8th November 2019
Written by Javier Maquieira, Associate
Edited by Harriet Moll, Creative Director
Thirty years ago tomorrow, east Germans in the communist-ruled German Democratic Republic (GDR) were allowed to move freely for the first time in 28 years. That day marked the fall of the Berlin Wall, which would lead to the reunification of Germany eleven months later. The collapse of the GDR left euphoric scenes of celebration on both sides of the Wall, with thousands of east Germans flowing through it not long after the decision had been broadcast. The immediacy of such an event, however, meant that reunification wasn’t going to be easy for many emerging from the communist state, who had been subject to decades of oppression and indoctrination while West Germany developed into a big, rich democracy. Indeed, integration and readjustment came at a price for east Germans as privatised factories were shut down, industrial production slumped, and many moved to cities and villages in the West. Although the gaps between both sides have narrowed in the last thirty years, disparities remain, and so do certain stereotypes and divisions over the meaning of reunification. According to a recent report by the German government, only 38 per cent of east Germans think reunification succeeded; a figure that drops to 20 per cent among those younger than 40, who barely experienced East Germany, if at all. What’s more, just half of west Germans consider the East a success, with easterners sometimes portrayed as complaining, ungrateful, and backwards. The divide was even implicit in the words of the German chancellor, Angela Merkel, ahead of German Unity Day some weeks ago, when she called on all Germans to “learn to understand why for many people in east German states, German unity was not solely a positive experience.” This message of mutual understanding becomes even more relevant considering the electoral surge of the far-right Alternative für Deutschland party in eastern federal states like Saxony, Brandenburg, and Thuringia. The fall of the Berlin Wall may have opened up many opportunities for those in East Germany, but it also left them disadvantaged and more sensitive to change. Yet the significance of reunification is worth celebrating in this day and age.
Shadow chancellor John McDonnell unveiled yesterday Labour plans to commit £400bn of investment to climate emergency and social deprivation. Speaking in an election campaign speech in Liverpool, McDonell said a Labour government would change the fiscal rules so that borrowing for investment would be excluded from borrowing targets. He also used his speech to promise a significant shift of political decision-making power from London to the north. Meanwhile, chancellor Sajid Javid has vowed to borrow an additional £20bn a year for new infrastructure projects as he overhauled Conservative fiscal rules in a bid to woo voters. The chancellor, who has been repeatedly criticised for his decision to increase borrowing, has insisted that he could still deliver cuts to taxes such as inheritance tax, as he signalled at last month’s Tory party conference. Brazil’s ex-president Luiz Inácio Lula da Silva could be freed from custody after Brazil’s top court voted on Thursday to overturn a rule that stipulates that convicted criminals should not go to prison until they have exhausted their appeal options. Lula, who led Brazil between 2003 and 2010 and was favourite to win last year’s presidential election, was jailed following his implication in a major corruption investigation. US billionaire and former New York mayor Michael Bloomberg is expected to get on the Democratic primary ballot in Alabama after saying in March that he wouldn’t run for president. Bloomberg’s move comes as Joe Biden struggles to break out of the Democratic field and Senator Elizabeth Warren rises in the Democratic campaign.
Business and economy
The Bank of England has published its first formal forecast of the impact of Boris Johnson’s recently negotiated Brexit agreement. In its Monetary Policy Report, the Bank concluded that, although the deal would lift uncertainty and boost investment in the near-term, the UK’s economy would slightly weaken during the course of the next three years as a result of customs checks and regulatory divergence with European trading partners. Profits at Sainsbury’s have been hit by store closure costs after the supermarket group said it would shut a number of stores as it moves the Argos brand into its supermarkets. Pre-tax profits dropped to £9m from £107m in the same period last year, while like-for-like and food sales fell by one per cent and 0.1% respectively. Sainsbury’s has insisted on the impact that highly competitive retail markets and the uncertainty of consumer outlook has had on the group. Luxury car manufacturer Aston Martin is relying on the next James Bond movie to give the firm a financial boost after announcing a £12.5m loss in Q3. Chief executive Andy Palmer said that the saga usually gives the company a lift in China, where it has struggled in recent months. The next Bond film, the last starring actor Daniel Craig, will feature four Aston Martins: DB5, V8 Saloon, the new DBS Superleggera, and Valhalla.
What happened yesterday?
London stocks closed in the green on Thursday after the Bank of England kept interest rates on hold. The FTSE 100 ended the session up 0.13% at 7,406.41, while the pound was 0.28% weaker against the dollar at $1.2816 and off 0.08% versus the euro at €1.1609. RSA Insurance Group (+3.98%) rose after it said net written premiums for the year to date were flat but underwriting profit was up “strongly.” Marks & Spencer (+5.16%) was boosted by an upgrade to “hold” at Société Générale, while Primark owner Associated British Foods (+0.37%) closed up following an upgrade to “buy” at Goldman. On the downside, Hiscox (-9.72%) slumped after JPMorgan downgraded its stance on the shares to “neutral.” Engineer solutions provider Senior (-4.74%) was down after it announced a restructuring programme amid difficulties in its Flexonics and aerospace markets, while BP (-0.04%) and Card Factory (-0.12%) were lower as both of their stocks went ex-dividend. Across the pond, US stocks closed at record highs as reports of additional tariffs being removed between the US and China soothed nerves. The S&P 500 finished 0.3% higher at 3,085.18, the Nasdaq Composite rose 0.3% and the Dow Jones Industrial Average advanced two-thirds of one per cent. In addition, Treasury bonds sold off, driving yields higher, as investors became more optimistic over a resolution to the Sino-American trade deal.
What's happening today?
Gulf Red Emperor Vietnam Holding Vietnam Holding
Intl. economic announcements
(07:00) Balance of Trade (GER) (07:00) Current Account (GER) (15:00) U. of Michigan Confidence (Prelim) (US) (15:00) Wholesales Inventories (US)
Columns of note
Writing in City A.M., Kate Andrews argues that yesterday’s spending showdown starring Sajid Javid and John McDonnell was staggering and off the scale. In the case of Labour’s plans, she writes that in order to deliver promises to avoid a deficit and debt spike, taxes would undoubtedly have to hiked across the board. On the other hand, Tory’s own rule-loosening on spending risks following a similar path of avoiding safe delivery, as Andrews reminds both parties that the public purse does not belong to the Conservatives or Labour, but to each and every taxpayer. Libby Purves opines in The Times that we should save crumbling, historic theatres from falling into disuse. Rather than just turning them into museums, traditional theatres like those in London’s West End should be given a chance to continue connecting us to a past of human understanding and risky dreams, as they energise the city in contrast with towering multinationals. Purves regrets that, while it’s estimated that £550m are needed to maintain and upgrade theatres across the UK, requests for tax concessions or subsidy have fallen on the deaf ears of seven culture secretaries in six years. (£)
Did you know?
Early British settlers in North America brought the tradition of Bonfire Night with them, but they called it Pope’s Day and burned effigies of the Pope instead of a Guy.
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