The election race is up and running. Boris Johnson is in the saddle, on the platform, in the hospital, in the school, on the case. Never in the field of human voting, have so many photo opportunities been offered, to so many, by so few.
Jacob Rees-Mogg has been shuttered for the campaign duration. A series of unfortunate remarks on LBC about the Grenfell fire, confined the Victorian exemplar to barracks in Somerset. Andrew Bridgen, MP for North West Leicestershire, was dispatched to defend the Mogg.
"Jacob is a good friend of mine. He is an extremely compassionate, intelligent human being". He just doesn't get to meet many poor people. "I think of either of use were in a fire, we would ignore the advice of the Fire Brigade and leave the burning building".
Nanny would advise to tie silk sheets together with lace handkerchiefs, hang them from a window and ask the gardener to test the escape route before toffs lives were put at risk.
"We want clever people running the country and that is why he is in a position of authority", Bridgen explained. As if that were a reason! By the following morning, Bridgen was forced to recant. "I realize what I said was wrong and caused a great deal of distress and offence". [especially in campaign headquarters]. Jacob is not an extremely compassionate, human being ...
Sajid Javid, had his moment in the limelight. The Chancellor announced an easing of fiscal constraint to accommodate an increased in deficit spending of some £20 billion per annum. The spending would be allowed to rise to around 3% of GDP. A modest expansion compared to Labour largesse running into hundreds of billions.
Moody's fired a warning shot. The UK's credit rating has been cut over concerns about public sector finances and fears Brexit could damage economic growth. "No matter what the outcome is of the general election, the agency sees widespread political pressures for higher expenditures with no clear plan to increase revenues to finance that spending".
The OBR forecasts were withheld during the purdah period. The Treasury were not allowed to comment on Labour spending plans. The Bank of England released the November Monetary Policy Report. The MPC agreed to hold rates. Two of the nine members of the MPC voted for a rate cut.
The Bank expects growth of around 1.3% this year and in 2020 with inflation set to remain below the 2% target. It must have been a difficult forecast to put together.
In the absence of any clear resolution about the structure of parliament, spending plans, borrowing targets and the continued uncertainty about Brexit, Governor Carney may well be pleased this will be his first and last submission of the "Monetary Policy Report".
Keep America Great ...
Let's keep America Great! The U.S. electorate may decide to vote Democrat. The Republicans faced a setback in Kentucky and Virginia this week as the impeachment process rumbles on.
The President may be obsessed about the Whistle blower but the noise is rising to a cacophony as evidence flows in the impeachment inquiry.
This week, Fiona Hill, former special assistant to the President on European and Russian affairs, gave evidence behind closed doors in a ten hour session. Evidence was also provided by Lt Colonel Alexander Vindman. Vindman is the U.S. army lieutenant colonel serving as the Director of European Affairs for the National Security Council.
From both testimonies it is clear, there can be no doubt, Trump sought a quid pro quo with the Ukraine. $400 million of military aid was withheld pending investigations of American politicians. A visit to the White House was also on the table assuming officials in the Ukraine complied.
Gordon Sondland U.S. ambassador to the European Union, has admitted in deposition, military aid was contingent on the investigations Trump desired. Mick Mulvaney, Trump's acting chief of staff was complicit in the arrangements to secure a meeting in the Oval office.
Rudy Giuliana and associates, Igor Fruman and Lev Parnas, were involved in the skulduggery. Igor and Lev were arrested last month attempting to leave the country with a one way ticket. The may face federal charges of funneling foreign money to U.S. politicians, while trying to influence U.S. Ukraine relations.
For John Bolton, national security advisor to Trump until September this year, it was all too much. Bolton had warned Giuliani "is the hand grenade which will blow us all up" Bolton repeatedly told staff and colleagues in the administration that "nobody should be talking with Rudy Giuliani".
Chaos in the White House continues. Later this month will be published "A Warning".
The book’s author says Trump moves from one crisis to the next, “like a twelve-year-old in an air traffic control tower, pushing the buttons of government indiscriminately, indifferent to the planes skidding across the runway and the flights frantically diverting away from the airport”.
Turning to Trump’s early morning Twitter rants, the author writes: “It’s like showing up at the nursing home at daybreak to find your elderly uncle running pantless across the courtyard and cursing loudly about the cafeteria food, as worried attendants tried to catch him.
Just on year to the 2020 election ... a chance to Keep America Great ... which way will the American public vote? Will Trump be on the ticket ...
Moscow 2019 ...
We are off to Moscow next week as a guest of Gazprom. I shall be speaking at the fourth annual leasing conference. This year’s main theme of the Conference is “Leaders’ Strategies, The fight for new markets. I shall be speaking on “How companies adapt their marketing strategies under the influence of digital disruption”.
