5th September 2019

Written by Scott Reid (Associate Partner)

In this morning's briefing, Scott Reid muses on the quirks of our complex political system (with some stonking metaphors thrown in for good measure).

Good morning,

Right, I think I’ve got it this time.

So, Boris Johnson failed to get the election he supposedly didn’t want, only after Jeremy Corbyn didn’t in the end vote for the election that he supposedly did want?

We may scoff, but surely we’re at the point of being excused for mistaking the reality of our political situation as one long-running gag where the punchline isn’t all that funny. I for one have had it with the chicken metaphors. In our game of General Election ‘chicken’, it is one thing for the prime minister to land a questionable zinger on Corbyn as the only “chlorinated chicken” on the front bench, but quite another to discover The Sun’s frontpage follow-up, which would put best of us off our cornflakes.

In the end, Johnson’s numbers weren’t even close. MPs voted by 298 to 56 for an early election, falling short of the two thirds majority – or 434 votes – which would be needed to overturn the Fixed Term Parliaments Act. Meanwhile, the rebel alliance have succeeded in sending their bill onto the Lords, that if passed (a likely prospect following cross-party agreement late last night) would compel the prime minister to seek a further three-month extension to Article 50 unless he can either secure a new agreement with Brussels by October 19th or parliament agrees to a no-deal Brexit.

Picking over the fallout from yesterday’s votes, Johnson’s goose seems cooked, leading we puzzled onlookers to ask – was there really any method in the madness? The plan devised by Number 10 chief strategist, Dominic Cummings – whose reputation for scheming is somewhere bordering on a Scooby Doo villain right now – seems to still focus on forcing a ‘people versus parliament’ election. Given the course of the last 24 hours, that election will probably arrive later than we thought this time yesterday, but it is still a contest Cummings thinks he can win.

It is a brilliant (if gauling) quirk of our first past the post system that means Johnson, having sent most of the Tory old guard to the dustbin and insulted just as many liberal Remainers, could still sneak a majority with not much more than 30% of the vote. After that, the rest is history. As long as his opposition remains divided and Johnson can still muster support from a third of the electorate with the slightly reworked message of ‘no-deal, do or die (at a date TBC)”, then the game's a bogey.

News

Twenty people have died as a result of Hurricane Dorian’s path through the Bahamas. Officials strongly expect that number to increase, however, with Bahamian prime minister, Hubert Minnis, declaring Dorian an “historic tragedy.” The United Nations has estimated that around 70,000 residents in the worst-affected northern Bahamas region remain in need of relief assistance.

Mass protests continued in Hong Kong last night despite an announcement that chief executive Carrie Lam intended to drop plans to legislate for a controversial extradition bill. Carrie Lam’s televised announcement was quickly rejected by the protestors, who have set out five key demands which remain to be satisfied, including Lam’s resignation, prisoner amnesty and greater democratic freedoms. According to The Times, some activists are calling for a “lose-lose” strategy, attempting to incite Chinese intervention in Hong Kong in order to impact Beijing’s global reputation. (£)

The US state department has confirmed it offered millions of dollars to the captain of an Iranian oil tank which the US intended to seize. The Adrian-based Darya 1 was temporarily impounded by UK authorities in July on suspicions of transporting oil to Syria, but was later released after Iran gave assurances about its destination. Reports of a cash offer first appeared in the Financial Times on Wednesday, and were confirmed last night.

Business & Economy

Chancellor Sajid Javid delivered his latest Budget spending review yesterday, promising a “decade of renewal” via boosted investment. The review’s main points included £2 billion investment in Brexit delivery plans, £7.1 billion spent on schools, and a further £1.5 billion given to local authorities for social care.

Marks & Spencer has fallen out of the FTSE 100 for the first time since the index’s launch in 1984. The retailer has lost 40% of its share value during the last year, sliding further this week as speculation over a symbolic exit from the index intensified. Analyst consensus has focused on the decline on M&S’s clothing division, which has been slow to adapt to younger, online audiences.

The Bank of England has softened its predictions for the severity of a no-deal Brexit on the UK economy. Speaking to the Treasury Select Committee yesterday, governor Mark Carney said the Bank now believed GDP would fall by 5.5% by the end of 2022 as a result of no-deal, where previously this has been estimated at around 7.5%. The Bank’s revised assessment included a possible seven per cent rise in unemployment and a peak in inflation at 5.25%.

Meanwhile, a key services sector report yesterday indicated the UK economy may be falling into recession. According to data from Markit, output in the UK services sector contracted in August, also reporting the lowest level of business confidence in three years. The data indicated the UK economy was on course to contract by 0.1% in the third quarter of 2019, following a 0.2% fall in April – June.

