Daily Briefing: 6th December 2016
by Susan Arthur
We had good and bad news about the economy yesterday. On the one hand, data from the purchasing managers’ index (PMI) showed that Britain should finish the year as the fastest growing economy of seven leading nations. On the other, Mark Carney, the Bank of England Governor, said that Britain was enduring its “first lost decade since the 1860s” and that free trade had hurt the poor and fostered “isolation and detachment”.
It’s interesting to see a clear link between general anger with the establishment from an economic, rather than a political, point of view, for a change. Carney’s comments suggest we’ve been through a new kind of industrial revolution and that growth in our technology economy has served to broaden, not lessen, the gap between the rich and the poor: “The combination of open markets and technology means that . . . a globalised world amplifies the rewards of the superstar and the lucky. Now may be the time of the famous or fortunate, but what of the frustrated and frightened?”
The gap between us is almost visible in how the papers have covered the speech. The Daily Mail headline screams: “Bank Chief: Robots to steal 15m of your jobs”, in contrast to The Telegraph and The Times, which lead with “Britain set to be fastest growing economy in G7” and “Carney’s warning over ‘lost decade’” respectively.
The Governor’s comments have given me new food for thought as 2016, the year when the voice of the people was heard so loudly, draws to a close.
In a speech today, Transport Secretary Chris Grayling will announce plans to loosen Network Rail’s control of rail infrastructure and give more power to train operators in parts of the UK. Grayling wants to form “integrated operating teams” that will bring together train operators and Network Rail at East Midlands Trains and South-Eastern when new franchises take over in mid-2018. A “deep alliance” operates in Scotland already, and Mark Carne, Network Rail chief, has said that the company already has plans to devolve significant power to individual routes. We’re likely to see resistance to this announcement today from the trade unions.
The first day of the UK Government’s appeal against the High Court’s Article 50 ruling was heard in the Supreme Court yesterday. The court’s president, Lord Neuberger, hit back at accusations that justices are straying into politics as he opened the hearing, and insisted the case was to do with legal issues, and that judges would decide the case according to law. The hearing is expected to continue for the rest of the week.
BUSINESS & ECONOMY
Retail banks across the globe spent $200bn on consultancy fees in the aftermath of the financial crisis as they battled to keep up with changing regulations, and to return their businesses to profit. This is according to data calculated by researcher ALM Intelligence, based on information about fees paid by a sample of banks.
The government of Iceland has announced it will proceed with legal action against the UK retailer Iceland after talks with the supermarket failed late last week. The Icelandic government has described the issue as “a matter of principle”.
Tata Steel says it has made significant commitments to more than 4,000 workers at the Port Talbot steelworks in South Wales, which has spent the past eight months under threat of closure. Rather than close one of the two blast furnaces, it is believed that Tata plans to keep staff employed into the next decade.
What happened yesterday
In the wake of the ‘no’ vote in the Italian referendum, Italian banks suffered a sharp sell off. However, in the United States financials and industrials helped to push the Dow Jones industrial average to a new intraday high of 19,274,85, and a record close of 19,216.24, up 0.24 per cent, its 18th record close of the year. This was partly down to optimism about strengthening oil prices and partly as a result of Donald Trump’s promise to slash corporate taxes and embark on an infrastructure spending spree when he takes the Presidential chair in January.
The FTSE 100 index of leading shares in London rose by 0.24 per cent to close at 6,746.83 points.
OMG, On the Beach Group, RWS Holdings
Consort Medical, Gateley (Holdings), Imagination Technologies Group, Imaginatik, Iomart Group, OPG Power Ventures, Real Good Food, Vianet Group
DX Group, Jubilee Platinum, Kalibrate Technologies, Mila Resources, Trading Emissions
International Economic Announcements
Factory Orders (GER), Gross Domestic Product (EU), Balance of Trade (US), Factory Orders (US)
COLUMNS OF NOTE
Richard Walker, writing for Capx, suggests we should calm down about Italy’s banking system, pointing out that while the banks have problems, they are “solvable” and that the markets’ reaction reflects this.
Gideon Rachman in the FT is more concerned that the instability in Italy could pose a severe threat to the survival of the EU, in part because Italy is one of the six founding members of the group of nations, and because the country still uses the euro, which will feel the impact of any collapse in Italy’s banking system.
The Conversation argues that we can’t just blame Facebook for “fake news” — we also need to look at how we use the technology, and suggests that we ourselves create a “filter bubble” through our actions.
ON THIS DAY
In 1998, Hugo Chávez was elected President of Venezuela. Chavez served three parliamentary terms and was appointed for a fourth, which he was unable to serve as he died in 2013 after a battle with cancer.
House of Commons
Justice, Including Topical Questions
Ten Minute Rule Motion
Children of Armed Personnel (Schools Admission) — Anne Marie Trevelyan
Health Service Medical Supplies (costs) bill — Report Stage — Jeremy Hunt
Health Service Medical Supplies (Costs) bill — 3rd reading — Jeremy Hunt
Rail Services in Southend- Sir David Amess
Children and Social Work Bill [HL] — 2nd reading — Justine Greening
Children and Social Work Bill [HL] — Programme motion — Justine Greening
Children and Social Work Bill [HL] — Money resolution — Justine Greening
Support for people with terminal illness — Catherine McKinnell
House of Lords
Enhancing the role of community pharmacies in providing NHS services to patients and the public — Baroness Cumberlege
Government plans with regard to pensions tax relief; and whether they are planning to introduce a pensions ISA — Lord Goddard of Stockport
Rise in the number of children and young people being treated for self-harm — Bishop of St Albans
Public Health England’s review on the consequences of alcohol abuse, and the implementation of minimum unit pricing — Lord Brooke of Alverthorpe
Higher Education and Research Bill — 2nd Reading — Viscount Younger of Leckie
14:00 to 18:00: Meeting of the Parliament
Parliamentary Bureau Motions
Ministerial Statement: Excellence and Equity in Scottish Education
Scottish Government Debate: Support for Scotland’s renewables
Parliamentary Bureau Motions
Members Business — Johann Lamont: Care Tax in Scotland