Angela Merkel will remain as German chancellor following Germany’s federal elections, but the Christian Democratic Union (CDU) – Christian Social Union (CSU) bloc which she leads suffered its worst result in the post-war era, leaving her position weakened.
The main opposition Social Democratic Party (SDP) led by former president of the European Parliament Martin Schulz also fared badly, meaning that the days of the “grand coalition” between the CDU/CSU and SDP, which has governed Germany since 2013, are over.
Both of the main traditional parties lost votes to the right-wing Alternative for Democracy (AfD) which made huge gains, not only entering the parliament but doing so as the third largest party with 13.3% of the vote. However, AfD also picked up 1.2 million votes from previous non-voters – replicating a pattern seen in many elections across the developed world in the last 18 months.
AfD was able to exploit dissatisfaction with Angela Merkel, who has been in power for 12 years, and particularly her controversial Willkommenspolitik policy towards refugees.
Cas Mudde, an associate professor at the University of Georgia, outlines in The Guardian why AfD’s surge may be a flash in the pan rather than a sign that it will become a sustainable third force in German politics. He points to one poll showing that 60% of AfD voters voted “against all other parties” suggesting that the relationship between AfD and its voters is weak.
That does not change the current situation though and Merkel’s options for forming a government are left limited, with a coalition between the CFU/CSU, the Free Democrats (FDP) and the Greens seen as the most plausible and likely scenario. However, negotiations could take months.
President Trump has added North Korea, Syria and Venezuela to the list of countries whose citizens will face restricted travel to the US, as he introduces an alternative to his controversial travel ban which has been frozen by the courts. Tailored restrictions will be applied to eight countries – Libya, Chad, Somalia, Iran and Yemen in addition to the three aforementioned.
Police in Greater Manchester have arrested two men after a surgeon was stabbed in the back of the neck on his way to the mosque. Dr Nasser Kurdy was attacked outside Altrincham and Hale Muslim Association yesterday evening. He was taken to hospital but has since been discharged. The incident is being treated as a suspected hate crime.
Jeremy Corbyn has been criticised by some Labour MPs after party members voted not to include Brexit as one of a series of debates at the party’s conference in Brighton. Delegates chose to discuss issues including housing, the NHS and social care but the UK’s relationship with the EU was left off the agenda. Speaking on the BBC’s Andrew Marr Show on Sunday, Corbyn voiced his concerns about single market membership, particularly rules about state aid and spending which might prevent the nationalisation of the railways.
Business and Economy
Four thousand jobs could be saved at Palmer & Harvey (P&H), the tobacco supplier and forecourt wholesaler which supplies Tesco and Sainsbury’s amongst others. It has been reported that Carlyle, the US-based asset manager, is close to entering a period of exclusivity during which it would seek to conclude a takeover of P&H. P&H had been looking to find new investors and recently hired PwC to oversee a sale process.
The Labour Party is set to unveil plans to limit the amount of interest that can be charged on credit card debt. John McDonnell, the shadow chancellor, will address Labour’s conference in Brighton later today where he will highlight figures from the Financial Conduct Authority showing that three million people are trapped by credit card debt as evidence that action is required.
The value of Deliveroo has hit $2 billion (£1.5 billion) after it raised $385 in new funding which will be used to expand into new cities and countries, enlarge its technology team and to work with restaurants to develop delivery-only kitchens. The food delivery company now operates in 150 cities across 12 countries, has 30,000 riders and is worth double what it was in August 2016.
The week ahead
It’s the last week of Q3 2017, which has seen Wall Street and world stocks climb to record highs and hit the longest streak of quarterly gains in two decades.
Monday marks the beginning of the fourth round of formal Brexit talks and it is hoped progress will be made with regards to the UK’s financial settlement. Following Theresa May’s speech in Florence on Friday, which ETX Capital analyst Neil Wilson called “a bit of a dud”, the pound slipped against the euro and the dollar – reversing some of the gains made after the Bank of England indicated a rise in interest rates is looming.
Attention this week will focus on whether “sufficient progress” has been made to allow negotiations to move on from withdrawal terms to the future trading relationship.
In Japan, it is widely expected that Prime Minister Shinzo Abe will call a snap general election to take advantage of his improved poll ratings and opposition weakness. The Nikkei climbed to its highest level in two years last week in anticipation of an Abe victory and the continuation of Abenomics – the combination of mega monetary easing, flexible fiscal policy and selective deregulation which has boosted Japan’s economy.
Third quarter sales earnings from H&M – the world’s second largest fashion retailer - is likely to be one of the bigger company stories this week. The company’s shares have climbed 7% this month on the back of hopes that an inventory clear-out will boost earnings.
We will also see final results from housebuilder MJ Gleeson and a trading statement from tour operator TUI (formerly Thomson Group).
Amerisur Resources, Elecosoft, Nasstar, Osirium Technologies, SimiGon Ltd. (DI), Sprue Aegis, Trinity Exploration & Production
Associated British Engineering, Clipper Logistics, Hidong Estate, Lucky Cement Ltd GDR (Reg S), Zoo Digital Group
UK Economic Announcements
(09:30) BBA Mortgage Lending Figures
(09:30) Public Sector Net Borrowing
International Economic Announcements
(09:00) IFO Business Climate (GER)
(09:00) IFO Current Assessment (GER)
(09:00) IFO Expectations (GER)
Columns of notes
Writing in The Sunday Times, Kevin Pringle points to the growth in the number of UN member states, particularly smaller nation states. With reference to next week’s Catalan independence referendum, he cites this as evidence that change cannot be held back and argues that there is no point in Spain attempting to stop the plebiscite.
In The Telegraph, Tom Stevenson, investment director at Fidelity International, outlines the four bubbles he believes are closest to bursting – crypto currencies, commercial warehouses, consumer credit and housing – and which are therefore the potential source of the next financial crisis.
Did you know?
Whilst studying law at night school between 1907 and 1910, Fiorello H. LaGuardia – who would go on to serve as mayor of New York City – worked as an interpreter at the immigration inspection station on Ellis Island. He spoke Italian, German, Yiddish and Croat.
House of Commons
In recess until 9th October for party conference season
House of Lords
In recess until 9th October for party conference season
No business scheduled
Public Petitions Committee Debate: PE1319 on Improving Youth Football in Scotland