8 November 2018
Lens on the Week
UK
BREXIT: According to “1066 and All That”, faced with the problem of what to do about James II “the people lost control of themselves altogether and, lighting an enormous number of candles, declared that the answer was an Orange.” This time the answer will be a fudge. There may be some outside the negotiating chamber who try to follow every twist and turn of the debate over transitional arrangements which involve the UK remaining in the Customs Union for the time being, but most of us are only familiar with the basics. The UK wants the right to bail out of the Union when it wishes. The EU is only happy for that to happen by agreement. There is a possibility of everyone agreeing on some sort of review mechanism which will no doubt be understood in different ways in different places.
By the time you read this, everyone’s positions will have changed completely, but it does seem increasingly unlikely that there will be a ‘no deal’ exit as the parties strain to put something in place. The trouble is, of course, that the rules of the customs union will not let us enter into trade agreements with third party countries, something for which Brexiteers are champing at the bit.
DEATH TAX: Probate fees are to be limited to £6,000 following criticism of proposed increases. They will also be restricted to ½% of the value of the estate and will only be payable where that value exceeds £50,000.
MURDER STATISTICS: According to Scotland Yard, 20% of the 118 murders committed in London this year were gang related, although in a further 10%-15% of cases one of the parties had gang links. Although the figures for all murders are around the same as last year, the number of domestic murders has increased from 9 to 26.
BULLYING: The House of Commons is to hold yet another enquiry into the bullying culture in the Palace of Westminster. The new enquiry, to be led by an (inevitably) female lawyer, follows hot on the heels of the first by Dame Laura Cox, a retired High Court Judge, which found that the Commons had “fallen woefully short in supporting and protecting its staff.” It is understood that the terms of reference will not permit the naming of names, in which case, frankly, why bother?
GAGGING: More criticism of the Government’s habit of putting clauses into contracts with its contractors forbidding them form trashing the reputation of ministers. This time it is not the charities working with the DWP but an engineering company charged with looking at government buildings post Grenfell. The practice is clearly widespread. Clauses of this sort run counter to the spirit of our transparent age. On the other hand they mean that people can be frank with their contractors. Which is the more important and when? You cannot have it both ways.
International
PAKISTAN: Mrs Asia Bibi, a Christian, has been cleared of blasphemy after eight years on death row. She had been convicted of insulting the prophet Muhammad (after an argument with a neighbour over a cup of water) and sentenced to death in 2010. However, she is now being kept in prison for her own safety; protestors across the country are demonstrating against her Supreme Court acquittal and demanding that she be hanged. Prime minister Imran Kahn initially defied the protestors, calling them “enemies of the country”, but after two days of increasingly violent and widespread unrest he backed down, agreeing to keep her in prison and saying that the government would not stand in the way of the acquittal being overturned. Protestors have burnt cars and buildings and called for the murder of judges and the overthrow of the government. Last week Mrs Bibi’s lawyer fled the country with little more than the clothes he was wearing; his family remain in Pakistan under police protection.
Mrs Bibi has five children. Her husband has begged other countries to offer his family asylum. Arrangements about any such offers are being kept secret for fear of violent reprisals against diplomats. Italy’s interior minister Matteo Salvini, however, has said he would offer her sanctuary in Italy.
Five years ago, the governor of Punjab province, Salman Taseer, called for Mrs Bibi to be pardoned and for the blasphemy laws to be reformed; he was promptly murdered by his own bodyguard who then became a national hero.
Separately, in Egypt, at least seven Christians were killed and 14 wounded when gunmen attacked a bus driving to a Coptic monastery in Minya, south of Cairo.
USA: Record numbers cast early votes as the country went to the polls for the midterm congressional elections, the results of which will be seen as their verdict on President Trump’s record so far. Early results suggested that the Democrats will wrest control of the House of Representatives (the lower house) from the Republicans, while the Republics will retain their control of the Senate (the upper house). Democrat victories include suburban Virginia, Florida’s 27th district and the governorship of Illinois. If Democrats do regain control of the lower house, they will be able to frustrate the President’s legislation plans and launch investigations into his business and political activities.
ITALY: Matteo Salvini set his country on a collision course with Brussels by refusing to amend the government’s budget after it was rejected by the EU because its high-spending and high-borrowing plans, in a country already in financial difficulties, was judged to breach EU rules.
Violent storms battered much of the country. Venice suffered record flooding. Winds of up to 110mph felled almost 2 million trees in the Alps. In Sicily, nine people were killed when floods swept through their holiday homes, a doctor died trying to get to patients in the town of Corleone, and two German tourists died when their car was flooded.
Financial
RATES RISING OVER THERE: US employment data showed a much greater than expected increase in non-farm payrolls. That 250,000 people instead of 190,000 had started work was impressive enough, but policy setters will be more concerned by the rise in hourly earnings to 3.1% year-on-year, the highest level since April 2009. This would appear to herald a further increase in US interest rates next month – whatever President Trump says. Pressure on longer-term yields is developing as a result of the President’s fiscal policies that have prompted the Fed to announce sales of $83bn of longer-term debt in the fourth quarter – a sum that exceeds the amount sold in the worst stages of the financial crisis.
RATES RISING OVER HERE: The outlook for UK rates may be a little more uncertain, but the size of the Budget giveaways seems to have had an influence on the Bank of England. While there was unanimity amongst the Monetary Policy Committee to leave rates unchanged for now, they indicated that they would step up the pace of interest rate rises if a smooth Brexit deal was negotiated. The Bank said that, based on its current forecasts, it would need to raise interest rates to 1.5% (from 0.75% currently) over the next 3 years to ensure that inflation was kept under control.
ONE BAD APPLE: Shares in Apple fell 5% in response to concerns about its outlook for holiday season sales. This was in spite of them beating their revenue forecasts for the fourth quarter. They sold the same number of phones as in Q3 (46.9m) but more of them were the higher priced new XS and XS Max models, which cost over $1,000. Hence its smartphone revenues were up 29% at $37.2bn.
TAKE THE MONEY AND RUN: The Chief Executive of Persimmon Jeff Fairbairn has left by “mutual agreement” in an effort to stem the reputational damage that resulted from his £75m pay award. While the house builder’s share price has doubled under his tenure, and £2.2bn had been paid out to shareholders, concerns had been voiced about the extent to which public subsidy had driven those returns. Persimmon has benefited considerably from the governments Help to Buy programme. From Mr Fairbairn’s point of view his departure may prove to be shrewd given that the Help to Buy scheme is scheduled to end in 2020, turnover in the housing market is falling and, according to the EY ITEM Club, prices are at risk from the lack of a deal on Brexit.
