Brexit Day 15: And now for something a little different...

Today’s issue was written by the Cicero team as I was out of the office. Not bad for a first effort. Have a good weekend!

Conservative leadership: Eyes to the right

And then there were two. Theresa May and Andrea Leadsom will spend the next two months appealing to the hearts and minds of the ~150,000 Conservative Party members who will submit their postal and online ballots from 17th August.

A supposed supporter of Leadsom was photographed on the tube holding what looked like a game plan for the leadership contender. Policy ideas included: Positive discrimination explicitly illegal, trigger Article 50 (to begin Brexit negotiations) in September. “Grammar Schools”, and “transfer power back to local parties”. The plan also includes a move to “win back some of the UKIP voters”.

Theresa May will be looking to build a platform based on her experience and strong stance on immigration. Whilst many remember the vans with posters suggesting that immigrants go home, we can be sure that Leadsom will be keen to trot out the graph showing that 3,443,000 migrants have entered the UK since May assumed the role of Home Secretary. Either way, don’t expect either candidate to be on the fence about whether we should actually build one.

We mentioned yesterday that anything could happen in the membership vote, and nothing we have seen in the last 24 hours has changed our minds on the issue. Remember May is undoubtedly the establishment choice. That’s been the kiss of death in most recent electoral competitions…

Labour pains continue

If nothing else, the ongoing will-they, won’t-they Labour leadership challenge must be doing wonders for the party’s bank balance. It was confirmed today by the party’s General Secretary that almost 130,000 new members have joined the party since the referendum, bringing the total to a modern record high of over half a million. Whether these new joiners are flocking to save Corbyn or to oust him is a matter of dispute – inevitably it will be some of both, though there is a general feeling that it is more of the former.

The expected challenger – if the contest ever does come – Angela Eagle, was door-stepped outside her home again today. She repeated her assertion that, if Corbyn doesn’t do “the right thing” soon, she will stand against him. I’m sure she said that last week as well…perhaps like her bird of prey namesakes she is simply waiting for the right moment to swoop.

Companies and markets

UK consumers are freaking out. Big time. In a special survey commissioned in the week following the EU Ref vote, GfK found that consumer confidence in the UK fell by 8 points following the referendum – the fastest rate in 22 years. In a strange twist, confidence in the Leave-leaning north of England fell the most, and in London the least. Particularly nervous are middle-income households earning £25-50k. Consumer confidence is a fickle thing. But perception, as they say, is reality. If customers are not confident they won’t spend. And if they don’t spend the economy will slow. Simple.

Allianz reckons that sterling could slide to as low as parity with the dollar if ministers fail to negotiate a free trade deal with the EU. The pound has rebounded a little in the past two days, rising to $1.2954 after falling to a 31-year low at $1.2798 on Wednesday. This would make Pacific North West Pinot Noir excruciatingly expensive. And oil, which is also priced in dollars. Historical footnote: the last time the pound came close to parity was the miners’ strike in 1985 ($1.05 - £1).

If the UK does lose Single Market access is there a new global axis that can be formed to make Leavers tingly? Switzerland's banking sector has mooted the possibility of working the UK, Hong Kong and Singapore to form a so-called F4 alliance that would seek a deal with Brussels on financial services. Worth remembering, that Switzerland’s current deal with the EU does not include financial services, so there’s an alignment of interests here.

The politics/finance revolving door continues to spin and its clear big finance is tooling up for Brexit. Goldman Sachs announced today that it has hired José Manuel Barroso, the former European Commission president and former prime minister of Portugal, as an adviser and non-executive chairman of its Goldman Sachs International arm.

On to the markets… Is the City demob-happy? It’s a question that surely needs to be asked as UK property and financial stocks demonstrate a bit of a resurgence. The property market has, unsurprisingly, been one of those sector’s hardest hit since ‘Independence Day’ but Bovis Homes, Taylor Wimpey, Barratt Development and Berkeley Group are all making ground, and in some cases leading on their different exchanges. Why is this? UBS suggests that perhaps they took a disproportionate early hit and the market is now correcting itself. Investors are in for a bumpy ride.

One key indicator of investor nervousness is the rush to safe havens. Bank of America Merrill Lynch has upgraded its gold and silver price forecasts and this week the price saw a 27-month high, with the price up 29 per cent this year alone. We’re still some way away from the post-crash highs of $1,875 in 2011 but with investors aware that gold is protected against the inflation of paper money, the cost does look set to rise. Buy buy buy!

Trading Places

As we wait for the next PM to pull out the pin on the Article 50 grenade, Business Secretary Sajid Javid was in Delhi today in a bid to kick off a trade agreement with India. As well as meetings with Indian Government ministers, Javid was also there to talk about Tata Steel’s sale of Port Talbot, which was put on hold following the Brexit vote. Indian industry appears to be pressing a UK-India trade deal. After nine years of molasses-like talks with the EU, held up by concerns about European exports of wine and cars, will the UK be able to move talks on quickly or get mired as well?

The Chancellor is part of the trade charm offensive. He met Chinese officials in London this week to discuss future trade relations. Osborne’s meeting was unlikely to have been too comfortable, givenChinese Premier Xi Jinping’s call comments last autumn on the importance of the UK’s role in China-EU ties.

Trade data published today found a £2.3bn total UK trade deficit in May 2016, £0.3bn wider than April as exports fell faster than imports.

RBS Economics has a nice chart on the UK trade balance. The positive bit. Yeah, that’s services. Remember trade in goods is not what this country does. It’s services.:

US Republican candidate Marco Rubio plans to table a resolution urging Obama to secure the “special relationship” with the EU and start US-UK trade talks at the UK’s request. Rubio’s words may provide some comfort after Obama’s threat that the UK would be “at the back of the queue” for a trade deal outside of the EU. We’ll come back to the vexed question of TTIP in future editions.

Picture of the day: Bank of England Governor, Mark Carney, chillaxes with Jude Law at Wimbledon this afternoon