26 February

@scottreid

26 February

Good morning,

Out of the frying pan and into the fire?
 
Potentially: today Jeremy Corbyn will make his first big policy intervention in the Brexit debate and could be gambling the eerily persistent harmony in his Labour party in doing so. He will call for a “new and strong relationship with the single market”, which in the opaque language of Brexit-speak, means committing Labour to supporting a retained customs union with the EU after Brexit.
 
The move towards a softer Brexit has already been met with criticism among pro-Brexit Labour MPs, who are usually the most loyal to the leadership within the party. Frank Field suggested the shift treated their voters as “thick”, that the public had made an informed choice to leave all of the institutions of the EU during the referendum which if ignored could risk losing swathes of Labour’s northern seats to the Tories.
 
From where I stand, the battle for Labour has already been won – not by the otherwise Eurosceptic Corbyn or Momentum, but by the overwhelmingly pro-Remain majority which lent the party their votes in last year’s General Election. Should another opportunity present itself by way of a sensible, centre-ground opinion in favour of keeping close ties with the EU (if not the whole EU membership), his voters might not be so keen to support him next time.
 
This is the reason why 80 senior figures within the party have almost immediately stepped up their demands for Labour to commit to single market membership as the only real way of achieving full tariff-free access to the EU. If the leadership are really as keen on protecting jobs and toppling the government as they say they are, the logic of going that one bit further might be too much to resist.

News

China is set to lift a limit on the length of time its president can serve meaning incumbent Xi Jinping could rule for life. The amendment, which would overturn a clause in China’s constitution that limits the president to serving two five-year terms, is almost certain to be approved by the National People’s Congress when it is introduced to the legislature next week. The change would give President Xi, 64, more power than any Chinese leader since Mao Zedong, who died in 1976.
 
North Korea has said it will begin direct talks with the US, following a high-level delegation sent to Pyeongchang for the Winter Olympics closing ceremony yesterday. The eight-person team included officials responsible for the country’s nuclear programme and was headed by general Kim Yong-chol, vice chair of the ruling Workers’ party’s central committee, and the man accused of masterminding attacks on South Korea in recent years. The talks are thought to indicate North Korea’s desire for more substantial talks compared with those during an earlier visit by president Kim Jong-un’s sister during the opening ceremony.
 
Universities could be forced to curb high pay among principals, tackle grade inflation, and provide greater support for disadvantaged students under new regulations. Legislation to create a new Office for Students will go before parliament on Wednesday, and leaked documents seen by The Times suggest the bureau will have powers in both management and academic matters, including regulating the amount of first-class degrees awarded and the number of contact hours held between students and staff members.

Business & Economy

Following a four-month leadership contest, Kevin Sneader has been confirmed as global managing partner at McKinsey. The 51-year old and current head of McKinsey’s Asia-Pacific division assumes the role from Dominic Barton, who has run the world’s largest consultancy firm since 2009. Barton had doubled annual revenues to $10 billion during his three-term tenure, being ineligible to stand for a fourth under company rules.
 
Energy price caps in the UK could be in place by next winter as new legislation is introduced to the Commons today. The Domestic Gas and Electricity Bill will limit the cost of standard variable tariffs until 2021 at least, which the government says will protect 11 million people against expensive tariffs. Under the legislation, the energy regulator Ofgem will be able to recommend whether the cap should be extended on an annual basis from 2020.
 
The Treasury could be in line for a £15 billion windfall after a major revision to estimated GDP growth in 2017 by the Office of Budget Responsibility.According to a new survey by the CBI, growth in the UK’s dominant services industry surged in the last few months of 2017, equivalent to extra growth of 0.3 per cent in each year to 2021. Analysts predict this will have the biggest impact on deficit forecasts, which are expected to be lower at the Spring Statement by £46 billion to £166 billion in total by 2022-23.

 

Markets

The week ahead
Brexit discussions will no doubt steal the limelight for another week, as both the prime minister and leader of the Labour party, Jeremy Corbyn, give major speeches on their respective platforms. On Monday, Corbyn is expected to confirm his party’s commitment to ‘a’ customs union, whilst on Friday, Theresa May will give her ‘road to Brexit’ speech in Newcastle, and is likely to seek continued alignment with the European single market in certain sectors but divergence in others. The European Commission’s chief negotiator, Michel Barnier, will give an update on the current state of negotiations on Tuesday, so expect strong words from both sides to unsettle the currency markets if issues such as the Northern Irish border are brought back to the table.
 
The US will come into focus from Tuesday as it posts its latest trade data and its second reading of annual GDP growth on Wednesday. Jay Powell will also make his first outing as US Federal Reserve chairman in a semi-annual monetary policy speech on Wednesday, in which he is expected to echo his predecessor’s gradualism towards raising interest rates. Company news to look out for include full-year results from Standard Chartered and chemical giant, BASF, on Tuesday.
 
