19 July 2018
Lens on the Week
UK
BREXIT: With the help of four Labour Brexiteers, the Government maintained a six vote majority to defeat an amendment to the Trade Bill which would have forced it to negotiate for the UK to remain in the Customs Union if they do not have a plan for friction-free trade by mid January. Had the amendment passed it would have meant acceptance of the EU rule book and abandonment of any possibility of doing separate trade deals with other countries. The 12 Conservative rebels who voted with the opposition appear to have been incensed at the Governments acceptance of Brexiteer amendments to the Chequers agreement which undermined the dual tariff structure (see comment).
PRIVACY: Sir Cliff Richard has been awarded £210,000 in the High Court for breach of privacy in connection with the BBC’s coverage of a police raid on his house following allegations of child abuse. The BBC has also apologised to Sir Cliff, who was neither arrested nor charged. Of the £210,000 total, £20,000 is to be paid as aggravated damages after the BBC submitted its coverage for an award and the balance is to be met 65:35 between the BBC and South Yorkshire Police. The judge, Mr Justice Mann, criticised the reporting as sensationalist.
HOSEPIPES: United Utilities, which supplies water to the North West of England, is to impose a hosepipe ban on residential customers. The company has been criticised for its high level of leaks. Ofwat, the water regulator, is to tighten up on leak targets requiring a 15% reduction by all companies by 2025,
ELECTORAL COMMISSION: Vote Leave has been fined £61,000 by the Commission for overspending in the referendum campaign. It is also accused of deliberately seeking to avoid electoral rules by channeling £675,000 through an organisation “BeLeave”, which, as it followed a “common plan”, could not be regarded as separate for expenditure purposes. The findings, which are denied by Vote Leave, have been referred to the police.
NOVICHOK: Now they have the bottle which contained the poison, and perhaps CCTV pictures of who discarded it. Maybe that will help to fix responsibility: maybe not. One thing is sure, though. The press and public will be the last to learn what is really going on. In the end we just have to assume that the security services are doing whatever it is that they do to protect us.
International
SYRIA: The Regime assault on the rebel-held area around Deraa in south western Syria continues, while rebels in the city itself – where the revolution began – have surrendered. Regime troops and rebels fought in the village of Massharah, and Regime forces fired more than 800 missiles at rebel positions between Deraa and Quneitra. State media said that about 400 rebel fighters and 600 civilians have agreed to be moved out of the area by bus to the last rebel-held area in Idlib province in north-western Syria. About 20,000 displaced people are heading for the border with Israel.
The advance of Regime forces and their allies (Iran, Iranian-backed Shia militias and Russian bombers) on this front brings them closer to the Golan Heights and potential conflict with Israel. Israel is deeply concerned at the prospect of Iran establishing military bases on the Israeli/Syrian border. Israel’s prime minister, Binyamin Netanyahu, has urged Russia to persuade Syria to keep Iranian troops and Shia militias away from the Golan Heights, and suggested that in return Israel would show restraint in the face of the advance on its borders. He also urged President Trump to seek an agreement about it with President Putin during their talks in Helsinki. He suggested that Russia could be offered a lifting of sanctions and a recognition of its right to the Crimea in return for easing Iran out of Syria. The suggestion was apparently supported by Saudi Arabia and the United Arab Emirates. It is not known whether Trump raised the idea with Putin in Helsinki.
PAKISTAN: Polling in the elections opens on July 25. An attack by a suicide bomber killed 149 people and injured another 189 at a rally in Mastung, Balochistan province. The Taliban and Isis have both claimed responsibility. It was the third attack on an election rally this week. Last week, 20 people were killed in an attack on a rally in Peshawar.
Former prime minister Nawaz Sharif, who was sentenced in absentia to ten years in prison last week for corruption and money-laundering, returned to Pakistan from London this week. He was arrested as he got off the plane at Lahore airport, in spite of supporters blocking policemen, and taken to prison. He hopes that his return to Pakistan, protesting his innocence and claiming that his arrest, trial and imprisonment were politically motivated, will boost his party, the PMLN, in the elections. Security forces detained many of his supporters before his arrival and prevented many others from gathering at the airport.
Financial
PRESIDENT KICKED UPSTAIRS: But a kick no ambitious investment banker would ever refuse. It is David Solomon, who has received the big kick – from President of Goldman Sachs to the office of chief executive, the top job in American corporate life, (unlike the UK where it is the other way round). Mr Solomon has long been tipped as next CEO of the world’s most famous investment bank when the present chief big cheese, Lloyd Blankfein decides to step down. Mr Blankfein has run the bank for 12 years, a period of turmoil and challenges which he is greatly admired for surmounting, whilst keeping the bank as one of the most powerful in US markets. He is now 63 and has decided that the handover process will begin within days, with him stepping down as CEO on 30th September and as chairman of the bank at the end of the year, both in favour of Mr Solomon. Mr Solomon is 56 and has been 19 years in the bank, being a junk bond trader before he joined Goldmans. He is also currently Chief Operating Officer and has worked closely with Mr Blankfein on a long term strategy to de-risk the bank’s activities and increase reliable income streams. The old model of direct broking and trading will continue, as will the advisory and underwriting business, but the growth is intended to be in more mainstream banking activities such as cash management, general banking services, and even retail banking (it has recently launched Marcus, a consumer bank). One thing has not changed – Goldman will endeavour to be the best in class at anything it does, and will hire and motivate the best people to achieve that. And it will stay top of every ambitious young bankers career list.
PRESIDENT KICKSTARTS ECONOMY: The effects of President Trump’s tax reforms seem to be filtering through into the US economy as intended. The burden of tax for many middle income earnings was eased at the beginning of the current year, and Americans seem to be confident enough to take their increased income straight round to the mall – and spend it. If that is what is causing the rapidly growing US retail boom it is a recommendation to any finance minister wanting to boost his economy – retail sales were up over 5% on an annualised basis in the second quarter of the year. In June they were up 0.5% on May, implying an annualised rate of 6%, which, in an economy in which two thirds of activity is driven by personal spending, is remarkable. There are some devils in the detail though; much of the increase in the second quarter seems to have come from new vehicles being sold, as American households perhaps catch up on some deferred spending. Although the US car industry has recovered from its weaknesses of a decade ago, some of those vehicles will be imports, most of them from the Far East. Another factor driving consumer spending has been increased expenditure on fuel – not that those new vehicles are tempting their proud owners to drive them around, but just the knock-on effect of increasing oil prices.
However economists say that they expect the increase in spending to continue, with smaller consumer items, services, and eating out, all likely to show strong positives. What is more, the US is now seeing continuing good job growth and with the jobs market tightening, there are also signs of wage growth coming through on a significant scale, so there is a treble whammy on disposable incomes. Philip Hammond please note!
