6 July 2018

Charlie Peters

6 July 2018

Good morning, 

Today, 743 days since Britain voted to leave, Chequers plays host to an explosive all-day Cabinet meeting to decide Britain’s economic plan for Brexit. The build-up this week has been packed with will-they-won’t-they resignation drama, leaked Cabinet documents on potential trade agreements with the USA, and details on what to expect in the regulation of goods.

Leaks last night and this morning suggest that the proposed plans will have a significant impact on Britain’s relationship with the Single Market and ability to trade with the United States. It is expected that May’s “third way” deal, now called the “evolved Mansion House model”, will tie Britain to EU rules on goods and agricultural produce.

As reported by The Telegraph, the leaked document says: “We would make a continued commitment to the Single Standards Model for goods so that where there is an agreed European harmonised standard, the UK could not put forward any competing national standards.

The document also makes clear that alignment with Brussels standards could jeopardise the potential for a free trade agreement with the United States. With Trump’s official visit less than a week away, this caveat to May’s deal will add to what is already expected to be a tense encounter.

Elsewhere, London Mayor Sadiq Khan has given the green light for a blimp of ‘angry baby’ Donald Trump to float along the city’s skyline ahead of the president’s visit. The move risks raising the hot air levels in Westminster to unprecedented heights.

News

A Wiltshire couple who were poisoned by Novichok were exposed to the nerve agent after handling a contaminated item, police say. The Home Secretary Sajid Javid said that the nerve agent that poisoned Charlie Rowley, 45, and Dawn Sturgess, 44, is the same as that used on ex-Russian spy Sergei Skripal and his daughter in March. Javid accused Russia of using Britain as a “dumping ground for poison”.

In the United States, Scandal-hit Scott Pruitt has resigned as head of the Environmental Protection Agency. Since taking office in February 2017, Pruitt has been subject to allegations of misuse of office and spending irregularities. Allegations include using emergency lights to speed through Washington D.C. when late for meetings and questionable purchases, including $43,000 for a soundproof phone booth. In a letter to President Trump, Pruitt blamed his resignation on “unrelenting attacks” towards him and his family.

A former Navy diver has died whilst attempting to deliver supplies to 12 trapped boys and their football coach in a flooded cave in Thailand. Petty Officer Saman Gunan lost consciousness whilst exiting the cave complex. He was delivering oxygen to the group, but his own supply faltered. Thai Seal commander Rear Admiral YooKongkaew told reporters “I guarantee that we will not panic, we will not stop our mission, we will not let the sacrifice of our friend go to waste.”

 

Business & Economy 

US tariffs on Chinese imports take effect today as the US-Chinese trade battle begins. The tariffs on $34bn of Chinese goods official began at midnight, Washington time, signalling what many fear will be significant damage to global economic growth. China said the US had started the “largest trade war in economic history” and promised “necessary counterattacks.” It is understood that the Chinese "counterattack" is likely to include a 25% levy on $34bn of US agricultural and automobile goods.

Ahead of the Cabinet meeting on Brexit, the head of the UK’s aerospace industry trade body has today warned that a No-deal scenario would be a “worst case scenario” and could ground UK aircraft. ADS chief executive Paul Everitt said that regulatory alignment with the EU was the biggest concern for the industry. Everitt’s comments come as Jaguar Land Rover warned that a “bad” Brexit could threaten their $80bn worth of investment plans for the UK.

The Bank of England Governor Mark Carney has stated that recent data has given him more confidence in the UK economy. In a speech at the Northern Powerhouse Summit in Newcastle, Mr Carney said: “Overall, recent domestic data suggest the economy is evolving largely in line with the May Inflation Report projections, which see demand growing at rates slightly above those of supply and domestic cost pressures building." The pound moved up 0.2% on the dollar in reaction to Carney’s remarks.

Markets 

What happened yesterday?
As US tariffs on Chinese goods came into effect, investors are buying back into China. China-focused stocks are moving higher, European stocks are matching this trend and Wall Street futures look positive as investors priced in the expected impact of the US tariffs.

London's equity market shows negative signs for Greggs and Dominos, and brewers Marston's and Greene King are expected to finish the week flat following a struggle to meet the higher demand for lager and ale. Job cuts are expected at Greene King. Marks and Spencer have climbed from 293p on Monday to a one-month peak of 309p, with England manager Gareth Southgate's signature waistcoat driving sales of the £65 garment up by a third.

On the currency markets, the pound is up 0.06% against the dollar at $1.3233 and down 0.11% against the euro at €1.1298.

 

AGMs
Capital Gearing Trust
Urban Logistics Reit
Stobart Group Ltd.
Value and Income Trust

Finals
SVM UK Emerging Fund

UK Economic Announcements
(08:30) Halifax House Price Index

International Economic Announcements
(07:00) Industrial Production (GER)
(13:30) Balance of Trade (US)
(13:30) Non-Farm Payrolls (US)
(13:30) Unemployment Rate (US) 

Columns of Note 

Writing in the New York Times, columnist Bret Stephens argues that Merkel’s time as German chancellor should come to a close. Citing Germany’s ‘desultory’ integration policies and the fallout within the CSU, Stephens argues that Germany must now find a new leader.

The Times Comment section leads with Philip Collins, who holds that cabinet Brexiteers must either offer a credible plan or back Theresa May’s ‘third way’ approach to negotiations.

 

Did you know? 

There is enough concrete in the Hoover Dam to build a road across the U.S from coast to coast.

Parliamentary highlights 

TODAY

House of Commons
Legislation
National Living Wage (Extension to Young People) Bill - 2nd reading - Holly Lynch
 
Fishing (Access to Territorial Waters) Bill - 2nd reading - Sir Christopher Chope
 
Tax Rates and Duties (Review) Bill - 2nd reading - Sir Christopher Chope
 
Legalisation of Cannabis (Medicinal Purposes) Bill - Paul Flynn
 
Wild Animals in Circuses Bill - 2nd reading - Trudy Harrison

House of Lords
No business scheduled

Scottish Parliament
Recess until 3rd September