Emergency brake test

There were some interesting developments on free movement at the weekend. So…remember that renegotiation Cameron had? The EU  did not give him the emergency brake on immigration he asked for.  James Forsyth, writing in the Sun, says that Cameron told the other leaders that the failure to secure the emergency brake had probably lost him the referendum. Merkel’s response: cheer up chuck, you’d never have got it anyway:

Then came a fascinating piece by Toby Helm in The Observer, suggesting that EU capitals were considering an emergency brake on immigration for seven years, along with single market access as transitional arrangement. Emergency brake redux!

"Senior British and EU sources have confirmed that despite strong initial resistance from French president François Hollande in talks with prime minister Theresa May last week, the idea of an emergency brake on the free movement of people that would go far further than the one David Cameron negotiated before the Brexit referendum is being examined." 

This would allow plenty of time for both sides to adjust. Cheers, bruv. Where do we sign?

Not so fast, the Mr Redwood is not happy – You! Can! Tell! By! The! Exclamation! Mark! on the title of his recent blog posting:

He writes:

“The UK did not recently vote for a slightly beefed up version of Mr Cameron’s attempted renegotiation with the EU. We voted to leave, to take back control of our laws, our money and our borders. Those phrases were repeated throughout the Leave campaign, heard and understood by many, and approved by the majority of voters.”

How could I not include this?..we all need a giggle now and then

And here you get a flavour of just one of the challenges ahead. The most ardent Brexiters are worried that if this goes on too long Brexit won’t really be a Brexit at all and it will all get fudged or watered down, and we’ll have what CGP Grey calls a ‘non-Brexit Brexit’. Rupert Myers has spun out a whole piece on this theme. (As a side note Myers says leavers and remainers will both be disappointed by Brexit. If that’s the case I can live with that – if everyone’s upset it’s probably a fair outcome).    

Expect, then, the True BeLeavers to fight any deal that phases our departure over many years. There are too many events that could happen in between that could derail the exit - crisis, election, change of public opinion. If Art 50 is triggered early next year, a seven year transition would take us to the mid-2020s! They will be very suspicious that a. this was all a ruse and b. will slow the path to the sunlit uplands that await us. Remember, May has a majority of 12 and these guys will rebel.

Second, Theresa May wants to reduce net immigration - probably  to the ‘tens of thousands’ (without saying exactly when). However, she will want to deliver serious progress well in time for the 2020 election (if indeed that is the date of the next general election). So the brake will have to be set aggressively enough that it makes a material impact on net migration. 

Once again the trade-off is being set-up between free movement and single market access. So here are the questions all this prompts for me:

  • How long would the transition last for?
  • At what level would the brake be set? How would it even work? Would it be phased?
  • Would those permitted to enter under the brake be eligible to remain after we full leave? 
  • What limitations on single market access would be demanded (if any)?
  • What destination would the UK be in transition towards?

The @RowlandReport Brexit Awards

Sponsored by Shahin Kebab Van, outside Waitrose, Weybridge

Ernst Stavro Blofeld prize for pantomime villainy

Michael Gove for doing his oppo over with such elan – covered on Day 7

The Calor Gas trophy for best burn

Theresa May for her destruction of Jeremy Corbyn at PMQs on day 27

The Lunchtime O’Booze award for best nutshelling of the Tory leadership candidates

The Rt Hon Ken Clarke QC, for his off air remarks on the candidates on day 12

Best politician in a supporting role: Malcolm Rifkind

Katie Hopkins award for best trolling

Donald Tusk for this classic exemplar mixing sport, politics and pop culture:

Honourable mentions: Nigel Farage for crowing at the European Parliament: You’re not laughing now, Nadine Dorries in general. 

The Alan Partridge award for most awkward moment

Boris Johnson, at the hands of the State Dept Pool on Day 26

The Chubby Checker prize for most surprising twist

Andrea Leadsom’s withdrawal from the Tory leadership contest on Day 18…

The Fyffes award for transparency in elections

Jointly to Tom Watson, Jeremy Corbyn and the Labour NEC for the eligibility criteria for the Labour leadership contest

Mystic Meg medal for worst prediction of the month

The award goes to me for saying: ‘the death of George Osborne is much exaggerated’ on Day 5. George may have to deal with some austerity of his own (via Guido)….

