Parliament is falling apart according to Matt Chorley in the Times today. The Houses of Parliament surrounded, not by demonstrators but by scaffolding. Support structures, in place, not to effect repairs but to catch the bits that are dropping off.
A warning message was sent to MPs this week, debris had fallen into the colonnade connecting Portcullis House with the Palace of Westminster. More effective than a three line whip, the objective was to move members of parliament away from danger. Crisis avoided. They moved as one, just as the nation is demanding on Brexit.
Toilets are blocked, not the only impasse in the house. Mice are rampant, like naughty back benchers in debate. Proceedings were suspended. Water was pouring through the roof of the Commons Chamber. Relief abounded with the realisation it was rain, not sewage. falling onto the heads of honourable members.
Outside the chants continued, "What do we want?" "Not quite sure" "When do we want it?" "Not just yet." Theresa May has written to the EU to ask for an extension to the Article 50 process. Allegedly the date is set for the 3oth June 20**. We remain confident the deal will be done in this century at least.
In another place, the dream team awaits to resolve the crisis. Jeremy Corby and Shadow Brexit Secretary Keir Starmer were invited by the Prime Minister to join cross party talks this week. The invitation followed a mammoth seven hour cabinet meeting on Tuesday. Hopes were raised of a composite customs union deal.
Hopes were dashed by the end of the week. Labour claimed Theresa May had failed to offer real change or compromise. Cross party talks had become an exercise in listening to an increasingly isolated leader.
The Mogg tweeted "If a long extension leaves us stuck in the EU, we should be as difficult as possible. We could veto an increase in budget, obstruct the EU army and stop eating French cheese". I made the last bit up! Parliament is falling apart, there is no scaffolding to catch the bits that are set to fall off, in the not too distant future.
UK Car Sales Fall ...
Car Sales fell in March according to the latest data from the SMMT. Registrations were down by over 3% in the month and 2.4% for the year to date.
Mike Hawes Chief Executive made a plea to government. "We urgently need an end to political and economic uncertainty by removing the threat of a no deal with Europe." "We need to agree a future relationship that avoids trade friction, increasing costs and prices". Yes Amen to that.
March is a critical month for the industry. The plate change drives buyers into showrooms. Car demand is often seen as a bellwether for consumer confidence and the health of the economy. Not so much this time round. The trends in sales are much more structural rather than cyclical. Petrol sales were up by 5%. AFVs were up by over 7%. Diesel sales fell by over 20%. Consumers are confused by the diesel story. The move to hybrids and plug ins, is accelerating. The industry is struggling to cope with the demand for greener driving.
Sit back and relax. In a new report, the SMMT reckons the UK consumers could be among the first to benefit from self driving vehicles. Lives will be saved and accidents avoided in an industry switch worth some £62 billion by 2030.
The ability to achieve this will be dependent on securing a deal with the EU which benefits the automotive industry. It doesn't seem to be too much to ask but fears abound of a no deal prospect. Strange that some on the right, still think this is a great idea ...
US Jobs Rally In March ...
In the US, 196,000 jobs were added to the payroll numbers in March. The move was ahead of expectations, reducing fears of a slow down in growth for the year. The unemployment rate held at 3.8%, earnings eased back slightly to 3.2%.
In the first three months of the year, job creation averaged 180,000. The February data was an anomaly. "February was a blip, we aren't seeing any decrease in demand for workers" said one of the leading recruitment firms. Recruitment difficulties are increasing. Wages are set to rise further in the US as in the UK.
The US economy grew by an estimated 2.9% in 2018. In the second half of the year, the average rate of growth was 3.0%. That may be as good as it gets but we do not expect any radical slowdown in growth for the year. The Fed has reversed stance on more rate hikes for the moment. Ten year US rates moved back towards 2.5%. The yield curve is no longer inverting. The Fed expects growth to slow but we expect an upward revision for growth and monetary policy.
On Friday, The President called for the Federal Reserve to cut rates and resume QE. The Chairman of the Fed Jerome Powell received some assurance on job security from the truculent Trump this week. "I guess I am stuck with you," Trump said in a phone call. The administration would like to see a cut in rates of 50 basis points. "The economy would climb like a rocket ship" claimed Trump.
Trump is proposing appointments to the Fed including Wall Street journalist Stephen Moore and Pizza executive Herman Cain. Both have expressed agreement with Trump on the need for rate cuts. Both have called for a return to the gold standard. Both are rated with a high level of economic illiteracy.
The President threatened to close the border with Mexico this week, then dialed back the threat with a possible 25% tariff on car imports if the hordes on the frontier were not reduced. The independence of the Federal Reserve is under threat. Column inches and pizza toppings do not provide adequate preparation for the custodians of monetary policy in the most powerful economy in the world.
An economy climbing like a rocket ship, with a growing trade deficit and soaring government borrowing will require emergency rate hikes ere to long if any semblance of normality is to be restored.
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
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