POLITICAL & COMMERCIAL INTELLIGENCE

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Future of the EU in Trump's hands?

Two sides will take part in Brexit talks, so a parochial focus on things this side of the Channel risks missing key issues. For example, the current Greek bailout (of €86bn) is due to end next year and euro finance ministers are reviewing the deal. High on the list of concerns are doubts about whether the US-based International Monetary Fund will support another bailout – doubts compounded by President Trump’s belief that the eurozone is failing anyway and another package would be throwing good money after bad. Without the IMF, Germany would have to foot more of the bill, which makes for a pretty unattractive pitch in an election year. At the same time, the ECB has put the frighteners on other countries (like Italy) that might be considering a euro-exit, only confirming they see it as a realistic prospect. The UK may end up feeling it got out of the EU just in time, but big problems on the continent are in no one’s interest – and our negotiating partners will be looking for help in avoiding them.

Whitehall turf war

Civil Service jockeying continues for power over the UK’s Brexit preparations. The MoD, for instance, has made a play of offering its expertise to DExEU, while also claiming other departments, like DEFRA, have simply got too much on already to take a bigger role. Coming on top of what was an institutional leaning to Remain and former mandarins now openly criticising Government policy, the Civil Service needs to change tack quickly to rebuild the most effective working relationships with Ministers.  

Brexit and workers' rights

In its drive to counter fears of stripping back workers’ rights post-Brexit, the Government has just announced it is “determined to tackle pregnancy and maternity discrimination” and said it will “consider” telling courts to extend the time limit for wronged mothers to bring a tribunal against their employer. Dramatic change to the current law seems unlikely, but the move is further evidence that the Government will move quickly to address any worries that could give MPs or Peers a rod to beat them with.

Killer Corbyn

I have a new article up on Labour Uncut. The gist of the piece is that by facilitating Labour MPs’ resignations, holding fire on Jeremy Corybn, and having a clear position on Brexit, the Government is giving Labour enough rope to hang itself - and the Leader of Her Majesty’s Loyal Opposition seems only too happy to pick up the noose. If you’re a political boffin and want to read or comment on the article this lunchtime, you can find it here: http://labour-uncut.co.uk/ 

Briefly on Brexit

I won’t add too much to the plethora of Brexit news here. One thing that may have been missed, though, is the Government’s hopes to secure a final Brexit deal within the next two years and then apply its outcomes at various stages after that (this is subtly different to securing a transition ‘deal’ and is more like offering UK industries transition ‘assistance’). This fits in with our take that the Industrial Strategy is really one and the same thing as planning for Brexit. If you would like our detailed Brexit analysis and predictions, we are sharing a pro bono presentation with contacts and clients, so please get in touch if you’d like to see the slides.

Soft Brexit equals recession

Our modern economy is based on consumer confidence. This partly explains why the UK has prospered since June, “despite Brexit” – the majority of consumers voted for Brexit, so by definition, the majority of them are confident the decision was the right one and the prospect of leaving the EU does not make them nervous enough to change their spending habits. In turn, contrary to some accepted wisdom, a ‘soft’ Brexit would pose a bigger short term financial risk than ‘hard’ Brexit – if consumers think their prescription for the UK’s politics and economics is being ignored, they are likely to be less confident about the future and reduce their spending accordingly.

2017 General Election

Anyone who saw Jeremy Corbyn on the Marr show on Sunday was reminded the longer he stays in post, the worse things get for Labour. Paradoxically, this makes an early election more, not less likely: while the Tories would love Corbyn to hang on to 2020 and virtually guarantee them a stomping majority, senior figures on the hard left (McCluskey, Abbott, Livingstone, etc) have hinted at a time limit for Corbyn to up his game – and when he doesn’t, his replacement could give the Conservatives a more substantial headache.

To avoid that, officials in Number 10 are taking daily advice from former party chairmen on what would be needed to run a General Election campaign this year. Leave has been cancelled for some senior staff around a possible poll date in May if the Government needs a mandate to overrule opposition in the Commons and Lords. 

POLITICS: Midlands could be key

This year could see the Midlands become the crucible of national politics. For the Government, Number 10 is extremely keen to see Andy Street become West Midlands Mayor, so it can use that victory to show how Conservative policies do “work for everyone” in a region that is especially close to the heart of one of Theresa May’s chiefs of staff. For Labour, all eyes are on the West Midland’s Gerard Coyne, who is challenging for Unite’s top job. He is seen as more centrist than incumbent Len McCluskey and, given Labour’s reliance on union cash, a bigger threat to Corbyn. As the region also holds a number of marginal seats, we could see the Midlands becoming a vital political bellwether in 2017.

POLITICS: The GUIDE to 2017

Christmas is fast approaching. I know this because the Baker household is now into week five of our 4yr-old singing ‘Silent Night’ on loop… So this seems a good time to look ahead to 2017.

Fortune favours the brave

The funding crisis in social care finally started to get proper attention this week, but we have always said Theresa May enjoys more political good fortune than most (this is becoming a common refrain from others now, too). Corbyn and the EU’s financial, immigration and Russian problems all potentially strengthen her hand – and even the weather seems to be in her favour with a mild winter postponing more trouble in the persistent political Hindu cow that is the NHS. The real test is whether the Government’s luck holds until local elections next year. That is when UKIP’s 2013 surge will be tested for the first time, revealing the new lie of the land since the referendum and whether the PM can expect a Labour rout and a LibDem revival in a national vote.

Brexit means… the Industrial Strategy

In 2017, the Government will continue to use the evolving Industrial Strategy to prepare for Brexit. The Industrial Strategy has to be seen in the context of Brexit – in fact, they are practically the same thing. The former is being used to put measures in place that can be ramped up to support the economy in the event of the latter. Next year will see more interventions that bend EU state aid rules as far as possible without actually breaking them, as we will still be constrained by the laws of the club until (at least) the day we leave.

The next big thing

This year’s biggest political themes have often been misunderstood. In the American election, for example, I think the candidates’ reputation for honesty played a bigger part than anything else, with Trump’s (sometimes terrifying) candour picked over Clinton’s repeated mistake of not being more transparent about issues that might not have mattered with full disclosure (e.g. her own health, her email accounts, etc). Brexit and the Italian referendum were the result of something different – concern about a lack of accountability in politics – and unfortunately, the EU using ‘trilogues’ to avoid scrutiny of new laws is unlikely to turn that tide. In 2017, the biggest political theme could be economics. In the UK, even before we look at international trade or investment, our national finances are still precarious with debt growing uncontrollably – and we are in considerably better shape than most of our European partners. It will become more and more painful for politicians to grasp the economic nettle the longer they leave it, and any action (or inaction) will have a measurable political effect.

That all sounds a bit glum, but I am actually very optimistic about next year. Businesses are stepping up to the opportunities found in change, as business always does. Politicians are at their best when there are big problems to solve, and there are brave and good people in Westminster. And, with a small Government majority, Brexit negotiations and the economy consider, the public is remembering that politics really matters again – which can only be a good thing.

POLITICS: Steeling itself for Brexit

Ahead of Brexit, the Government wants public sector bodies to buy British – and to do so, it is helping buyers avoid the EU state aid rules we are subject to until the day we leave. Purchasers are being encouraged to consider “social and environmental” issues as part of their wider value for money calculations. This gives a lot of room to decide that UK suppliers meet purchasing criteria more closely than, say, Chinese steel makers with poor environmental standards.

A Brexit transition deal may be hard to achieve. It will be much easier for HMG to provide transition assistance direct to UK industries, using taxpayers’ money to make up for any damage inflicted by a punishment deal from Brussels.


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