As parliament reconvenes today – until prorogation shuts it down again – Boris Johnson faces the biggest challenge of his short premiership. Yesterday, a cross-party group of MPs led by Philip Hammond and Hilary Benn published a draft bill to block a no-deal Brexit on 31 October. Labour MP Hilary Benn is expected to present the legislation to the House of Commons, but before that MPs will have to seize control of the order paper.
The stage is set for a dramatic confrontation. In a statement in Downing Street yesterday, Johnson hinted that in the event the bill passes, he will call for a snap general election, with the date of 14 October briefed out afterwards – three days before the European Council summit. Adding to his implied ultimatum, Boris also threatened to purge rebels from his party.
With the news this morning that ‘rebel’ Tory MP Justine Greening will not stand at the next general election, it is clear that there is a significant section of the Conservative parliamentary party that is now beyond the reach of government whips.
Only about 15 to 20 Conservative MPs are needed to work with Labour and other opposition parties to seize control of the Commons agenda and pass the bill. If it passes, the likely scenario is a general election, although Labour is sending out conflicting signals on its position, briefing that it may abstain in a vote to dissolve the Commons, which would deprive the government of the two-thirds majority needed under the fixed-term parliament's act.
Whatever happens, a genuinely historic week lies ahead.
A new deal brokered between America and the Taliban will result in the withdrawal of 5,400 troops from Afghanistan within 20 weeks. The US has over 14,000 troops in the country, and has fought an endless war with the Taliban, who now control more territory than at any other time since 2001, when they occupied the capital. In exchange for the troop withdrawal, the Taliban would ensure that Afghanistan would never again be used as a base for terrorist groups seeking to attack the US and its allies.
Hurricane Dorian, now downgraded to a category 3 storm, touched the Bahamas yesterday and has remained relatively stationary there, causing the loss of five lives so far. The storm has also caused the cancellation of 1,300 flights in the region and the destruction of over 13,000 homes.
Tensions between Hezbollah and Israel escalated as the two increased their engagement in Lebanon and Northern Israel yesterday. The exchange started off last week, when Israel attacked Hezbollah's power centre in Beirut, the first time that the country carried out an attack on the Lebanese capital since the 2006 war. Serious escalations are unlikely: both sides have an interest in halting operations for now, and neither wants a full-scale war.
Business & Economy
China officially filed a complaint yesterday at the World Trade Organisation against the United States over US tariffs on Chinese products. This followed the imposition of a 15% tariff on a variety of Chinese goods on Sunday in America, as well as tariffs on American oil in China; the latest escalation in their trade war. This is the third lawsuit that China has brought to the WTO regarding the trade war with the US. Meanwhile, US officials say that they are penalising China for theft of intellectual property, something that is not covered by WTO rules.
Deutsche Bank CEO Christian Sewing announced that he will be spending 15% of his net salary on the bank’s stock. It is the latest effort to turn around the troubled bank, which saw a dramatic restructuring that included firing 15,000 to 20,000 workers and shedding large parts of its investment banking operation. It is the first time a Deutsche CEO has committed to regularly invest part of their salary in the bank’s shares.
Woodford Patient Capital Trust non-executive director Steve Harris will step down of the position at the end of the month. Harris, who also is the CEO of Circassia Pharmaceuticals, is leaving after the board of the trust faced criticism for its close links to Neil Woodford, who is undergoing efforts to clean his reputation. Woodford is the largest shareholder of Circassia Pharmaceuticals, a common sight in the board of the trust, something that has raised questions about the independence of the board.
What happened yesterday?
Global equity markets were relatively quiet on Monday due to the US Labour Day public holiday.
In Europe, equity markets performed well. Investors were relieved to see that Germany's far-right Alternative für Deutschland failed to take the majority of seats at two regional elections over the weekend. By the end of trading yesterday, the Stoxx 600 was up by 0.32% to 380.69, and the German Dax 0.12% to 11,953.78 while the FTSE Mibtel 0.61% to 21,451.98.
In the UK, sterling fell due to the growing chances of a general election; and following the release of weak manufacturing data, the pound fell 0.8% versus the dollar to 1.2061 and 0.6% against the euro to 1.0999. Nonetheless, equities also performed strongly: the FTSE 100 ended up 1% at 7,281.94.
What's happening today?
Dalata Hotel Gp
Michelmersh Brick Holdings
UK Economic Announcements
(00:01) Retail Sales
(09:30) PMI Construction
Intl. Economic Announcements
(10:00) Producer Price Index (EU)
(15:00) ISM Prices Paid (US)
(15:00) ISM Manufacturing (US)
(20:30) Auto Sales (US)
Columns of Note
In the Financial Times, Laura Callanan addresses the controversies that surround the funding of many museums and galleries. It is common practice for these institutions to turn down donations from controversial individuals and organisations. If we are to be consistent, Callanan argues, we also need to look at how these institutions invest the billions of dollars they already control through their endowment funds. These funds usually invest, among other assets, in equities through indexes. As a result, the institutions that care so much about the origins of their donations end up investing in the very companies that they would reject. This is wrong and contradictory says Callanan. Contrary to focusing on returns, museums and galleries should in fact aim to lead the way in responsible investing, and this is where their boards should step in.
Writing for Foreign Policy, Adam Tooze discusses Britain’s ceremonial head of state and looks at continental Europe for alternatives. Tooze believes that Brexit’s latest impasse has exacerbated the need for an active head of state: last week, the Queen gave a prime minister who lacks a solid parliamentary majority the power of prorogation to ease the path to a no-deal Brexit that has been rejected by Parliament. The Queen’s legitimacy as head of state derives from preserving the appearance of being apolitical. This is in stark contrast to systems such as that of Italy, where the president is a professional politician who, unlike the Queen, has demonstrated his willingness and ability to exercise judgment and do so in a beneficial manner for his country.
Did you know?
Garfield phones have been washing up on a beach in France for over three decades. During a storm, a shipping container fell off the cargo ship and the locals can do nothing about it.
House of Commons
Oral questions: Foreign and Commonwealth Affairs
Ten Minute Rule Motion: Clean Air - Chris Philp
Legislation: Census (Return Particulars and Removal of Penalties) Bill [Lords]: proceedings in Committee and remaining stages
Adjournment: Implications for the sheep industry of the UK leaving the EU without a deal - Jenny Chapman
The EU Settlement Scheme in relation to looked-after children and care leavers (nominated by the Backbench Business Committee) - Steve McCabe, Tim Loughton, Stuart C. McDonald
Urgent care hub at Kettering General Hospital - Mr Philip Hollobone
School funding in East Anglia - Clive Lewis
Hull's bid to become a Maritime City - Emma Hardy
High income child benefit charge - Craig Mackinlay
House of Lords
Boosting investment and productivity and stopping the decline of sterling - Lord Haskel
Supporting the CPS in prosecuting, and the courts in sentencing, those involved in gang-related offences, illegal migration and petty offences - Baroness Neville-Rolfe
Date for the next Queen’s Speech - Lord Foulkes of Cumnoc
Powers available to recall Parliament during a prorogation in the event of a national or international crisis - Lord Cormack
Legislation: Parliamentary Buildings (Restoration and Renewal) Bill - Report stage - Baroness Evans of Bowes Park
Debate: Implementation of the recommendations of the Parliamentary Commission on Banking Standards and the opportunities for further banking reform
No business today.