24 July 2018

Daisy Penman

24 July 2018

Good morning, 

The Met Office released an amber heatwave warning yesterday, urging Brits to stay out of the sun until Friday as temperatures could reach the mid-30s for the rest of the week.

This is no concern for senior ministers in the cabinet, whom Theresa May has ordered to go on “mini European tours” in order to sell her Chequers Brexit agreement. May has suggested that time is running out for a deal to be reached by the autumn that will benefit UK and EU citizens, and opposition to her approach seems to be growing both in EU states and in grassroots Tory party members.

Things are certainly heating up for those MPs who remain in Britain, as Jeremy Hunt warned that negotiations may result in a no-deal by accident. This would be brought about, Hunt said, by the EU waiting for Britain to “blink”; he assured the public, however, that this would not happen and the government would continue to stare at the EU until further notice.

May took the opportunity of a factory visit in Newcastle to quell fears that the North East of England would suffer economically post- Brexit and reiterated the government’s desire for easy trade at the border and investment in infrastructure and skills. She also revealed that in order to unwind from the pressures of governing she likes to watch the US crime drama NCIS.

As the week progresses and temperatures rise, the prime minister may welcome tomorrow’s start to the summer recess. What better way to take her mind off the growing dissent in her party, the constant barrage of negative media coverage, and the pressures of leading a country out of the EU than watching a long-running police procedural drama that regularly features people getting stabbed in the back?

News

It emerged yesterday that the government agreed to hand over intelligence to the US regarding two British jihadists, without demanding that the pair would not be executed in America. Theresa May had been warned that if the prisoners were sent there instead of facing trial in the UK, they could face the death penalty or be sent to Guantanamo Bay. The UK government has previously called for Guantanamo Bay to be shut down on the grounds that it does not offer its defendants a fair trial. 

US National security adviser, John Bolton, doubled down yesterday on President Trump’s tweet which appeared to directly threaten Iran. Bolton issued a statement suggesting that the tweet was not a random act, but rather an indication of the administration’s policy towards Iran in the future. In the original tweet, Trump used all capital letters to warn Iranian President Rouhani that he would face “unprecedented consequences” if he continued to talk about the US in a negative way.

A government-backed study has concluded that British hospitals are failing to follow NHS guidance on multiple births. Women who are carrying twins reportedly face “pot luck” over whether they are looked after by a specialist team or offered planning for the risk of premature birth. The report estimates that if all hospitals followed the guidance, a fifth of the 270 twins who die before they are a month old could be saved, equivalent to 55 babies a year across the UK.

Business & Economy 

US car manufacturer Tesla saw its shares drop almost 5% after leaked memos reportedly showed the company asking suppliers for refunds. The memo was obtained by the Wall Street Journal and had originally been sent by a global supply manager, who described the payments as essential to the company’s operation. Tesla announced recently that it would be cutting several thousand jobs in an effort to reduce costs; the company has been burning through cash at a rate of roughly $1 billion a quarter according to Bloomberg, and finished the first quarter of this year with $2.7 billion cash on hand. 

Google’s parent company, Alphabet, beat Wall Street’s forecasts with its second-quarter results last night to put its shares on course for an all-time high. The company’s underlying profit was almost 22% better than expected, despite the $5.1 billion charge it took to cover the cost of the record fine from the European Commission. Alphabet is gaining ground on Amazon as one of the world’s largest technology companies - it is valued at $838 billion, compared to Amazon’s $874 billion.

The government is expected to lift the pay rise cap on the wages of public sector workers today after six years of the cap remaining at 1%. It is understood that the money will come from departmental savings instead of extra funds, meaning frontline services could be at risk. This news comes after it was announced in March that NHS workers would be receiving a 6.5% pay rise over three years, and follows pressure to address public sector pay, which many experts blame for lack of recruiting and retraining of staff.

Markets 

What happened yesterday?
 

Japan was at the forefront of a steep rise in global bond yield following reports that the Bank of Japan was considering adjusting its monetary policy stance. Lee Hardman of MUFG said that there are reportedly several ideas being considered to make the bank’s policy more sustainable but no consensus has been reached. 

