For Theresa May ... The End is Nigh ...
Parliament had the chance to vote on eight different options to secure agreement on Brexit this week. The bonus ball in this week's lottery was a third attempt to agree to the Prime Minister's deal with the EU.
The deadline date to leave was extended to April 12th to accommodate the process. In the end no deal secured enough votes. The House did confirm however, that no deal was not an option. Nowadays that is considered to be progress.
Soft EFTA, EEA and Common Market two point zero, fared badly. No deal managed (well) (as if that would happen) along with a revocation of Article 50 disappointed. The option of a second referendum did quite well failing by just 27 votes. Just 90% eligible voted in this round.
The Labour leader called for an election to clarify the process. Tax increases and nationalization would be added to a free vote Brexit ticket. No one fell for that. Jeremy Corbyn, is no knight in shining armour, just a bearded lefty riding a Trojan horse.
The final round in the week was another shot at the Theresa May deal. Excitement mounted as Mogg and the Troglodytes indicated a change in stance. The DUP on the other hand were unwavering. The Prime Minister offered to resign to get her deal over the line. "Back me and I go" failed to convince the House. The option failed again, this time by 58 votes.
Numerical progress considered to be a great success, May is considering a fourth attempt to make it over the line. It is the "Duracell Bunny" strategy. Fatigue and ennui expected to take a toll on resistance. In the TV ad race, the rabbit may win the day but for the Prime Minister the end is nigh.
So what happens next? The customs union option secured 264 votes with just 272 against. The option failed by just 8 votes. The Prime Minister will have to go, along with her red lines, especially on the customs union. Inside the single market and the customs union makes sense. Government effort along with the opposition should focus on securing a Customs Union deal and soon to avoid a hard Brexit or a prolonged period of uncertainty and torment.
UK Investment Falls ...
Is uncertainty hitting investment? In the final quarter of 2018, business investment fell by 2.5% compared to prior year. Machinery and Equipment fell by 5%.
Overall investment fell by just 1%. Investment in building and structures actually increased by 2%. We tend to identify "Investment" as an increase in productive capital relating to machinery and equipment in manufacturing specifically.
Yet this accounts for less than 20% of total investment. The majority of expenditure is in "buildings, structures and housing". accounting for 60% of total investment. Investment in IP (Intellectual property) is 20% of total investment. The latter unchanged year on year, expenditure on IP is greater than the spend on machinery and equipment.
Certain sectors have fared badly. In the motor trade investment has fallen significantly over the past three years. Inward investment into the UK fell to £600 million in 2018, down by almost 50% from prior year. Who would invest in a gateway to Europe as a portcullis and drawbridge are installed?
This week the SMMT reported manufacturing output down by 15% in February down for the ninth consecutive month. 1.5 million cars were produced in the UK in 2018. 80% of output is exported, almost half of which is destined for the EU. Exports fell by almost 20% in the first two months of the year as markets slow in Europe and South East Asia. Structural reasons in diesel and ATVs explain the slow down in part. The motor trade will be one of the most vulnerable in a hard Brexit scenario.
Trump should come with a warning label...
Trump should come with a warning label, the headline in the Washington Post this week. The paper had been reviewing the financial statements used by the President to overstate his net worth when extending borrowing facilities.
Extra phantom floors on the Trump Tower, 800 phantom acres on a vineyard. Brand values inflating net worth by some $4 billion.
One of Trump’s statements came with a disclaimer saying “users of this financial statement should recognize that they might reach different conclusions about the financial condition of Donald J. Trump if they had access to a revised statement of financial condition prepared in conformity with generally accepted accounting principles.”
In a sense the President is quite open and honest in his mendacity. It is as if he doesn't really take it seriously. Like the stories of his golf. "Trump must pay his caddies well because he smacks his ball into the woods and it always reappears on the middle of the fairway". "A ball in the water appears on the side of the lake "It must be the tide" explains Trump
All revealed in Rick Reilly's new book, "Commander in Cheat" due out in May. Trump used to carry a spray can in his golf trolley. Hit a ball against the tree? The tree would be marked with an X for elimination before the next round if his handicap is to be maintained. "They cheat, I cheat, we all cheat" the rationale ... Yes a warning label, a great big warning label ...
That's all for this week, have a great week-end. 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 updates on the UK and World Economy.
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