Finishing off the week, Italy goes to the polls on Sunday to decide the outcome of one of the most unpredictable general elections in recent memory. Opinion surveys suggest a three-way race between Silvio Berlusconi’s rightwing coalition, Matteo Renzi’s incumbent centre-left governing party and the anti-establishment Five-Star movement. Analysts are already predicting a hung parliament and the likelihood of further elections if a stalemate ensues.

Finals
Ascential
Bunzl
Dialight
Hammerson
Keller Group
Quartix Holdings
RTC Group
Senior
Greencoat UK Wind
 
Interims
Avation
Dechra Pharmaceuticals
Sylvania Platinum Ltd (DI)
Town Centre Securities
 
Trading Announcements
Associated British Foods

AGMs
BOS Global Holdings Limited
JPMorgan Asian Investment Trust
 
GMs
Renew Holdings
 
UK Economic Announcements
(07.00) Nationwide House Price Index
(09.30) BBA Mortgage Lending Figures
 
Intl. Economic Announcements
(15.00) New Homes Sales (US)

Columns of Note

Writing in yesterday’s Sunday Times, Kevin Pringle questions the logic behind recent suggestions of a “red scare” and claims that Jeremy Corbyn had spoken with a Czech spy during the Cold War. Pringle suggests Corbyn’s Conservative accusers should read their history; wartime precedents demonstrate there have long been questionable allegiances on both sides of the political spectrum, even when party differences were put aside in favour of national coalition building as they were under Churchill.
 
Today’s FT Big Read by Jonathan Ford and Gill Plimmer looks at the costs involved with “buying back” Britain’s railways under a scheme of nationalisation. Within the industry, opinion might surprise you; as the article concludes, whether by passenger or taxpayer, the railways will get paid one way or another. The question of ownership detracts from the real problems at stake the authors suggest – a need for strong long-term investment and management, back by sensible regulation.

 

Parliamentary highlights

TODAY
   
House of Commons
Oral questions
Home Office (including Topical Questions)
 
Estimates Day
1st Allotted Day – Ministry of Defence and Department for Exiting the European Union – Mel Stride
 
Adjournment
Future of diabetes care, treatment and prevention – Liz McInnes
 
House of Lords
Oral questions
Evaluation of stage one of the National Child Obesity Strategy - Baroness Benjamin
 
Representations opposing electrical safety checks in the private rented housing sector - Lord Kennedy of Southwark
 
Reducing waiting lists for consultant-led NHS treatment - Baroness Thornton
 
Establishing the Northern Forest - Baroness Rawlings
 
Legislation
European Union (Withdrawal) Bill - Committee stage (day 2) - Lord Callanan
 
Scottish Parliament
No business scheduled
 
TOMORROW
 
House of Commons
Oral questions
HM Treasury (including Topical Questions)
 
Ten Minute Rule Motion
Access to banking services – Ben Lake
 
Estimates Day
2nd Allotted Day – Ministry of Housing, Communities and Local Government related to homelessness, Department for Transport – Mel Stride
 
Adjournment
Eating disorder awareness week 2018 and the importance of early intervention – Edward Argar
 
House of Lords
Oral questions
Whether remaining in the European Single Market, post-Brexit, would require the UK to retain membership of the European Economic Area and associated EU agencies through re-joining the European Free Trade Agency - Lord Lea of Crondall
 
Removing the need for candidates for higher education with dyslexia and other specific learning disabilities to pay for new assessments for the disabled students’ allowance if they have an existing diagnosis acquired before the age of 16 and a history of support - Lord Addington
 
Rebuilding the lives of people affected by the Grenfell Tower fire - Lord Goddard of Stockport
 
Legislation
Space Industry Bill - Consideration of Commons amendments - Baroness Sugg
 
Laser Misuse (Vehicles) Bill [HL] - Report stage - Baroness Sugg
 
Orders and regulations
Draft Transparency of Donations and Loans etc. (Northern Ireland Political Parties) Order 2018 – motion to approve - Lord Duncan of Springbank
 
Draft Transparency of Donations and Loans etc. (Northern Ireland Political Parties) Order 2018 – motion to regret - Baroness Suttie
 
Legislation
Haulage Permits and Trailer Registration Bill [HL] - 2nd reading - Baroness Sugg
 
Scottish Parliament
Topical Questions (if selected)
 
Scottish Government Debate
Developing a Scottish healthy weight strategy
 
Members’ Business
Scotch Whisky Contribution to Scottish Tourism Industry – Rachael Hamilton