21st January 2020

Written by Juan Palenzuela, Associate

Edited by David Gaffney, Partner

Good morning, Can you guess which country will likely be topping the GDP growth ranks in 2020? Here’s a hint: it is not located in Asia or Africa. The firm favourite is actually found in an often overlooked corner of South America. It is Guyana. With a population of fewer than 800,000 people, this tiny (by South American standards) country – the only English-speaking nation in the region – is expected to grow at an outstanding 86% in 2020, according to the IMF. Exxon Mobil discovered vast reserves of oil in Guyana in 2015, and again in 2018. And with the first shipment of crude setting sail yesterday, the Guyanese are now eagerly anticipating the material impacts that the new riches will have on a country that has traditionally been poor, relative to a region that is still developing. Some of the ramifications are being felt by the populace already. The booming industry is now demanding a qualified workforce, and institutions such as the Government Technical Institute in Georgetown are stepping in to meet the demand, partnering with universities in the US to offer new technical courses. Exxon has already taken advantage of that investment, hiring the entire class of 2018. The path to success, however, is far from clear. Many in Guyana fear that oil and wealth will be accompanied by more corruption and less democracy, as has been the case in other countries across the developing world, such as in Guinea, Nigeria or neighbouring Venezuela. It is a valid concern. In a 2001 paper, professor Michael Ross argued that oil discoveries may indeed inhibit democracy in developing nations, for a variety of reasons. Nonetheless, the Guyanese have much to look forward to. The small population means that the redistribution of oil revenue will not go unnoticed, and the increasing desire of the large, educated diaspora to return home might help in pushing policymakers in the right direction. Whatever the outcome, you can be sure an interesting ride lies ahead for the country.

News

An impeachment trial against Donald Trump will begin today in the US Senate. A two-thirds majority of 67 senators would be needed to convict and remove Trump from office, a seemingly unreachable number for Democrats.  Scientists are becoming increasingly worried about a virus that causes a respiratory illness, which originated in China’s Wuhan animal market at the end of 2019. The total number of people with the virus has more than doubled in the past few days. As of yesterday, Chinese government officials reported 136 new cases in Wuhan, taking the total number of confirmed cases to 221 in China and four outside the country. Mainland Chinese and Hong Kong stocks have been affected as a result, as fears that the virus could hit tourism and retail shares increase. Continuing with a series of reforms to facilitate his grip on power, the Russian president Vladimir Putin ordered the dismissal of Yury Chaika, the prosecutor-general, who has been in office since 2006. Chaika will be replaced by Igor Krasnov, a former deputy head of the investigative committee, a body that answers only to the Russian president. It is the latest in a series of moves that began this year and led to Dimitry Medvedev, prime minister and former president, to quit his post.

Business and economy

During a visit to Ireland, Apple’s chief executive Tim Cook called for the reform of the global corporate tax system. Apple is under increasing pressure to pay a fair share of its profits in tax but according to Cook, Apple "desperately" wants the system to be fair. In 2016, the European Commission found that Apple received illegal state aid from Ireland and forced the company to repay 13 billion euros in back taxes. Facebook announced that it is looking to hire around 1,000 people to strengthen its London office this year. The announcement was made in the run up to a speech that Facebook’s chief operating officer Sheryl Sandberg will be giving in London later today. More than half of the new staff will be in technology-focused roles such as software engineering, product design, data science, product development, and dealing with harmful content. Talks are taking place between the Barclay brothers, owners of the Ritz Hotel in London, and Sidra Capital, a Saudi investment group representing wealthy Saudi families. The talks may lead to the Ritz, one of London’s most desired properties, changing hands for the first time in 25 years, according to the FT.

Columns of note

Companies now have many options to help their older employees boost productivity while also providing incentives for younger ones, says Michael Skapiner in the Financial Times. It seems to be common practice among most companies and institutions to apply subtle strategies to encourage older staff into retirement. But this not ought to be the case anymore, argues Skapiner. With wealthy societies ageing, the pressure is on firms and other institutions to deploy those with a desire to continue working effectively. (£)

In The Times, Rachel Sylvester argues that the government should be wary of backing policies that allow discrimination by religion, referring to a schools policy that sees the government fund voluntary-aided faith schools. The schools targeted in the policy are state-funded schools, also supported by a foundation or trust, that are allowed to select up to 100% of their pupils on the basis of their religion. (£)

Source: Wired

Markets

What happened yesterday?

Equity markets across the globe edged lower as the International Monetary Fund lowered its forecasts for global and euro area growth over the next two years to 3.3% and 3.4% respectively. 

In Europe, the Stoxx 600 had dipped 0.14% to 423.98, while the Cac-40 was off by 0.36% to 6,078.54 and the FTSE Mibtel was 0.57% lower at 24,002.45. 

In London meanwhile, the FTSE 100 ended the session down 0.3% at 7,651.44.

American markets were closed for the Martin Luther King Jr federal holiday.

What's happening today

Trading Announcements

Ig Group Holdings Joules Group Sensyne Health

Trading Announcements Dixons Carphone

AGMs

John Lewis Mitchells & Butlers Polo Res UK Economic Announcements

(09:30) Unemployment Rate (09:30) Claimant Count Rate

Int. Economic Announcements (10:00) ZEW Survey (GER) - Economic Sentiment (10:00) ZEW Survey (GER) - Current Situation (10:00) ZEW Survey (EU) - Economic Sentiment

Source: Financial Times

Did you know?

The Great Pyramid of Giza was once encased in limestone and would have appeared perfectly smooth and blindingly white.

Parliamentary highlights

TODAY House of Commons Oral questions Business, energy and industrial strategy (including topical questions) Legislation Direct payments to farmers (legislative continuity) bill: second reading General debate Grenfell Tower inquiry’s phase one report Adjournment Stepping Hill hospital – Mr William Wragg House of Lords Legislation European Union (Withdrawal Agreement) Bill - Report stage (day 2) - Lord Callanan Oral questions Resolving the power generation problems affecting Type 45 destroyers - Lord West of Spithead How a federal or confederal system of government could be implemented in the UK - Lord Foulkes of Cumnock Producing an effective strategy for dealing with alcohol abuse in 2020 - Lord Brooke of Alverthorpe Changing the four hour accident and emergency waiting time target - Lord Hunt of Kings Heath Legislation European Union (Withdrawal Agreement) Bill - Report stage (day 2) continued - Lord Callanan European Union (Withdrawal Agreement) Bill – Third Reading - Lord Callanan Scottish Parliament Topical questions (if selected) Ministerial statement The strategy for our veterans – taking the strategy forward in Scotland Stage three proceedings Scottish National Investment Bank Bill Committee announcements

TOMORROW

House of Commons Oral questions Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office (including Topical Questions)

Prime Minister's Question Time

Consideration of Lords amendments Legislation Telecommunications Infrastructure (Leasehold Property) Bill: Second Reading

Consideration of Lords amendments

Adjournment House of Lords Oral questions

Orders and regulations

Legislation European Union (Withdrawal Agreement) Bill - Consideration of Commons amendments Scottish Parliament Parliamentary Bureau Motions

Portfolio questions Government Business and Constitutional Relations Culture, Tourism and External Affairs

Opposition debate Investing in Our Future

Member's business Royal Botanic Garden Edinburgh 350th Anniversary