No money to spend ...
It was to have been The Chancellor's big moment. The budget date set for the 6th November. Bonfire of the Sanities, the government was set on a spending spree to cut taxes and boost expenditure on health, education, defense and almost everything else for that matter. No time to fix the roof, the objective to please the electorate and return to power with a working majority to empower the front bench to back foot remainers in the house.
More police in the capital, mainly to escort members of parliament in and out of the office. It would have been a great occasion, with a few fireworks for good measure. Alas it was not to be. The Tory timetable began to fall apart as the Prime Minister failed in his attempt to leave the EU by the end of the month. Boris Johnson was committed to taking the EU out of the EU on Halloween. He had also committed not to ask for an extension to the Article 50 period.
The compression timetable to rush through the withdrawal agreement through the house was rejected. In the latest twist, the government announced on Thursday, the PM will let MPs give proper consideration to the withdrawal bill, provided the House agrees to a general election on the 12th December. This "Quid Pro Quo" a "non sequitur", is causing confusion in the direction of travel for Labour and Tories apart.
The prospect of an election in December, rendered a November budget redundant. Probably just as well. The latest borrowing figures suggest the government is set to borrow over £50 billion in the current financial year. An increase of over 5% in spending in the year to date, led to a borrowing increase to £40 billion in the first half of the year compared to just £30 billion last year. Borrowing will exceed the 2% of GDP target attributed to fiscal prudence. No real room for tax cuts or for an increased in spending for that matter. The Chancellor will have to take time out to re write the guidelines for budget planning.
No time to fix the roof, the Chancellor is carrying an umbrella as he leaves Number 11 Downing Street. It is a subtle message about the financial largesse to follow perhaps ...
The extension will just have to wait ...
Want an extension? You will just have to wait says Donald Tusk, President of the European Council. Having asked for an extension that he didn't want, the Prime Minister has introduced the prospect of an election that he probably doesn't really need before the end of the year at least.
Make a decision on the election and we will make a decision on the extension, says the EU. Agree the withdrawal agreement and we will agree to an election say the opposition parties. Agree to the election and we will provide an extension to the period to discuss the withdrawal agreement says the Mogg. "I may not agree to anything" says Macron the President of France. "Rien ne va plus" as the roulette wheel spins.
Boris and Brexit, Trump and Tariffs have created an overhang on business and consumer confidence in the UK, Europe and the U.S.A. Now among the uncertainty we add the problems of an election in the UK and impeachment in the U.S. In the UK, the Tory hard liners are swayed by a 35% rating in the poll which could deliver over 400 seats in the house. The Labour Party could end up with just 150 seats. The LibDems would have 32 seats. Johnson would be returned victorious to Downing Street with "Carte Blanche" to deliver Brexit on whatever terms of choosing.
Be careful what you wish for must be a concern to some in government. The Tories have a great chance to screw up the manifesto once again. Support for fox hunting and cock fighting may not feature this time. Hopefully the fiscal attraction of an amnesia tax will be forgotten.
By the end of next week, it seems probable, the EU will grant an extension to the end of January next year. The House will debate the withdrawal agreement with amendments tacked on to the initial agreement. No budget in prospect before the end of year and not much chance of an election either. The uncertainty will continue into the New Year ...
Trump and the Phony Constitution ...
"You don't have to be a stable genius to work here but it helps." So reads a sign in the White House. It serves as a warning to all. Maybe not for much longer.
The impeachment process is accelerating. Conviction in the House is a given. The President's moves suggest Republican support in the Senate may be wavering. This week Trump complained about the phony emoluments clause embedded in the U.S. constitution.
The President was obliged to reverse his decision to take the G7 meeting to his own Trump National Doral Resort in Miami, Florida. The media and Democrats were to blame for the backlash claimed the President. A few calls from Senior Republicans precipitated the process. The President was clearly in breach of the "emoluments" clause in the constitution. A President benefiting financially from executive decisions, Trump could see nothing wrong with that. "Being President has cost me between $3 and $5 billion dollars" claimed the President. What's wrong with a little give back? "I should be allowed to keep my foreign gifts".
Mick Mulvaney acting head of staff, explained "The President still considers himself to be in the hospitality business". The founding fathers would be confused by the claim. Doral is struggling and could do with a little cash, the more likely explanation. The Trump empire is seeking too ditch the D.C. hotel, concerns about the Trump lost revenue claims begin to accelerate.
The President is surrounded by doubtful advisers now the adults have left the White House. Mulvaney agreed the Ukrainian conversation was a quid pro quo. When asked about the political interference in foreign policy he stated "That's what we do!"
This week John Bolton revealed he considered Rudy Giuliania to be a "hand grenade which will blow us all up". Now the "personal attorney" is himself looking for a "personal attorney". Giuliani may be heading for jail.
The President's personal attorney is not the only weapon in the arsenal with a penchant for self destruction. The President created additional outrage suggesting the impeachment process was akin to a lynching. The decisions on Syria, Ukraine and Doral this week will make the Democrat task much easier. The process is scheduled to go public in November ... "
The Democrats offer a fair trial and a first class hanging, not literally of course!
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.
The material is based upon information which we consider to be reliable but we do not represent that it is accurate or complete and it should not be relied upon as such. We accept no liability for errors, or omissions of opinion or fact. In particular, no reliance should be placed on the comments on trends in financial markets. The presentation should not be construed as the giving of investment advice.