8th October 2019

Written by Javier Maquiera, Associate

Edited by Sabina-Kadić-Mackenzie, Associate Partner

Good morning,

It seems that more than at any other time our worries about the world’s future are focused on issues such as the US-China trade war, news of an imminent global recession, and how our consumption habits are contributing to shrinking ice caps. These are of course well-founded concerns that require international cooperation, but it seems that in our state of anxiety about the state of the world, we have so far failed to appreciate the role local governments can play in translating these crises into global goals and then into powerful community action. Change is afoot though as mayors across the world take a leadership role in responding to the challenges of our times, placing them in a responsible and powerful position. This is at the root of why council chiefs in England and Scotland are pushing for more devolution to see through their own agenda, or perhaps why the Chinese government is considering delegating greater autonomy to local authorities to boost investment on infrastructure projects. Or even why Rory Stewart has decided to enter the race to be mayor of London – one of the most nationally and internationally visible offices in British politics – after running against Boris Johnson in the Conservative leadership contest. In terms of engagement, cities like Barcelona and Edinburgh have already taken the first step towards achieving the United Nations’ Sustainable Development Goals by 2030 through joining the CITIES CAN B programme; a global movement that encourages applicants to tackle sustainability, prosperity, and inclusivity challenges from a local standpoint.   Many governments and climate crisis practitioners have also started to pay attention to initiatives led by municipal and local authorities in developing countries. According to the World Economic Forum, performance-based climate resilience grants like the ones designed by the United Nations Capital Development Fund have the potential to introduce climate mainstreaming into local planning and budgeting, improving appropriate climate action and good governance. Ultimately, there could be something extraordinary in the way we experience our ordinary, community lives as “glocal” politics is increasingly seen as part of the solution to the crises of our times.

News

The United States has cleared the path for a Turkish invasion of north-eastern Syria after president Donald Trump announced the withdrawal of US troops from the border areas. The surprise move represents a major shift in policy which puts Trump at odds with his generals, diplomats, senior officials, and Kurdish allies, as the US abandons control of tens of thousands of Islamic State prisoners. President Trump has defended his decision, which could open the way for Turkey to launch an attack on Kurdish fighters, and has threatened to destroy the Turkish economy if Ankara goes “off limits.”

The UK government has called the European Union to “engage fully” with Boris Johnson’s Brexit plans in an attempt to deflect the blame on Britain’s EU counterparts. Johnson’s official spokesman said that the prime minister was waiting for the EU27 “to match the compromises that the UK has made” after the French president, Emmanuel Macron, set the end of the week as a deadline for progress towards Brexit.

More than 280 Extinction Rebellion activists were arrested in London yesterday as global demonstrations by environmental campaigners began in cities like Berlin, Amsterdam, and Sydney. Organisers are calling for urgent action on global climate and wildlife emergencies, and plan to shut down key sites in central London over the next two weeks. The prime minister labelled the protesters “uncooperative crusties” and has called them to abandon their “hemp-smelling bivouacs.”

Business & Economy

Unilever has announced plans to halve the amount of new plastic it uses in a bid to stay relevant to millennials and Gen Z-ers over the next five years. The owner of brands such as Surf and PG Tips, which is responsible for producing 700,000 tonnes of new plastic a year, will use more recycled plastic and find other alternative materials to cut back on what Alan Jope, the firm’s CEO, has called a “terrific material.” The Institute for Fiscal Studies has warned that emergency tax cuts and higher public spending to counterbalance the impact of a no-deal Brexit would rise government debt to its highest level since the mid-1960s. This could eventually lead to another period of austerity aimed at undoing an upward spiral of debt and deficit, according to the think tank. It also said that government borrowing is set to more than double in 2020 regardless of the outcome of negotiations with the EU. Pizza Express is reportedly in early talks with creditors to refinance two tranches of borrowing worth £665m combined. The debt situation review comes after the 470-store pizza chain made losses for the last two years, and its operating profits were more than offset by high interest payments on its £1.1bn debt pile. The company’s sales fell in both the UK and its 150 overseas restaurants in the last year.

Markets

What happened yesterday?

