10th October 2019

Written by Juan Palenzuela, Researcher

Edited by Tom Gillingham, Associate Partner

Good morning,

Until recently, the Islamic State (Daesh) controlled a swath of territory with 10 million people and roughly the size of Britain. This included most of Syria’s northern border with Turkey, which remained somewhat indifferent as zealots from all over the world poured through its border to join the so-called caliphate. 

The situation continued for nearly two years until the Kurdish-led SDF started claiming back territory, town-by-town, , drawing on with American support. By March this year, the SDF had overrun all of Daesh’s territorial holdings, as well as most of northern Syria. Yet it was this, not the presence of the prime global terrorist force itself, that triggered a swift response from Turkey. 

#OperationPeaceSpring will neutralize terror threats against Turkey and lead to the establishment of a safe zone, facilitating the return of Syrian refugees to their homes. We will preserve Syria’s territorial integrity and liberate local communities from terrorists. — Recep Tayyip Erdoğan (@RTErdogan) October 9, 2019

The operation, which started yesterday afternoon with airstrikes, has already claimed its first civilian casualties. In a region that had just started enjoying a breadth of relative stability after years of war, this is a major blow.  

Turkey, however, is unlikely to carry on unscathed. Despite the seemingly inconsistent US policy on the matter, a bipartisan effort is underway to sanction the country, something that could weigh heavily on the Turkish Lira. Despite tacitly endorsing the operation, Trump himself has also threatened to “obliterate” Turkey economically if it did anything he considered “off-limits”, whatever that means. 

A diplomatic rift last year resulted in tariffs and sanctions that diminished the value of the Lira by 40% against the dollar. The weaker the currency, the harder it becomes to pay the external debt, which is overwhelmingly in dollars and amounts to nearly 60% of Turkey’s GDP

Another run on the Lira would put Turkey’s central bank in a tough spot. It started an easing effort in July, lowering rates by 750 basis points since then to boost the economy. A falling Lira, however, would be enough to force the bank to reverse this and tighten mnetary policy instead, leaving the country more vulnerable to a recession. 

Despite rising international condemnation, it may just be that money –or the lack of access to it– is the only thing that can halt this particular offensive.


The OECD proposed swift corporate tax reforms yesterday, in order to stop giants such as Facebook, Apple, Amazon, Netflix and Google shifting profits around the world to minimise taxes. The proposals are aimed at extracting more corporate tax from large multinationals whether they are digital or own highly profitable brands, such as luxury goods makers or global car companies. 

EU leaders issued an ultimatum on Boris Johnson ahead of talks with Ireland’s prime minister, Leo Varadkar, to accept that Northern Ireland remains within the customs union or leave without an agreement. According to the Financial Times, some British officials admitted the talks could collapse on Friday, given Mr Johnson’s refusal to accept the EU’s demand. 

England's game against France on Saturday in the Rugby World Cup has been cancelled due to the approach of super typhoon Hagibis. The teams were due to play their final group game in Yokohama on Saturday, in what would have decided who leads Group C. Instead, the match will be registered as a scoreless draw, and England will proceed to the quarter-finals as group winners, with France in the second place. Scotland must win against Japan to have a chance of progressing to the next round, but the typhoon threatens to leave them in third place in the group. 

Business & Economy

The Bank of England warned Facebook that Libra must meet the "highest standards" if it is to be allowed in the UK. The Bank's financial policy committee (FPC), which is tasked with identifying potential risks in the financial system, also set out further rules of engagement on cryptocurrencies during a wide-ranging meeting that also covered Brexit preparations. 

Hays Travel, the largest independent travel agent in the UK, agreed to buy 555 of Thomas Cook’s 563 UK shops for an undisclosed sum yesterday. The company has also said that it has recruited almost 600 of Thomas Cook’s former employees so far, with “further offers outstanding” to others. Up to 2,500 jobs could be saved in total. 

Nissan’s board made a complete revamp of the executive leadership team yesterday. Makoto Uchida, head of China operations, and Ashwani Gupta, a former Renault executive, were installed as chief executive and chief operating officer, respectively. The company is in an effort to end a boardroom rift that has threatened the carmaker’s survival after the scandal surrounding previous CEO Carlos Ghosn’s arrest. The company also announced that it would end night shifts at its factory in Sunderland. 


What happened yesterday?

Stock markets around the world rose on the back of positive prospect of a partial trade deal between the US and China.    

The FTSE 100 was up 0.33% at 7,166.50. Sterling also nudged higher, but briefly, after The Times said the EU was ready to make a "major concession" to Prime Minster Boris Johnson by proposing a mechanism for the Northern Irish assembly to leave a new backstop after a number of years. Despite this, by the end of trading the currency was down slightly 0.08% against the US dollar at 1.2210 and 0.26% weaker versus the euro at 1.1125.  

In Europe, stocks rose on the back of news that the chairman of the US Federal Reserve is open to further interest rate cuts if necessary. By the end of trading, the Stoxx 600 was 0.42% higher at 380.30, as the German Dax rose by 1.04% to 12,094.26 and France's CAC 40 climbed by 0.78% to 5,499.14. London's FTSE 100 added 0.33% to reach 7,166.50.  

 American stocks followed a similar trend, the Dow Jones Industrial Average closed up 0.63% at 26,328.00, while the S&P 500 gained 0.80% to 2,916.21 and the Nasdaq Composite finished 0.92% firmer at 7,895.90.  

Source: FTSE 100, Financial Times

Whats happening today?


Colefax Grp. South32 United Carpets Univision


Brown Group Morses Club


Aber. Frnt. Npv

UK Economic Announcements

(00:01) RICS Housing Market Survey (09:30) Balance of Trade (09:30) Index of Services (09:30) Gross Domestic Product (09:30) Industrial Production (09:30) Manufacturing Production

Intl. Economic Announcements

(07:00) Balance of Trade (GER) (07:00) Current Account (GER) (13:30) Initial Jobless Claims (US) (13:30) Continuing Claims (US) (13:30) Consumer Price Index (US)

Columns of Note

Writing for the Financial Times, Anjana Ahuja warns of the prospects for British science in a hard-Brexit scenario. In particular, she points out how the UK’s involvement with the European Research Council as well as with other pan-European organisations such as Euratom, has boosted Britain’s scientific research output over the past decades. Britain’s memberships of these organisations is due to end in the event of a no-deal Brexit. Despite the government already pledging to replace some lost EU funding, this may not be enough. Beyond funding, continent-scale competition has driven research forward, argues Ahuja. 

In the New Statesman, Stephen Bush opines that the possibility of Britain getting a deal died with the premiership of Boris Johnson. When Johnson became Prime Minister, he did so having ruled out May’s backstop, while having resolved against a backstop for Northern Ireland alone. His only remaining option is, and always has been, a no-deal Brexit. This, Bush believes, had led to a polarisation of the party system where the Conservatives have become the Brexit party and the Labour Party has to become the anti-Brexit party. 

Cartoon source: Robert Ariail

Did you know?

Hamsters weren't successfully bred and domesticated until 1939. Today’s entire domesticated population descends from a single brother-sister pair. 

Parliamentary highlights


The House is in prorogation and will next sit on Monday 14 October 2019. House of Lords The House is in prorogation and will next sit on Monday 14 October 2019. Scottish Parliament

General Questions First Minister’s Questions

Members’ Business World Day Against the Death Penalty – Bill Kidd Portfolio Questions Stage 3 Debate Transport (Scotland) Bill Stage 1 Debate Non-Domestic Rates (Scotland) Bill TOMORROW Scottish Parliament No business scheduled.