“Day 18. Donald is in the Oval Office speaking about steel walls”.
The 800,000 federal workers in the US who have been affected by the partial government shutdown could be forgiven for thinking that their elected politicians are having their own Big Brother-style experience in Washington; in a separate world totally isolated from the hardships and difficulties of those beyond the halls of Capitol Hill.
But while there may be an ex-reality TV star in charge in the White House, the impact of the shutdown on those employees is anything but a game. The effects are extensive and rippling right across the country, starting a few feet from Donald Trump’s office.
It will really hit home this week as Americans working in the public sector brace themselves to miss out when the first paycheck of the year drops. For employees deemed “essential” it will be a double whammy, as they are still expected to show up at the office yet not receive the pay to go with it. That’s the difficult situation thousands of Secret Service agents who protect the president and 41 other officials in his administration on a daily basis currently find themselves in.
While wages may not be forthcoming, deadlines for rent and mortgage payments are, leaving workers in a quandary as to how they square their monthly outgoings with a loss of income. And with research yesterday showing that those affected owe a combined $249 million in monthly mortgage payments, any proportion of payment default will undoubtedly have sizeable consequences on the housing market, not to mention the 39,000 federally backed mortgage applications believed to be delayed as a result of limited staffing.
Just about everyone in the country has been impacted by large swathes of government grinding to a halt, from farmers and manufacturers to air travellers and investors all feeling the bite from a shutdown.
And it’s a shutdown that a CNN poll has found a majority of Americans blame the president for. Losing the court of public opinion perhaps played heavily on Trump’s mind when he opted to use a first primetime television address from the Oval Office last night to continue his offensive over his reasons for a lack of compromise on the proposed wall on the border with Mexico. Each of the major TV networks carried the president’s message that the situation was of the Democrats’ doing, and that $5.7bn (£4.5bn) was needed to build a steel barrier in order to halt "a growing humanitarian and security crisis”. He did, however, stop short of declaring a national emergency in order to bypass Congress and deliver his signature campaign pledge.
Three days from becoming the longest shutdown in history, the onus is surely on politicians to strike a resolution to the dispute. The American people are watching.
MPs will today begin five days of discussion on Theresa May’s Brexit plan ahead of an expected vote next Tuesday. The debate comes almost a month after the prime minister postponed the crunch Commons vote on her agreement. The government last night suffered defeat when 20 Tory MPs joined forces with Labour to signal their opposition to a no-deal Brexit, with former cabinet ministers including Michael Fallon, Justine Greening and Sir Oliver Letwin, voting to restrict the ability of the Treasury to make tax changes in the event of a no deal.
The military are assisting a police investigation after flights from Heathrow airport departures were suspended for an hour yesterday afternoon when the UK’s busiest airport received reports of a drone near one of its runways. The airport apologised to passengers for the “short suspension” and were working with the Metropolitan Police following the sightings of at least one remote-controlled air vehicle. (£)
The EU says the US government has downgraded the bloc's diplomatic status in Washington – and didn’t notify them of the change. The change came to light at the state funeral for the late President George HW Bush in December when the EU's ambassador was not called up in the usual chronological order, from the longest-serving to the newest ambassador, but instead went as the last person.
Business & Economy
Sainsbury’s has said that "cautious customer spending" was to blame after reporting a 1.1% fall in like-for-like retail sales, excluding fuel, for the 15 weeks to 5 January. The supermarket, which has agreed to merge with Asda, said it was well set up to deal with customers doing their big Christmas shops later than usual after reporting a rise of 0.4% in grocery sales, with online sales and convenience stores up six per cent and three per cent respectively.
The UK is expected to remain one of the most popular locations for M&A in 2019 after the value of deals with a UK target in 2018 surged 40% to £413bn. Research showed that the UK was third behind the US and China for shareholder value following M&A, climbing 41% from the previous year. Although the number of deals rose only slightly from 6,177 to 6,218, the value was enhanced by transactions such as Japanese pharmaceutical company Takeda's purchase of the UK's Shire in a £62bn deal and Comcast's £47.8bn acquisition of Sky, which were the third and fifth largest deals globally last year.