US and European stocks failed to make headway due to a heavy schedule of corporate earnings reports this week and continuing concerns about the US-China trade dispute. The Dow Jones ended the day down 0.06% at 25,044.29, while the FTSE 100 finished down 0.30% at 7,655.79.

Shares in e-commerce giant Amazon sank after President Trump hinted at the prospect of antitrust claims being brought against it. The 2.4% fall in shares led to the lowest price of the company’s stock since 12th July. Trump’s distrust of the behemoth was aired in a series of tweets on Monday morning, where the president claimed that the Washington Post was a “lobbyist” for Amazon.

Finals
The Fulham Shore
Highlands Natural Resources
IG Group Holdings
PZ Cussons
Victoria

UK Economic Announcements
(11:00) CBI Industrial Trends Surveys

AGMs
Bluerock Diamonds
Charles Stanley Group
Chariot Oil & Gas Ltd.
Fuller Smith & Turner
Halfords Group
Motorpoint Group
TR Property Inv Trust
Wizz Air Holdings

Int. Economic Announcements
(14:00) House Price Index

Columns of Note 

Polly Toynbee writes in The Guardian that “a new low standard has been set”by the government concerning its recent behaviour around Brexit. She takes aim at individual ministers such as Esther McVey and Chris Grayling, but also looks at the crises faced by the government as a whole and criticises the way the Vote Leave scandal has been punished. Toynbee laments the constant warnings about how disastrous a no-deal Brexit would be, but argues that the continued talk of preparations for no-deal are to convince supporters such as Jacob Rees-Mogg that it is still an option. 

In the Financial Times, Rana Foroohar outlines why the concentration of power in only a handful of new tech companies  - the oligopoly – is 'the economic and political challenge of our time'.  She argues that whilst the network effect (ringfencing of users and their data) and the US antitrust approach supports the monopoly of the current dominant players, the EU markets are delivering a system that is more competitive and with fewer barriers to entry.  Both sides of the Atlantic, she cautions, need to address anti-competitive behavior in order to see consistent economic returns. 

Did you know? 

Amazon employees spend two days every two years working at the customer service desk. This is in order to ensure workers understand the customer service process; even the CEO participates.

Parliament highlights 

TODAY

House of Commons
Oral questions
Health and Social Care (including Topical Questions)
 
Ten Minute Rule Motion
Civil Aviation (Accessibility) - Helen Whately
 
Motion
Third Report of Session 2017-19 from the Committee on Standards - Andrea Leadsom
 
General debate
Matters to be considered before the forthcoming Adjournment
 
Adjournment
First tier tribunals, section 24 powers and enforcement on freeholders - Jim Fitzpatrick
 
House of Lords
Oral questions
Updating the cost estimate and business case for HS2 Phase One - Lord Berkeley

Implications for the Government's proposed domestic abuse strategy of the default payment of universal credit to couples - Baroness Lister of Burtersett
 
What assessment the Government made of the precedents for Parliament providing them with a mandate for international negotiations - Lord Lea of Crondall
 
What progress the Government have made towards establishing an online pensions dashboard - Lord McKenzie of Luton
 
Legislation
Registration of Marriage Bill [HL] - Third reading - The Lord Bishop of St Albans

Assaults on Emergency Workers (Offences) Bill - Third reading - Baroness Donaghy

Parental Bereavement (Leave and Pay) Bill - Third reading - Lord Knight of Weymouth

Home Education (Duty of Local Authorities) Bill [HL] - Third reading - Lord Soley

Non-Domestic Rating (Nursery Grounds) Bill – Second reading - Lord Bourne of Aberystwyth
 
Orders and regulations
Draft Immigration (Provision of Physical Data) (Amendment) (EU Exit) Regulations 2018 - Motion to approve - Baroness Williams of Trafford
 
Higher Education (Transparency Condition and Financial Support) (England) Regulations 2018 - Motion to approve - Viscount Younger of Leckie
 
Scottish Parliament
Recess until 5th September

TOMORROW

House of Commons

Recess until 4th September

House of Lords

Recess until 4th September

Scottish Parliament

Recess until 5th September