Fox secures Fish ...
The prospects for truly global Britain, forging an invisible chain for free trade and democracy, received a real boost this week. Liam Fox, the international trade secretary was able to announce a trade deal with the Faroe Islands.
There has to be some payback for the £1 million plus spent by his department on overseas trips and missions to valuable markets abroad. Almost 400 trips have been made in the period since the referendum.
Talks with China may not be too relaxed following news the Defence Minister Gavin Williamson is to send his brand new aircraft carrier to patrol the Pacific in 2020. "The UK is a global power with truly global interests," Defense Minister Gavin Williamson said "Since the new global great game will be played on a global playing field, we must be prepared to compete for our interests and our values far, far from home."
"China is developing its modern military capability and its commercial power," Williamson said. Tensions in the Pacific are set to rise as China escalates claims in the South China Sea. Trade talks may be put on hold as gunboat diplomacy returns to Britain's foreign policy arsenal.
For the moment, the Faroe islands will feature in truly global Britain's future. Total trade with the Faroe Islands was worth about £250 million last year. Fish and crustaceans made up the vast majority of imports, worth over £200 million. Total exports in return were worth about £6 million.
Three additional deals have also been secured at the moment, to offset the loss of the EU's forty deals with some 70 countries. Switzerland, Liechtenstein and Chile feature as part of the "New Deal" scenario. Still much work to be done to secure the trading future of the UK ... for the moment the Fox has secured fish, with some crabs and prawns for starters ...
Retail Sales Bounce Back ...
Retail sales bounced back in January, following tales of a dismal period over Christmas, Sales volumes increased by 4.2% year on year. Sales values increased by 4.5% in the same period. Online sales increased by 10% accounting for 19% of total retail sales.
Clothing and footwear sales were up by over 5%. Household goods store experienced little or no growth. It is easy to fall into conventional narrative of a slow down in household spending as consumers fret about Brexit. It didn't really happen in January.
According to the latest GfK Consumer Confidence survey for January, consumers may be worried about the economy but they are less concerned about household prospects for the moment. It remains for many a good time to save and spend. A strong job market, rising vacancies, and earnings rising ahead of inflation will maintain activity in the short term.
The falling rate of inflation will continue to boost real incomes. Inflation CPI basis fell to 1.8% in January from 2.1% prior month. The headline rate is flattered by a big fall in goods inflation to 1.3%. Service sector inflation was 2.5%. Service sector inflation together with Sterling weakness is one reason why we expect inflation to be above target towards the end of the year. Wage inflation will assist in pushing the headline rate up.
Producer price inflation slowed in the month. Output price growth fell to 2.1%, input costs slowed to 2.9%. Subdued oil prices assisted the muted developments in cost prices. Imported food costs were up by almost 7% as Sterling fell, other import costs, materials, metals and chemicals were up by 4% on average. The inflation story is by no means over. There still remains the prospect of a further base rate rise this year assuming a resolution of the article 50 conundrum can be found ...
See You In Court ...
A cross party resolution was found to the funding crisis in the US. Democrats and Republicans together secured a deal to avoid a further Federal shut down. Trump was a reluctant signatory to the agreement. Just $1.4 billion was offered to build the wall for which Mexico was always supposed to pay.
Trump was forced to swallow the biggest surrender on policy for his presidency to date. It was a short roll over. The President reacted by declaring a "National Emergency". Funds will be found from military and national emergency reserves within Presidential special powers. This will fill the gap in funding for physical construction along the Southern border.
Trump announced the National Emergency in The Rose Garden. The "chosen backdrop for pitching defeats as victories" according to the New York times. A legal challenge will follow from the Democrats and elsewhere. The decision to declare a national emergency will drag on for weeks and months. It is a familiar act of distraction and digression with a modicum of entertainment.
Democrats claim the action is evidence of a rogue President who has finally gone to far. It is a clear challenge to the separation of powers within the constitution of the USA. This week the FBI revealed they had examined the prospects of an execution of the 25th amendment as Trump abused McCabe and Comey in Hoover's treasured heartland.
During the 50 minute meandering Rose Garden new conference, Trump offered little evidence to support the idea there was a crisis at the border. White House lawyers had advised against the move fearing the legal risks of proceeding. Trump explained the legal ramifications of his move ..
"Look I expect to be sued", Trump said, "they will sue us in the 9th circuit, we will possible get a bad ruling, then we will get another bad ruling and then we will end up in the Supreme Court. There we will hopefully get a fair shake and win". Yes a fair shake and a win ...
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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