Issue 191: 2019 02 28: Lens on the Week

28 February 2018

Lens on the Week

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UK

BREXIT CONFUSION: Chaos it certainly is, with Mrs May forced into offering a vote on Brexit postponement if there is no agreement of a deal by 12 March.  But where exactly does that leave us?  Assuming that Brussels accept it, it is only a delay.  How does that make things easier?  Will the intransigent groups mellow with age?  Will the fact that we get a vote in the next European elections somehow help?  A delay is only any use if we do something with it and, Parliament being unable to agree, that means going back to the public.   That is it then.  No Brexit, the Government’s deal with such comforts as can be obtained, or no deal.  Single transferrable vote.  The sooner we get on with it the better.

TIG POLLS: As Labour finally come off the fence and back a second referendum if their proposals for Brexit are not agreed, a YouGov poll shows the damage that has been done to their standing by the defection of MPs to form an independent group.  Polls show Tories:41; Labour:30; Lib Dems:10 and the rest:19.  No separate figure was given for TIG which is not yet a political party.  These are highly volatile figures and it is hard to take them seriously.  Still, the real psephological point is that at elections Labour depends on combining the voting power of the far and moderate lefts.  Giving the moderates somewhere else to go disrupts that dynamic.  Never mind, Mr Corbyn, it is too early to worry.  TIG could easily implode or the Tories could produce some spectacular new split of their own.

UNIVERSITY ADMISSIONS: There has been a fall in the number of UK students at Oxbridge according to the Higher Education Statistics Agency.  That is the product of more applicants overseas and the fact that, unlike most universities, Oxford and Cambridge have not expanded.  It’s good luck in some ways.  Non EU students pay more which is nice, although the Universities insist that that does not affect admission choices which depend on ability and talent alone.  On the other hand it narrows social mobility since overseas applicants tend to come from wealthier families.  Still, in both universities the proportion of foreign students is below 25%.

Does the higher proportion of foreigners leave less opportunity for UK students?  Of course it does but it is the price of success.  Would we rather that our top universities were of less interest to foreign students or admitted second rate British applicants ahead of their more talented overseas competitors?   Not if we want them to remain top by international standards.

MIGRANTS: As light relief from the debacle of Brexit, MPs on the Commons Home Affairs Select Committee heard how the model for illegal cross channel migration has changed.  Rather than dodging the authorities to effect a covert landing in the UK, boats full of migrants give their position to the coastguard so that they will be intercepted, relying on the failure of the Home Office to repatriate them.

Many of the Immigrants come from Iran and have often paid £5000 or so to people-smugglers to arrange their journeys.  The numbers, however, are relatively small with about 250 attempting an illegal crossing in December and only 90 or so in January.  They are likely to increase as the weather improves.

International

KASHMIR: The conflict between India and Pakistan over Kashmir – the conflict most likely to escalate into an apocalyptic war – has flared up again after a two-and-a-half year lull (see The Line of Control, Shaw Sheet issue 73, 29 September 2016).  Two weeks ago, a suicide bomber killed 40 Indian security officers in Kashmir.  Jaish-e-Mohammed, a militant group based in Pakistan, claimed responsibility, and India has accused Pakistan of complicity.  An outraged India reacted by sending 10,000 troops to Indian-held Kashmir and rounding up known separatists and Muslim militants, and then by launching air strikes on targets inside Pakistan for the first time since 1971.  It claims to have destroyed a Jaish-e-Mohammed terrorist training camp and killed more than 300 militants.  Pakistan claimed that the strikes hit empty forest and that there was no damage and no casualties, but it also retaliated by scrambling its own air force.  At least one Indian warplane has been shot down and one Indian pilot captured.

