I’ve always rather fancied a holiday in Troon.
Enjoying the day or two of Scottish summer sunshine by the seaside; sipping bottles of ginger under a rain-battered parasol on the promenade; your bathers hiked up to the navel as you brave the Firth of Clyde. It might sound like a 1960s paradise worthy of Cliff Richard, but I assure you that in the not-so-distant future Scotland’s wild west coast could once again seem as attractive as a week sunning yourself in Marbz or celeb-spotting in Cannes.
Which is probably just as well, given the bottoming out of the pound’s current freefall over no-deal Brexit fears seems nowhere in sight. All the while, the good value of that most treasured of our national institutions – the package holiday – has all but vanished in the face of spiralling exchange costs.
In the seven days since Boris Johnson climbed the steps of Number 10, the pound has fallen by 2.2% on the dollar to $1.22, now also as its lowest level since the Brexit referendum against the euro at €1.09. A four per cent slide since the start of the Tory leadership campaign in June makes it the worst-performing major currency this year. And what’s more; it seems the new cabinet’s evangelism for no-deal is only getting started for want of either a negotiating tactic with Brussels, or to lessen the inevitable economic shock if we do fall over the cliff edge. Cynicism runs riot.
From our sun beds on the Costa Blanca in years past, you might have rightly cried “Piffle!”; surely a cheaper pound means a boost for exports? Don’t be so sure. UK export growth has stubbornly refused to budge since the 2008 financial crash, when we realised that devaluations can’t help shift products off the shelf when they contain such a high degree of foreign components. In a globalised age, ‘Made in Britain’ can neither be trusted upon, nor indeed exists, in many sectors.
Of course, currency fluctuations are nothing new, and investment may pick up when some certainty emerges from our current blackhole. Indeed, as a column in The Telegraph points out this morning, there is no telltale flight from UK sovereign bonds, and the equity markets are responding, however timidly, to the cheaper pound.
Perhaps then, in the manner of our new business secretary, Andrea Leadsom, we should trust in “tea and jam” tomorrow after all. Whilst I’m not convinced that extends to a viable export strategy, at least it will make for a Great British snack for all our “great” British holidays in years to come. Someone pass the ginger.
The UK’s ten hottest years on record have all occurred since 2002, a Met Office report has found. The analysis of national temperatures dating back to 1884 also demonstrated the warmer years overall were undeterred by cold snaps such as last year’s “Beast from the East”. The authors of the report have suggested “the science of climate change is now clear”, and have urged the UK government to prepare for further increases.
The Telegraph reports that Boris Johnson could be preparing for the UK to remain in the EU customs union and single market for two years after the country has left the EU whilst a free trade agreement is reached. Under the reported plan, which is being prepared ahead of negotiations with Brussels, the existing one-year transition detailed in the Withdrawal Agreement would be extended by up to a year, at which point the Irish backstop would cease to apply.
Bernie Sanders and Elizabeth Warren have been criticised for their radical healthcare and immigration policies during the second Democratic debate of the 2020 US primary season. Among the eight other candidates debating in Michigan last night was ex-Maryland congressman John Delaney who dismissed their support for free universal healthcare and the “Green New Deal” as “fairy tale economics”, arguing that it risked losing independent voters to President Trump.
Business & Economy
New investment in the UK car industry has fallen by more than a fifth in the last year due to Brexit fears, a sector trade body has said. According to the Society of Motor Manufacturers and Traders, output in the sector dropped by 20.1% in the first six months of 2019 compared to the same period in 2018, with domestic buyers down by 16.4% and overseas orders falling 21%.
The Bank of England has ruled that major UK banks must be fully resolvable by 2022 to ensure that customer deposits and core services would be unaffected in the event of a financial collapse. Under the so-called “living will” framework, which is seen as part of the central bank’s drive towards greater transparency in the sector, banks with retail deposits of more than £50 billion must publicly disclose summaries of their resolvability assessments by June 2021.
Apple’s latest earnings report has revealed a 12% drop in iPhone sales, dragging second quarter profits down 10% to $13 billion. iPhone sales still account for more than half of Apple’s total revenues at $25 billion, meaning that growth in all other business divisions, including Macs, tablets and Apple’s services business, was unable to shift the overall picture.
What happened yesterday?
Sterling hit its lowest level since March 2017 yesterday, continuing its nosedive on the back of no-deal Brexit fears. By close of the London market, the currency was trading down 0.53% on the euro at €1.09, and 0.56% lower on the dollar at $1.22.
Whilst the pessimism was shared by investors on the FTSE 100, which closed down 0.52% at 7,646.77 points, global equity indices painted a mixed picture. Weaker than expected Q2 GDP figures in Sweden and France led continental markets southward. But in the US, consumer confidence reached its highest level in a year during July, with inflation also running lower than forecast.
In corporate news, shares in Centrica fell 19%, hitting a 22-year low, after the energy group reported a £446 million loss in its full-year results. Outgoing CEO Iain Conn blamed the losses on the new energy price cap and increased pensions contributions, which together more-than-halved the company’s interim dividend to 1.5p. Lower profits also led miner Fresnillo into the red, cutting its interim dividend from 10.7 US cents to just 2.6 cents. Several companies were also hit by Brexit jitters, with RBS, down 4.01%, and IAG, which fell 5.43%, among those affected.
What's happening today?
Smith & Nephew
St James Place
UK Economic Announcements
(11.00) CBI Distributive Trades Surveys
Mitchells & Butlers
Mind Gym Plc
Polar C. Hldgs
St James House Group
Intl. Economic Announcements
(07:00) GFK Consumer Confidence (GER)
(09:00) IFO Business Climate (GER)
(09:00) IFO Expectations (GER)
(09:00) IFO Current Assessment (GER)
(12:45) ECB Interest Rate (EU)
(13:30) Durable Goods Orders (US)
(13:30) Initial Jobless Claims (US)
(13:30) Continuing Claims (US)
Columns of Note
In The Times, Roger Boyes asks whether the current protests in Hong Kong may be met with similar force used by China in Tiananmen Square. Boyes suggests that any direction carries serious risk for Beijing: do nothing and potentially lose influence in Hong Kong; or far worse, go in heavy handed, enrage the international community and make Chinese oppression the new global bogeyman. (£)
In The Telegraph, Nigel Farage suggests Boris Johnson’s honeymoon period as prime minister may be short-lived. He predicts that any EU compromise which falls short of scrapping the Withdrawal Agreement will lead to an insurgent Brexit Party in the polls, and also criticises Downing Street senior adviser Dominic Cummings as “untrustworthy”, with the potential that his strategy could lead to a second referendum. (£)
Did you know?
The red and white stripes of a barber’s pole are a legacy of the profession’s historical relationship with surgeons. First incorporated as craftsmen in the 16th century, ‘barber surgeons’ offered mixed services of hair cutting and medical surgery. The look of the barber pole is linked to bloodletting, with red representing blood and white representing the bandages used to stem the bleeding.
House of Commons
In recess until 3 September.
House of Lords
In recess until 3 September.
In recess until 2 September.