4 May 2018

Lyle Hill

4 May 2018

Good morning,

Local elections dominate the news this morning as results from across England act as a bellwether for the current political landscape.

The Conservatives have avoided the disaster they feared in these elections, despite the resignation of Amber Rudd over the ongoing Windrush scandal only last week. And the Conservatives managed to keep hold of Kensington and Chelsea following the Grenfell Tower scandal and what many saw to be an inadequate response.

But in truth the results that trickled in overnight have been mixed for the two main parties.

Labour won back Plymouth and became the largest party in Trafford. This morning, Jeremy Corbyn and John McDonnell have both claimed that Labour was not looking for "big swings" and instead required "incremental gains" that would lay the foundations for the next General Election. 

While something tells me that they wouldn't have balked at a Tory implosion, the spin points to an underlying feeling within the Labour leadership that their chances were hampered by overblown expectations in the media. McDonnell cited London as the prime example of an area where Labour had been unrealistically expected to sweep the board.

The Mayor, Sadiq Khan, either didn't get that talking point or chose to ignore it, trumpeting the fact there was now "no no-go areas" for Labour in London.

From the Tories’ perspective, performance was strong in areas that voted Leave in 2016. The absence of UKIP as an electoral force, particularly in local elections where it previously had strong representation in Eurosceptic areas, has helped the Conservatives gain Basildon and Peterborough. 

Results will continue to come in throughout the day, but with two-thirds of the votes counted Laura Kuenssberg believes Labour have made gains but come out relatively empty handed and that the wipeout feared at Conservative HQ has not come to pass.

While not jumping for joy, neither Theresa May nor Jeremy Corbyn will be crying into their cornflakes this morning.


David Leakey, the former Black Rod in Parliament, has claimed that speaker John Bercow creates an atmosphere of "fear and intimidation". He also said that he had seen Bercow engage in bullying and unreasonable behaviour as the scandal engulfing the Commons speaker continues to grow. Bercow's spokesperson has again dismissed the claims.

Damien Hinds, education secretary, has announced that teachers in England and Wales will be eligible for up to a year long paid sabbatical in a new pilot scheme. The proposal is designed to offer teachers more flexibility in a career where part-time work and job shares have been slow to catch on. The Government hopes that if successful, the sabbaticals will increase recruitment and teacher retention.

Dozens of staff have accused the Home Office of racial discrimination as a case comes to trial in which Mark Sedwill, Theresa May's national security adviser, is named as a defendant. Amjed Ramzan accuses the Home Office of treating him unfairly during an interview process, by reducing his scores while boosting those of white candidates.


Business & Economy

Former Volkswagen chief executive Martin Winterkorn has been charged by US prosecutors with four charges of conspiracy and wire fraud, becoming the most senior VW executive to be charged on the back of the 2015 emissions scandal which engulfed the company. Winterkorn resigned soon after the scandal broke.

BT is expected to reveal next week plans to cut almost 6,500 jobs from its 106,000 strong workforce before 2021 in a bid to save £500 million. The move is an attempt to win back investors spooked by the company's Italian accounting scandal, and forms part of Gavin Patterson's corporate strategy to revive the group.

During a speech at the University of Manchester, former chancellor George Osborne has stood by his predictions of the economic impact of Brexit, highlighting that figures are beginning to support his warnings. Osborne explained: “The last GDP number was 0.1 per cent. We went from being the strongest growing western economy and we are now the slowest growing economy in Europe”.


The FTSE 100 closed down 40.5 points or 0.54% at 7,502.69. This represented a return to where the market had opened at the start of the week.

The dollar was pushed lower again following the Federal Reserve report on Wednesday that inflation in the United States is beginning to rise. Despite the Fed holding rates as expected, the news of inflation pressures pushed the dollar down as the markets digested the report.

The pesky Trent 1000 engines were once again causing Rolls-Royce headaches, as the manufacturer slumped on news that expectations for 2018 were unchanged after it was forced to reorganise spending to offset costs associated with the engine repairs.

At the other end of the market, miners were lifted on the back of a weaker dollar. Glencore was also boosted on news production in its first quarter was in line with expectations and that it was on track to meet its targets for the year reported in February.

On the currency markets, the pound was roughly flat against the dollar after rising and falling throughout the day. Against the euro, sterling steadily lost ground throughout the day to €1.1336.

Q1 Results
HSBC Holdings
InterContinental Hotels Group
Smurfit Kappa Group

Capital and Counties Properties
FBD Holdings
InterContinental Hotels Group
Morgan Sindall Group
Microsaic Systems


International Economic Announcements
(09:00) PMI Composite (EU)
(09:00) PMI Services (EU)
(09:00) Retail Sales (EU)
(09:55) PMI Composite (GER)
(09:55) PMI Services (GER)
(13:30) Non-Farm Payrolls (US)
(13:30) Unemployment Rate (US)

Columns of Note

Merryn Somerset Webb, writing in the Financial Times, believes that the latest zeal for M&A reveals a dangerous short-termism in corporate culture. She argues that stock markets should not only be about the pursuit of cost savings and increasing market share.

Jonathan Powell, writing in The Guardian, looks to examples of peace treaties in the past and cites that in order to make meaningful and substantial progress towards peace in war torn regions, parties must engage with their enemies. Powell was the chief British negotiator in Northern Ireland from 1997 to 2007.

Did you know?

The Volkswagen emissions scandal caused the company to recall 8.5 million cars in Europe alone.

Parliamentary highlights


House of Commons
No business scheduled

House of Lords
No business scheduled

Scottish Parliament
No business scheduled