Both countries are nuclear powers and it’s unlikely that either prime minister Narendra Modi of India or prime minister Imran Khan of Pakistan would want outright war and risk the launching of either side’s 140 nuclear warheads.  But power in Pakistan belongs to the armed forces and to its IS intelligence and security service as much as to Imran Khan’s fragile government, and a meeting of the country’s nuclear command has been convened.  And Narendra Modi’s BJP party is facing a tough election, and a hard line against Pakistan would go down well in the polls.  His water minister has threatened to cut off Pakistan’s water supply, which originates in the mountains on the Indian side of the border.  But tearing up the seven-decades-old water treaty between the two countries would cripple Pakistan and almost certainly lead to war.  Besides, India is equally dependent on water from Pakistan’s ally China.

VIETNAM: The summit between Kim Jong-un of North Korea and President Trump of the USA is taking place at the moment in Hanoi.  It remains to be seen whether this second meeting between the two leaders will accomplish any more than their first meeting towards the goals of nuclear disarmament and an official end to the Korean War.

VENEZUELA:  An attempt at the weekend to bring aid into Venezuela across a bridge from Colombia was blocked by armed forces loyal to Maduro which opened fire on the convoy and attempted to set it alight.

Financial

GOING DOWN:The troubles of high street retail are having the inevitable effect on the landlords that own the shops.  Most retailers, trying to become ever more financially efficient and using capital as intelligently as possible, if they owned them, long ago sold off their shops and rented them back.  For most that has proved an astute move – although rents have gone up in prime locations, in many places rent reviews have produced no uplifts, or minimal ones; and values have slumped.  This is especially so in the supermarket sector where, in spite of the vicious competition between the big operators, rents have hardly moved in the past few years.   The recent financial results of Intu, one of the UK’s largest landlords show how painful the current troubles of the market are becoming. The recent revaluation of Intu’s retail properties, which include a clutch of regional shopping malls, knocked the value of their portfolio by £1.4bn – a reduction of 14%.  That meant the business made a loss of £1.2bn in 2018, and cancelled its final dividend.  The share price, already reeling from two failed takeover bids in 2018, fell to 109p.  As the net asset value of the business is 312p per share, that suggests that investors think there is worse to come.

AND HERE IT COMES:  It may be good news for shoppers who will see continuing  competition between the supermarket chains, but not for the shareholders in those businesses.  The Competition and Markets Authority, the successor to the Monopolies and Mergers Commission, a body nowadays seen as usually meek and mild, suddenly produced some very sharp teeth and applied them to the proposed merger between J Sainsbury and Asda.  The CMA said it had extensive doubts about the deal, adducing its effect on the range and quality of products available to shoppers.  Although the two merging businesses had offered to sell some stores where they would have local monopolies as a result of the merger, the CMA said they were minded to block it altogether, or require the newly merged business to sell one of the brands, together with hundreds of stores, to one freestanding buyer.  This is especially bad news for Sainsbury, whose recent performance has been weak.  Sainsbury’s chief executive Mike Coupe was said to be furious about the CMA decision, though some analysts were said to welcome its intervention against such a potentially powerful grouping.

HARD CHEESE: Secretary of State for Agriculture, Environment, Fisheries, Forestry, and most things that happen outdoors, Michael Gove has said that if Britain leaves the EU without an agreed deal in four weeks time the price of cheese will go up by as much as 30%.  This is apparently based on the view that the EU will impose WTO tariffs of up to 45% on cheese exports from Europe to the UK.  Mr Gove did not explain why this would be so, especially given the effect on French dairy farmers and cheesemakers who are a vociferous lobby group to say the least, but the major UK dairy product importers have long warned that imports of milk could be affected by extra bureaucracy – and that might affect pricing, especially of the bulk cheddar type cheeses imported from Denmark and the Republic of Ireland, and used in highly processed foods .  Given the parlous state of the UK dairy farming industry, and the recent success of UK cheesemaking, it seems unlikely that British farmers and cheesemakers would be too upset by less importing of foreign cheese.  But it could be hard cheese for some in the brave new world.

 

 

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