Jim Yong Kim, who unexpectantly stepped down from the presidency of the World Bank three years ahead of his term end, will join New York-based private equity fund Global Infrastructure Partners. Part of the arrangement in Kim’s sudden move to Wall Street is that he will be barred from doing any business with his former employer for a year.
What happened yesterday?
A breakthrough in trade talks between the US and China helped push the FTSE 100 higher yesterday. London’s blue-chip index ended the day 50.72 points, or 0.74%, higher at 6,861.6. Paper-based packaging giant Smurfitt Kappa was the day’s biggest riser, rising 6.15%.
It wasn’t such a good day’s trading for Morrisons, despite the supermarket unveiling an increase in Christmas sales thanks to stronger growth in its wholesale arm. It closed on 212.6p, a fall of 3.21%.
Some relief in the dispute between Beijing and Washington also gave a boost to stocks across Europe. Donald Trump’s comments that talks were “going very well” helped Germany’s DAX rise 0.76% and France CAC grow by 1.41%. Oil prices also continued to regain ground with Brent crude rising for a seventh day to breach the $58 a barrel mark.
On the currency markets, sterling was down 0.36% against the dollar at $1.272 and was flat versus the euro at €1.112 at the London market close.
Stock Spirits Group
Regional Reit ZDP
Int. Economic Announcements
(07:00) Balance of Trade (GER)
(07:00) Current Account (GER)
(10:00) Unemployment Rate (EU)
Columns of Note
The FT’s Martin Wolf says that while the world economy heading for a mild cyclical slowdown is not cause for alarm, structural changes in relation to differential productivity trends and the long-term debt cycle have taken place and the high political instability across the globe will “significantly constrain any optimism” over the fragile economy’s ability to ride out such a trend. (£)
Jonathan Powell, chief of staff to Tony Blair from 1995 to 2007, says that the instinct for self-preservation will be the trigger for Theresa May to “pull the emergency brake” and extend article 50 beyond March. Writing in theGuardian, Powell says that the government is wasting time on delusions that they can get the prime minister’s Brexit deal through the Commons next week and the sooner they stop the exit process, the better.
Did you know?
Wind speeds over land have been decreasing since the 1960s in a phenomenon known as 'the stilling'. No one knows why.
House of Commons
International Development (including Topical Questions)
Prime Minister’s Question Time
Proceedings on a Business Motion relating to Section 13(1)b) of the European Union (Withdrawal) Act 2018
Section 13(1)b) of the European Union (Withdrawal) Act 2018
House of Lords
Enforcement action brought by the European Commission in the European Court of Justice regarding breaches of air pollution rules during the proposed transition period - Baroness Jones of Moulsecoomb
Outreach work undertaken by British embassies with EU member states to keep UK nationals informed of their rights following Brexit - Baroness Miller of Chilthorne Domer
Consultation on the mandatory fortification of flour with folic acid to prevent foetal abnormalities - Lord Rooker
Reversing the policy of charging the victims of forced marriages the cost of their return to the UK - Baroness Hayman
Further debate, for the purposes of section 13(1)(c) of the European Union (Withdrawal) Act 2018, taking note of the negotiated withdrawal agreement and the framework for the future relationship (day 1 of 3) - Lord Callanan
Finance, Economy and Fair Work
Improving Animal Welfare
Scottish Government Debate
Recognising the Life Sciences Sector in Scotland
House of Commons
Transport (including Topical Questions)
Business Questions to the Leader of the House
Section 13(1)b) of the European Union (Withdrawal) Act 2018 - continued
House of Lords
Ensuring new properties are designed to avoid the occurrence of accidents in the home - Lord Jordan
Time required for parliamentary consideration of statutory instruments arising from the UK's withdrawal from the EU - Lord Beith
Violations of human rights in China, including the arrest and disappearance of political activists and
religious adherents, forced organ harvesting, and restrictions on free speech - Lord Alton of Liverpool
Impact of benefit reforms on families with children - The Lord Bishop of Gloucester
Further debate, for the purposes of section 13(1)(c) of the European Union (Withdrawal) Act 2018, taking note of the negotiated withdrawal agreement and the framework for the future relationship (day 2 of 3) - Lord Callanan
First Minister's Questions
Implications of the white paper on immigration and the population of Scotland
Scottish Government debate: Future Rural Policy and Support in Scotland