Want to know more, we shall be updating our work on digital disruption to include the latest “Moscow Chapter” before the end of the month!
That's all for this week, have a great weekend. We will be back with more news and updates on the 23rd November, John
And so it came to pass. The EU granted an extension. Boris Johnson called for an election. The house voted voted 438 to 20 to deliver the third trip to the hustings in less than five years. So much for the fixed term parliament act, members of parliament appear to be as disillusioned with the process, as the general public at large.
Boris Johnson is ready for action. The Tory platform is clear. We will be leaving the EU on the 31st January. No deal Brexit is off the table. The deal is done. "Oven ready, just slam in the microwave", the rather unappealing gastronomic option. The Conservatives are way ahead in the polls. The election will deliver a clear working majority in the house, or so it is thought.
Much can go wrong over the next six weeks. Nigel Farage plans to disrupt the "Bake Off". The President of the U.S.A. intervened. Nothing much to worry about at home, Trump dropped in to the Farage LBC radio show, to offer support. Farage-Johnson would be an unbeatable dream ticket. The deal with the EU may leave the UK free to trade with the rest of the world but a US trade deal would be virtually impossible, he explained.
The UK would have to accept chlorinated chicken, hormone injected beef and must be prepared to deliver the dirt on Joe Biden. Farage took great delight in outlining his demands for a place on the ticket. Johnson had no problem refusing. This is not the time to be associated with a hard Brexit and no time to be associated with a President on the verge of impeachment.
The race is on, the vitriol will pour, promises will be made, excessive spending plans will be revealed, the IFS and the OBR will explain the funding shortfall. The one consolation, it will all be over by Christmas and then we can start all over again ...
House Prices in Stasis ...
Trump and tariffs, Boris and Brexit are the major issues taking their toll on economic activity. Now we add impeachment in the US and an election in the UK to add to the confusion about just what happens next.
Nationwide this week revealed house prices were pretty flat in the month of October. Annual house price increased have been below 1% for eleven months in a row. Robert Gardner, chief economist explained, “Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensifying of Brexit uncertainty."
Should we worry so much about house prices? Not really. A slow down in prices contrasts with a near 4% growth in earnings in the latest date. The Nationwide price to earnings ratio is easing off recent highs. The move down from the recent 6.0 highs compares to a long run average of 4.5. A slow down in prices will improve affordability and housing access for first time buyers. The slow down in price rises may improve volumes into the New Year as the political uncertainty clears
Further news from the motor trade confirms a further drop in production in the month of September. Output fell by 4% in the month, down by 16% in the year to date. 80% of manufacturing is destined for the export market. Over half of which is shipped to the EU.
This week, Fiat, Chrysler, Peugeot, Citroen and Vauxhall announced a merger that could see the enlarged group become the world’s fourth-largest car maker. The news increases the prospects of plant rationalisation in Europe and concerns about Vauxhall commitment to the UK.
Manufacturing took a further hit in the latest PMI data for October. We still expect growth in the UK to be around 1.2% for the year as a whole. Most analysts expect a further slow down in 2020 to just 1%. No recession in sight, the surprise next year may yet be to the upside, if the political uncertainty clears ...
The Genius of Our President ...
Excitement in the U.S.A. is building. The impeachment process is underway. John Kelly, the President's former chief of staff had explained to Donald Trump, the importance of not appointing a yes man to the role. A yes man, prepared to follow the Presidents whims and wishes, would lead to an inevitable impeachment, he warned. And so it came to pass. The Democrats moved to impeach.
The White House was quick to issue the riposte. Stephanie Grisham, Director of Communications, explained "John Kelly, was unequipped to handle the genius of our President".
Kim Jong-un was impressed, firing off a few short range missiles in celebration, a reminder there was still a Nobel Peace Prize on offer on the Korean peninsula. No prize for economics in the U.S.A. Growth slowed to just 2% in the third quarter as business investment slowed. Government borrowing increased to $1 trillion dollars in the financial year, the unemployment rate increased to 3.6% in October.
The Fed cut rates by a further 25 basis points mid week placing the blame on trade uncertainty and the Trump tariff plans. 128,000 jobs were added to the payroll in October, assuaging fears of recession in the current year.
We expect growth of just 2.3% in 2019, analysts expect a further slow down to just 1.8% in 2020. It could have been and should have been so much better. The economy was unequipped to handle the genius of the President. The genius was unequipped to handle the complexity of the economy.
This week the Trumps announced they are changing residence from New York to Florida. The tax breaks may be better, but is also makes for a better retirement home. That may be sooner rather than later if the Democrats have their way ...
That's all for this week, have a great weekend. We will be back with more news and updates next week!
The Saturday Economist
John Ashcroft publishes the Saturday Economist. Join the mailing list for FREE weekly updates on the UK and World Economy.
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