This weekend, as Theresa May continued to ponder the detail of the UK’s future relationship with the EU, there were two meaningful political developments on the continent.
Firstly, national elections took place yesterday in Italy, with early projections suggesting the country is heading for a hung parliament. It was a good day for the populist Five Star Movement and the anti-immigrant, Eurosceptic Northern League parties, with both on course to make sweeping gains. The rise of the Northern League was particularly surprising and dealt a blow to ex-PM Silvio Berlusconi, with the League predicted to take more votes than his more moderate, centre-right Forza Italia party.
For the current prime minister, Matteo Renzi, the collapse in support for his ruling centre-left Democratic party is almost certainly going to lead to the loss of his position as leader of his party as well as the man in charge of the country.
The success of the country’s anti-establishment parties illustrates a trend that has been seen in elections across the Western world in recent times. As BBC’s Europe Editor, Katya Adler tweeted, “voters punished the centre-left government in Italy as they have punished the centre left in so many European countries of late.”
So, what will be top of the new PM’s inbox? Italy's economy has started to grow again but a decade on from the financial crisis, GDP remains 5.7% lower than pre-crisis levels and the electorate is increasingly exasperated at the pace of recovery. Immigration remains another key issue.
However, before a new PM can get to work, the country now enters a period of protracted negotiations driven by Sergio Mattarella, Italy’s president, for the formation of a new government.
This is a process that Angela Merkel knows all too well, having finally seen five months of political deadlock come to a conclusion this weekend. Members of the opposition Social Democrats (SPD) party voted in favour of another grand coalition, granting Merkel a fourth term as Chancellor.
She will now work with French president Emmanuel Macron to pursue deeper EU integration, a process that could be scuppered for the time being by the inevitable political uncertainty that has been delivered by Italian voters.
EU’s chief negotiator, Michel Barnier, will meet with a delegation from Sinn Féinin Brussels later today as talks continue to find a solution that would avoid a hard border between Northern Ireland and the Republic after Brexit. The party is expected to insist that the 1998 Good Friday Agreement must be protected and the only way to avoid a hard border is for Northern Ireland to remain within the customs union and single market.
Theresa May has relayed her fears to Donald Trump about starting a trade war, as the US president threatens to impose tariffs on steel and aluminium imports. Trump said he would introduce duties of 25% on imported steel and 10% on aluminium in an attempt to save its domestic industry and would place a tax on cars made in the EU if Brussels retaliated. Cabinet Office minister David Lidington warned that “trade wars don’t do anybody any good”. (£)
Shape of Water, a film about a woman who falls in love with a sea creature, has won best picture at last night’s Oscars. Gary Oldman took the honour of best actor for his portrayal of Winston Churchill in The Darkest Hour. There was also Oscar success for Maisie Sly, a six-year old deaf British girl, after The Silent Child was named best live action short film.
BUSINESS AND ECONOMY
New research suggests that the UK government is likely to fail in its target of creating three million apprenticeships by 2020. The situation has led to calls for an overhaul of the apprenticeship levy that is supposed to support the plans, with low pay emerging as one of the biggest issues deterring people from starting apprenticeships. (£)
The recent bad weather is likely to have had a short-term hit on the UK economy, with some predicting the big freeze could be a "disaster" for the high street as people stayed at home and instead shopped online. Furthermore, it is anticipated that it could impact on sectors such as retailing and construction by halving the 0.4% GDP growth that economists had earlier forecast for the first three months of this year.
Energy regulator Ofgem has introduced a new rule that means energy companies are unable to charge catch-up bills for gas and electricity used more than 12 months earlier. The new rule will come into force in May and is an attempt to stop shock bills of thousands of pounds for customers who pay by direct debit, as they normally pay based on estimated meter readings and are charged for any shortfall once an actual meter reading is taken.
The week ahead
Theresa May is back on the stump today with a speech in which she is expected to outline variations to the National Planning Policy Framework to release more land for development and to remove planning powers from councils who miss their goals.
On Tuesday, Ashtead, the FTSE 100 group, will announce their third-quarter results. Back in December, they saw a 16% increase in pre-tax profit to £413m during the six months to the end of October, while revenue increased 19% to £1.55bn, supplemented by some $40m-$45m of recovery work after hurricanes Harvey, Irma and Maria. The returns for the second half of the year is expected to go back to normal levels for the international equipment rental company. Telecom Italia, Italy’s largest telecoms company, will post its fourth-quarter results.
Full year results for Rolls-Royce will be published on Wednesday as the luxury car manufacturer continues to recover from the biggest headline loss in its history in 2016 after a £671m bribery settlement with regulators. The company saw gains in revenue and profit in the half year to June 30. A US trade report will also be published on Wednesday, where it is expected to show the trade deficit has widened to $55bn in January from $53.1bn in December due to a fall in exports.
Thursday is a busy day with results being announced by both Aviva and Akzo Nobel, and we will see the Trans-Pacific Partnership Agreement signed in Chile, despite the US withdrawing their participation from the deal. The Bank of Japan is likely to hold interest rates when they meet too.
Finally, on Friday, figures relating to January’s output of Britain’s production industries will be published, as well as US employment data from the US Bureau of Labor Statistics.
BATM Advanced Communications Ltd.
Telecom Egypt SAE GDS (Regs)
Ultra Electronics Holdings
UK Economic Announcements
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Int. Economic Announcements
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COLUMNS OF NOTE
After the ‘Beast from the East’ caused disruption across the UK last week, Kevin Pringle looks back at Scotland’s snow crisis in 2010, which claimed the political scalp of the then-transport minister Stewart Stevenson. Kevin says the experience has meant the Scottish government is far more prepared when faced with similar situations, illustrated by the fact ministers front the recovery efforts to a far greater degree than their Westminster counterparts ever would. (£)
In the Financial Times, former US Treasury secretary Larry Summers analyses the current US economy. He says that the weakness of the dollar has been amplified by Donald Trump’s decision to impose across the board tariffs on steel and aluminium.
DID YOU KNOW?
President Theodore Roosevelt was such a voracious reader he would consume up to three books a day. Indeed, it was reported that he was so skilled at speed reading he would read an entire book before breakfast every morning. By his own estimates, the 26th US president read tens of thousands of books over the course of his lifetime.
House of Commons
Defence (including Topical Questions)
Data Protection Bill [Lords] - 2nd reading
House of Lords
Introducing a regime for the purchase, possession and use of air guns - Lord Black of Brentwood
Issue of a sovereign green bond to support the UK's position in the global green finance market - Lord Teverson
European Union (Withdrawal) Bill - Committee stage (day 4) - Lord Callanan
No business scheduled
House of Commons
Justice (including Topical Questions)
Domestic Gas and Electricity (Tariff Cap) Bill - 2nd reading
Westminster Hall debate
Merger of British Transport Police Scottish division with Police Scotland - Douglas Ross
House of Lords
Promoting co-existence between Israelis and Palestinians - Lord Polak
Future regulation of general aviation - Lord Kirkhope of Harrogate
Ministerial Statement: Widening Access to Higher Education
Scottish Government Debate: Local Government Finance (Scotland) Order 2018 [Draft]
Stage 1 Debate: Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Bill
Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Bill: Financial Resolution