25 July 2019
Lens on the Week
UK
MEDIA WRECK: The election of Jo Swinson as head of the Liberal Democrat party and of Boris Johnson as top Tory and Prime Minister, have changed the faces at the top of British politics. Mr Johnson’s victory has had the additional effect of paralysing the media. That doesn’t mean that they have had nothing to say about it, far from it in fact, but rather that the comments are about him personally rather than being a serious prediction of how things will go forward from here. It is hard to know which are the more tedious: comments from those opposed to him painting him as an dishonest buffoon or comments from his supporters pointing to his “optimism” as if it would deal with our problems like some form of political imodium. In truth, of course, the problems are not about personalities but about a political jam. We have negotiated a deal including a backstop which the EU has said it will not change; Brexiteers will not accept it because they suspect it will keep us linked to the EU market (and so unable to negotiate our own trade deals) indefinitely. Labour will not accept it because they see an opportunity to bring the government down. That produces a majority against it in the House. What should Mr Johnson do?
His first step must be to try to agree with the EU a protocol which will prevent the backstop being needed. That would have to involve some form of e-border with the Republic of Ireland which did not have to be manned physically. No doubt everyone will agree to work towards that but the technology does not seem to be there at the moment and negotiators would have to cater for the possibility that it never is. Unless the technicians can come up with something clever, it is back to the backstop and the unlikelihood that the EU will give enough to satisfy the Brexiteers.
If nothing whatever is done, the UK will leave the EU on 31 October. Stopping that requires motions of no confidence bringing down the Government, followed by a General Election. Leaving aside the point that MPs with thin majorities may not want one, there are some difficult practical problems. The first is that, though the leadership of the Conservative leans towards a hard Brexit and the leadership of Labour leads towards Remain, there are MPs of both parties who differ from the leadership, often backed by constituents who share their view. An election, then, would be a very chaotic affair as the parties ran candidates against their own sitting MPs. Worse still it could leave the composition of the house much as it is now, resolving nothing but several weeks wasted.
The third possibility is to sort the Brexit issue by a further referendum offering a choice of Remain, Leave without a Deal, and the Mrs May Withdrawal Agreement. The trouble with that is that there is a general consensus that the withdrawal agreement is dead and reviving it, even with minor improvements, would involve politicians of all parties in a massive loss of face. Still, it would not be a bad answer. The public would be likely to go for the Withdrawal Agreement; the Prime Minister would say that his hand had been forced by the House and the EU would realise that to use the Irish backstop as a sort of trap was now too dangerous to contemplate.
Surely that is where it must end up but we need to get nearer to Halloween before a further referendum becomes viable. Meanwhile the media will continue with their various rants on the pros and cons of Mr Johnson’s character. It seems a good moment go on holiday and the Shaw Sheet will not appear again until Thursday 5th September.
“NICK” CONVICTED: Carl Beech, the NHS manager whose false allegations under the pseudonym “Nick” led to a police enquiry into alleged child abuse by Lord Bramall, Leon Brittan, Edward Heath, Sir Morris Oldfield, Harvey Proctor and others has been convicted at Newcastle Crown Court on 12 counts of perverting the course of justice and one count of fraud.
International
ELECTIONS: Elections in Ukraine appear to have given Volodymyr Zelensky (the comedian and actor who became president earlier this year) a majority in parliament. The scale of his party’s victory has taken even Mr Zelensky by surprise – he had already considered coalition talks with Svyatoslav Vakachuck, Ukraine’s most famous rock star and the leader of the Voice party. The votes are still being counted, but it looks like Mr Zelensky’s Servant of the People will be the first party to govern modern Ukraine without a coalition partner.
In Spain, attempts by acting prime minister Pedro Sanchez to form a coalition collapsed again. The anticipated support of his Socialist party by the far-left Podemos party did not materialise for the parliamentary investiture motion earlier this week; it seems that Podemos is now demanding a bigger role in a coalition government before it will support the Socialists in a second vote later this week. Even if he secures Podemos’ support, Mr Sanchez will still depend on a number of other minority parties.
In Greece, the recent defeat of Alexis Tsipras and the radical Syriza party by Kyriakos Mitsotakis and his conservative New Democracy party is being seen as a return to political reality by Greece and perhaps the beginning of the retreat of populism in Europe.
