3rd December 2019

Written by Adam Shaw, Associate Partner

Edited by David Gaffney Partner

Good morning,

For most organisations, a 70th anniversary would be a time of celebration. A chance to reflect on all that has been achieved so far and perhaps set some ambitious objectives for the next 70 years. However, as Nato leaders gather in London today, there’s a distinct feeling of unease surrounding the most successful alliance in history. This year’s meeting will be lower key than last year and there will not be the traditional end-of-summit communiqué detailing conclusions and future plans. Why? Well, mainly because while there is plenty for the leaders to discuss – military spending levels, the situation in Syria, and the threat posed by a resurgent Russia – there is currently very little that they agree on. Emmanuel Macron’s comments about the organisation becoming “brain dead” in a calculated interview with The Economist last month have been well publicised. Unsurprisingly, that intervention drew criticism from his fellow leaders, but the signs are that Monsieur Macron’s diplomatic missile was not far from the mark. Fractures have appeared in the form of the sudden and unexpected US withdrawal from Syria, allowing Turkey’s President Erdogan to plough his own unilateral and unwelcome furrow against the Kurds. Turkey has also taken the extraordinary step of purchasing a sophisticated Russian air defence system. However, most concerning are the noises emanating from Washington. President Trump’s dissatisfaction at the level of military spending among member states is not a new US frustration, and nor is it without some justification, but reports that he wants to withdraw the US from the alliance, which he views as a drain on resources, is a first for any US president. While it seems unlikely that Trump would go that far – although you never can tell – Congress would surely block him from doing so. However, the ambivalence of the administration and the vacuum of American leadership is doing its own damage.

This creates a foreign policy problem for the UK, which has long viewed itself as the bridge between Europe and America. With the US taking a more isolationist approach, calls for a separate European force have gained traction – something to which the British government objects. However, if the US continues to turn inward, it’s something the UK may need to countenance to avoid being left adrift.

In the absence of an agreed strategy and unity among leaders, the future of the alliance will remain uncertain. It’s not the happiest of birthdays for Nato, unfortunately.

News

A man has been arrested on suspicion of murder and attempted murder following a hit-and-run car crash in Essex yesterday. A 12-year-old boy was killed and five others were injured in the collision, which happened outside Debden Park High School in Loughton. A child in Britain becomes homeless every eight minutes, according to a new report from housing and homelessness charity, Shelter. The Generation Homeless report is the first time that the housing charity has been able to uncover the rate at which children are made homeless, as opposed to more general figures. The report also revealed that more than 135,000 children in the UK will be living in temporary accommodation on Christmas Day this year. Republicans have issued a 123-page defence of President Trump ahead of the Democrats’ impeachment report. The document – which asserts that Trump’s actions were “entirely prudent” and involved “no quid pro quo, bribery, extortion, or abuse of power” – provides a blueprint for Congressional Republicans to defend the president at Wednesday’s House judiciary committee hearing and acquit him in any Senate trial.

Business and economy

The Trump administration has proposed 100% tariffs on approximately £2.4 billion of French goods, including cheeses, beauty products and champagne. This followed a US trade representative report, which found that a new French tax on digital services, affecting large US tech companies like Facebook and Google, represents a barrier to trade. Ted Baker has appointed law firm Freshfields Bruckhaus Deringer to undertake a comprehensive review after it discovered the inventory valuation on its balance sheet had been overstated by between £20 million and £25 million. It is the latest setback for a fashion retailer following three profit warnings and the resignation of Ray Kelvin as chief executive in March, following allegations of inappropriate behaviour. Black Friday shopping helped lift UK November high street sales by one per cent, according to the British Retail Consortium (BRC). Helen Dickinson, chief executive of the BRC, said UK consumers had been more prepared to open their wallets "for a little extra festive spending, as the spectre of a no-deal Brexit has been pushed back to after Christmas."

Columns of note

In The Atlantic, Dan McAdams, a professor of Psychology at Northwestern University, takes an in-depth look at President Trump’s narcissism, suggesting that it is one of the reasons that his poll ratings have remained steady despite the volatility of his administration. Whilst Trump’s personality and working style have resulted in a high turnover in aides, those fans who look upon him from afar, see only the aura he has created for himself. Writing in The Independent, Bethany Dawson criticises political parties for not making their general election manifestos fully accessible to disabled voters. Dawson highlights that 21% of adults have some form of disability and, whilst offering some qualified praise on the content of manifestos, argues that it is difficult for disabled voters to cast an informed vote without a consistent approach to easy-read, audio, braille or large print formats.

Markets

What happened yesterday?

US and European stocks dropped sharply yesterday as investors digested weaker manufacturing figures, President Trump’s decision to reimpose tariffs on metal exports from Brazil and Argentina, and reports that US-China trade talks have stalled on the back of US support for the Hong Kong protesters. The FTSE 100 was down 0.82% to 7,285.94 and the FTSE 250 dropped 0.54% to 20,700.21. Ocado led the fallers on the main index, down 7.4%, after the company divided opinion by announcing a £500 million bond issue. The online grocer said the funds would be used to construct new robotic warehouses. Flutter Entertainment led the risers, climbing 1.41%, closely followed by Imperial Brands and Auto Trader, which gained 1.16% and 1.14% respectively. Across the Atlantic, the S&P 500 was down 0.81% to 3,11.56, the Dow Jones Industrial Average dropped 0.83% to 27,818.67, and the Nasdaq fell 1.01% to 8,577.69. On the currency markets, the pound was down 0.38% against the euro at €1.1682 and up 0.11% against the dollar at $1.2947.

What's happening today?

Finals

Gooch & Housego

Hyve Group

Image Scan Holdings

Oxford Metrics

Interims

Collagen Solutions

Consort Med.

Falanx Group

Ramsdens Holdings

Solid State

Tekmar Group P.

Uls Tech AGMs

Falanx Group

Greatland

Oleeo Plc

UK Economic Announcements (00:01) Retail Sales (09:30) PMI Construction

Int. Economic Announcements (10:00) Producer Price Index (EU) (20:30) Auto Sales (US)

Did you know?

The Pringles can was designed by Fredric Baur. When he died, some of his ashes were buried in a Pringles can at his request.

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