London stocks closed in the green on Monday, despite concerns over a global recession and anxiety ahead of this week’s US-China trade talks as Chinese officials are reportedly reluctant to agree to the US’ broad trade deal. The FTSE 100 ended up 0.59% at 7,197.88, while the pound was down 0.15% against the US dollar to $1.23154 and 0.13% weaker on the euro at €1.1215. In equity news, SIG shares (-15.90%) were down after the building materials supplier warned about profits, citing deteriorating markets caused by Brexit concerns and a weaker German economy. Just Eat (-0.54%) was also lower after a report saying that the food delivery company hosted thousands of restaurants with poor hygiene ratings alongside competitors Deliveroo and Uber Eats. Cruise operator Carnival (-1.17%) was hit by a downgrade at HSBC, while Sports Direct (-0.35%) continued to tumble as it said it does not plan to close a large number of House of Fraser stores in the new year following press speculation. On the upside, HSBC (+0.40%) closed higher after the announcement of a cost-cutting drive that would see 10,000 jobs axed up worldwide. Wall Street spent most of yesterday fluctuating between losses and gains as investors refocused on US-China trade tensions, finally finishing lower. The S&P 500 was down 0.5%, while the Nasdaq Composite ended 0.3% lower.

Source: FTSE 100, Financial Times

Whats happening today?

Finals

YouGov

Interims

Air Partner

UK Economic Announcements

(00:01) Retail Sales

International Economic Announcements

(07:00) Industrial Production (GER) (13:30) Producer Price Index (US)

Columns of Note

Writing in the Financial Times, Gideon Rachman argues that European countries should aim to defend their interests collectively through the EUagainst the rise of China, India, and Trump’s America First policies. According to Rachman, the fact that the world order envisioned by China and the US is based on power rather than rules leaves small European countries unprotected, calling for the EU to act as a superpower capable of shaping the world order. He concludes that the Union’s transition from a peace project to a power project can be realised if EU nations manage their differences and continue to pull closer together. (£) Tom McTague writes in The Atlantic that a general election would not end the Brexit crisis, as any vote held before the UK’s withdrawal from the EU would make reconciliation between all parties harder, worsening resentments and unleashing forces that may prove irreversible and uncontrollable. According to McTague, all the players in the Brexit game seem to be gambling that they can get their way, risking complications for businesses and dim prospects for future trade relations. (£)

Cartoon source: The Telegraph

Did you know?

A German court has ruled that hangovers are an “illness” in a case against the maker of an anti-hangover drink. In its ruling, the court said that food products – including drinks – cannot be marketed as being able to prevent or treat illnesses.

Parliamentary highlights

Today

House of Commons

Oral questions Justice (including Topical Questions) Ten Minute Rule Motion Details to be provided - Maria Caulfield Motion To approve a statutory instrument relating to the draft Plant Health (amendment etc.) (EU Exit) Regulations 2019 To approve a statutory instrument relating tom the draft environment and wildlife (legislative functions) (EU exit) (amendment) regulations 2019 General debate Baby Loss Awareness Week House of Lords Oral questions Removal of land mines laid in the Falkland Islands by Argentinean Forces in 1892 - Lord Trefgarne Retailer regulations on the sale of kitchen knives - Lord Naseby Financial sustainability of national museums and galleries - Lord Lee of Trafford Lessons learnt and procedural changes following reconsideration of the visa application by Dr Mu-Chun Chiang - Lord Greaves Debate Rural Economy Committee report: “Time for a strategy for the rural economy” - Lord Foster of Bath Royal Commission Scottish Parliament Topical Questions Ministerial Statement Scottish Government overview of ‘No Deal’ preparations The Proposed National Plan for Scotland's Islands Scottish Government Debate Supporting Innovation Members’ Business debate Gordon MacDonald: 50 Years of the Institute of Occupational Medicine 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 Ten Minute Rule Motion Prime Minister (Nomination) and Cabinet (Appointment) - Pete Wishart House of Lords No business scheduled. Scottish Parliament Portfolio Questions Stage 3 Amendments Transport (Scotland) Bill Members' Business S5M-18709 Sandra White: Charter of Rights for People with Dementia and their Carers 10th Anniversary