Markets

What happened yesterday?

While Westminster was consumed by politics, the stock and currency markets saw small gains, with the FTSE 100 closing up 0.6% at 7,311.26 points. Sterling was also higher on Wednesday, up by 0.9% on the dollar at $1.22, and by 0.5% on the euro at €1.11.

Away from the noise of Brexit in the UK, Asia-based Prudential (+3.60%), Standard Chartered (+2.98%) and Burberry (+1.74%) all finished higher after Hong Kong’s leader, Carrie Lam, withdrew an extradition bill that has provoked months of protests.

Glencore (+2.92%), Anglo American (+2.54%) and BHP (+2.37%) also finished higher with the rise of copper and iron ore prices. Meanwhile, housebuilder Barrett Developments (-3.60%) fell, posting an increase in full-year pre-tax profits, but lower revenues than expected.

Whats happening today?

Finals

Alumasc Group Avation Beeks Fin Genus Go-Ahead Mcbride

Interims

Curtis Bks Enquest Gem Diamonds Di Melrose Mpac Group Plc Pphe Hotel

AGMs

Anglesey Mining Carpetright Chelvertn Uk City Of London Carphone Fih Group Myanmar Strat. Sme Credit Real

Intl. Economic Announcements

(07:00) Factory Orders (GER) (13.30) Continuing Claims (US) (13.30) Initial Jobless Claims (US) (14.45) PMI Services (US) (15.00) Factory Orders (US) (15.00) ISM Non-Manufacturing (US) (15.30) Crude Oil Inventories (S)

Columns of Note

In The Times, Jenni Russell offers an alternative opinion on the likely strategy of Boris Johnson and Dominic Cummings to achieve a general election. Although the number of rebel Tories was much higher than Downing Street would have anticipated, Russell suggests it makes little difference to the longer term appeal, and the likely chances of success, for a Conservative campaign to pitch the next general election as a ‘people versus parliament’ vote.

In the Financial Times, Aleksandra Wisniewska looks at the impact of Airbnb on European city centres. Looking at the rise of the San Francisco-based letting company across four cities including Lisbon, Barcelona, Florence and Athens, Wisniewska asks whether cultural, social and economic damage can be undone, and whether regulation is the right vehicle for improvement.

Did you know?

In 1833, Britain used £20 million, 40% of its national budget, to buy freedom for all slaves in the Empire. The amount of money borrowed for the Slavery Abolition Act was so large that it wasn’t paid off until 2015.

Parliamentary highlights

Today

House of Commons

Oral questions

Exiting the European Union (including Topical Questions)

Business Statement

Business Questions to the Leader of the House - Mr Jacob Rees-Mogg

Select Committee Statement

Twentieth report of the Science and Technology Committee on Clean Growth: Technologies for meeting the UK's emission reduction targets, HC 1454

Backbench Business

Debate on a Motion on The Future UK Shared Prosperity Fund - Drew Hendry

Debate on a Motion on The British Housebuilding Industry - Siobhain McDonagh

Adjournment

Skerne River and the Discover Brightwater project - Phil Wilson

House of Lords

Oral questions

Prevalence of sexually transmitted infections in England over the last ten years - Lord Black of Brentwood

Funding of the National School Breakfast Programme - Lord Curry of Kirkharle

Funding of the National Maritime Information Centre and the Joint Maritime Operations oordination Centre - Lord Mountevans

Impact of a no-deal Brexit on the supply of medicines and the staffing of the NHS - Baroness Thornton

Debate

Reforming the management and treatment of offenders in prison and the community - Lord Ramsbotham

Threats posed by pests and diseases to native trees in the UK - The Earl of Kinnoull

To move that this House takes note of Report Pursuant to Sections 3(1), 3(6), 3(7), 3(8), 3(9) and 3(10) of the Northern Ireland (Executive Formation etc) Act 2019; Report Pursuant to Section 3(13) of the Northern Ireland (Executive Formation etc) Act 2019; Report Pursuant to Section 3(12) of the Northern Ireland (Executive Formation etc) Act 2019; Report Pursuant to Section 3(11) of the Northern Ireland (Executive Formation etc) Act 2019 - Lord Duncan of Springbank.

Scottish Parliament

General Questions

First Minister’s Questions

Members’ Business

Doors Open Days 2019 - Kenneth Gibson

Portfolio Questions

Transport, Infrastructure and Connectivity

Ministerial Statement

Tackling Drug Related Deaths

Scottish Government Debate

Avoiding a No Deal Exit from the EU

TOMORROW

House of Commons

No business scheduled

House of Lords

No business scheduled

Scottish Parliament

No business scheduled