Germany has produced a modern Frankenstein monster. Chancellor Merkel’s CDU and its partners have repeatedly refused to form any kind of alliance with the far-right populist AfD (Alternative for Germany) – but a CDU parish councillor in the town of Frankenstein has formed a local political pact with her husband, an AfD parish councillor. The CDU leadership is trying to expel her from the party because of this pact.
HONG KONG: Gangs of men armed with wooden clubs and metal poles, and wearing masks and uniform white shirts, attacked passengers returning by train from an anti-government rally. Over forty people were injured (including a pregnant woman), one of them seriously. It is suspected that the men were members of organised crime gangs, and that their attack was tolerated and perhaps encouraged or even initiated by the authorities. It is claimed that the police did not appear for some hours, by which time the attackers were dispersing.
SYRIA: The assault by Assad regime troops on Idlib province, the last pocket of rebel-held territory, is bogged down. Fighting around the village of Hammamiyat, where rebel forces counter-attacked fiercely, left 900 regime troops killed, according to the Syrian Observatory of Human Rights. Assad’s international supporters, Iran and Russia, are losing enthusiasm for this end-game. Iran, over-stretched, has withdrawn its Shia militias. Russia, although still giving some air-support, is currently engaged in a rapprochement with Assad’s enemy Erdogan of Turkey. On the other hand, the rebels’ international backers – Turkey and the Gulf states – are increasing their support.
Financial
GLOOM GLOOM GLOOM: The CBI was quick off the mark to try to throw new PM Boris Johnson into a Brexit settlement with the EU. Unless he does, says the CBI, the so-called representative body for British business (though membership is mostly from a relatively few large businesses), the economy will go into a tail spin, output will fall, unemployment will rise, and recession will stalk the land. It said Bexit uncertainty, low orders, and a global recession could mean economic doom, calling for Mr Johnson to reach early agreement with Brussels to ensure that the UK does not leave without a deal, (and preferably not at all, the CBI’s consistent position, though it did not say that this time). The CBI’s views do not entirely accord with recent economic data, although there is no question growth is slowing, as might be expected after a long period of strong growth. If they cut membership fees, then we will think they are seriously worried.
PETROL RATIONING SOON? Unlikely say the analysts. Although the market is nervous about Iran’s seizure of western ships in the Gulf of Hormuz, and prices of crude oil have risen a couple of percent in the last week, there is unlikely to be any significant sustained shift in the oil price. The amounts seized are not significant and there is plenty of oil in storage around the world. The USA is now such a significant supplier to the market from its shale sources that supply continues to outpace demand and the more likely direction of prices is down. Unless full scale war breaks out, of course, in which case the cost of filling your car tank may be your least worry.
WOT ABOUT THE CUSTOMERS? BT announced a few months ago that it would move from its current, and very long standing, headquarters in the City of London next to St Paul’s Cathedral, in the interests of cost control and modernisation. Now it has announced its new destination [drum roll and fanfare]; it is going to the trendy east side of the City into a brand new building being built in Aldgate. No doubt the accountants will show cost savings from this, but the customers might have thought the communications giant would have shown greater commitment to its regional business, and its investment needs, by a move to, say Bradford, or Norwich, or Dudley.
NO CHEERS: It was going to happen sooner or later. The experts say that gin is starting to become unfashionable (not in this house, it isn’t); sales are slowing and may soon start to fall. That is after an exponential rise, with dozens of small local distilleries opening, most with witty names and strong local followings. If this grim news is true, soon your local gin maker may be tightening his belt, or better still, cutting his prices, and alas some no doubt will not survive. There are a few other businesses that may get hit – the one most in the firing line being the extraordinarily successful mixer maker, Fever-tree, which started by making tonic as a challenge to … well, ssssh, you know who. Fever-tree has gone from start-up in 2005 to an AIM market value of £4.5bn last year. That looked stretched on 2018 sales of £237m and profits of £76m, and the market, staring gloomily into its glass, is beginning to think so too. The share price has almost halved this year, to just over £20 a share, though those who got in at the float at £1.65 should still be able to afford an occasional double.
