has been warned by Cabinet colleagues that he faces a possible ambush by Tory MPs who want him moved from his position. The rebellion could come at Hammond's next Budget in November and would cause a headache for Theresa May, who is already balancing tight parliamentary arithmetic.

The Government has significantly toughened its line on the fate of British nationals going to fight for the Islamic State. Foreign Office minister Rory Stewart confirmed this weekend that it was the Government's policy to kill almost all of the British nationals fighting for IS in Iraq and Syria.

According to health officials, almost a fifth of antibiotic prescriptions are needlessly given out as many illnesses get better on their own. Public Health England has warned that overusing antibiotics is making infections harder to treat by creating "drug resistant superbugs". Instead, many patients should simply be told to rest.

BUSINESS AND ECONOMY

British business groups, including the Institute of Directors, the Confederation of British Industry and the Federation of Small Businesses, have called for the Government to negotiate a swift Brexit transition deal. In an open letter to David Davis, the group said the UK risks losing jobs and investment if a transition deal is not secured quickly.

In another blow to the UK capital market, major investment banks such as JP Morgan are speaking to regulators about rerouting Asia trading activities through Hong Kong rather than London.New Hong Kong "booking entities" would have a limited effect on UK jobs but would signal a shift in gravity away from London.

Britain's leading manufacturing trade body, the EEF, has found in its annual survey that Britain is facing an investment crisis. The findings of the survey state that factories are cutting back on spending due to the backdrop of political uncertainty. The news comes against a global backdrop of increased spending.

MARKETS

The week ahead
Following the significant economic news last week that inflation had risen to 3 per cent and wage growth had once again stagnated, this week looks like a quieter week in terms of key economic announcements.

However, the pressure on wages and the subsequent decline on living standards will be a key political problem over the coming months and one that Philip Hammond will want to attempt to curb in the November Budget.

On Wednesday, we can expect the preliminary growth estimate for quarter three, which if construction and industrial production surveys are anything to go by will be similar to quarter two. If this logic follows, Q3 growth will be 0.3%.

In line with the above analysis of wage stagnation, it is expected that retail figures will remain subdued, alongside other consumer services such as pubs and taxis.

Much remains to be seen, but if growth sits at the same level as the last quarter, the onus will be on the chancellor to announce something significant in his upcoming budget. With all energy focused on Brexit, and all announcements viewed through the lens of negotiation, it will be interesting to see what Philip Hammond has up his sleeve in the coming months.

Interims
Braemar Shipping Services

 

Trading Announcements
Petra Diamonds Ltd

AGMs
City of London Investment Group, Goldplat

 

UK Economic Announcements
CBI Industrial Trends Surveys

COLUMNS OF NOTE

Tim Montgomerie, writing in The Guardian, argues that if Hammond is not willing to be a little more expansive with his Budget, including borrowing more money for investment, he should be moved from his position by Theresa May in any upcoming Cabinet reshuffle.

Rana Foroohar, writing in the Financial Times, takes a look at Washington's moves to curtail the influence of big tech and social media on politics. As a first step, legislation has been proposed to ban online political ads.

DID YOU KNOW?

Coffee is very popular in Japan and the country imports approximately 85% of Jamaica's annual coffee production.

PARLIAMENTARY HIGHLIGHTS

TODAY
 
House of Commons
 
Oral questions
Defence (including Topical Questions)
 
Adjournment
Provision of health care in North Staffordshire - Gareth Snell
 
House of Lords
 
Oral questions
Consumer and personal debt in the United Kingdom - Lord Haskel
Life science industrial strategy - Lord Crisp
Reviewing the Armed Forces Act 2006 and serious offences committed by members of the armed forces - Lord Morris of Aberavon
Banks and building societies undertaking comprehensive immigration checks - Lord Roberts of Llandudno
 
Legislation
Space Industry Bill [HL] - Committee stage (day 3) - Committee of the Whole House - Lord Callanan

Scottish Parliament

No business scheduled.


TOMORROW

House of Commons

Oral questions
Treasury (including Topical Questions)

Legislation
Smart Meters Bill - 2nd reading - Greg Clark

House of Lords

Oral questions
Current penalties and custodial sentences for animal welfare offences in England - Lord Allen of Kensington

Reducing the number of MPs to 600 - Lord Rennard

Discussions with the devolved administrations regarding Brexit - Lord Foulkes of Cumnock

Scottish Parliament

Ministerial Statement
Delivering for Scotland’s British Sign Language (BSL) Communities: Launch of the BSL National Plan

Scottish Government Debate
Unconventional Oil and Gas