The Dick Cheney love for power award

The Conservative party for its breathtaking three week PM-resignation-to-new-cabinet-appointed process

The Annie Lennox award for sisters doing it for themselves

Theresa May and Angela Merkel

Runners up: Nicola Sturgeon and Ruth Davidson

Brexit Day 29: stay in the single market and accept freedom of movement or have another status

Today marks one month since this crazy journey began. Later I will pick out some of the most notable bits from these remarkable last 4 weeks. I will write on occasion in the weeks and months ahead when I think it’s worthwhile. Before the fun, we must deal with business:

A note on Theresa May’s trip ‘over there’…

If Mrs May’s visits to Berlin and Paris set the tone for the rest of the Brexit process there must be some grounds for optimism that we can depart the EU on good terms – though probably not ones which are as economically advantageous as the ones we have now. Key points from Paris:

Hollande said he recognised the UK needed time to prepare but the sooner it triggers Article 50 the better.  
My take: this is consistent with Mrs Merkel’s position, but with an added reminder that France will not stand for the UK sitting in pre-Article 50 limbo forever. Nobody likes the person that says a party is rubbish, goes around telling everyone they are leaving right now because the party is rubbish. And then just hangs out by the front door not leaving. Don’t be that person.

Hollande also said the UK's choice is to stay in the single market and accept freedom of movement or to "have another status".

My take: This is key. Part of the reason, I suspect, that the approach of Germany and France has been reasonable thus far is because that May and Hammond (Remainers both) have recognised that the EU cannot compromise on free movement (even if there may be some clever trade-offs in order to secure targeted single-market access). Boris Johnson, and many BeLeavers I might add, are ‘pro cake and pro eating it’ – wanting all the benefits of the single market and none of the costs. I don’t think the UK will accept freedom of movement, as its not compatible with reducing net migration, so we will not stay in the single market. What the ‘other status’ the UK achieves is, of course, is the billion euro question.  

So the lines of engagement have been drawn? The UK will have to trigger Art 50 pretty soon after the new year arrives, and will have to leave the single market if cannot offer freedom of movement.

….And those miserable Markit PMI numbers

Yes they are pretty dreadful and imply a contraction in the economy later this year. Health warning: this is high frequency survey data that was taken in the immediate aftermath of Brexit. While this is certainly concerning, let’s see where we are once everyone has got back from their summer holidays. Next economic policy checkpoints: MPC meeting on 4 August, Conservative party conference in early October and the Autumn Statement in December (what will Philip Hammond’s policy reset look like?).   

And now ladies and gentlemen, without further ado...the Brexit awards...

Brexit day 28: 'We have two women who get on with the job'

This is my last regular update before the summer recess. I hope you have found these amusing and, perhaps, even useful. Tomorrow I will pick out some of the highlights and lowlights of the last few weeks in a compilation as well as picking up anything that emerges from Paris tonight. If there’s anything you’ve seen please send it through. Also…I’ve finally got round to setting up a professional (as opposed to amateur) twitter account today (I know!) @rowlandreport

May and Merkel meet in Berlin

The historic moments are piling up like Govia Southern commuters at Brighton Station. Yesterday saw the meeting of May and Merkel as the two most powerful politicians in Europe. I can’t think of two people I would rather having dealing with this fraught situation. Theresa May said: "We have two women who get on with the job and want to deliver the best results". Chancellor Merkel replied “Exactly. I can only subscribe to that.” I think we can all subscribe to that.

The official line is that there are to be no negotiations on Brexit until the UK triggers Art 50, probably sometime next year. And it is true that there will be no official negotiations. However, back in the real world, Mrs May has waited precisely one week before getting on a plane and seeing Angela Merkel and François Hollande.  

May has said repeatedly that she is going to wait until the UK has a settled negotiating position before she pulls the pin out of the Article 50 grenade. Mrs Merkel clearly endorsed the UK’s position yesterday saying it was “absolutely understandable” that the new government would “take a moment first and try to seek to identify its interests”. This is sporting of her – and is possibly tinged with a little sympathy for May’s predicament.  

Over at the Commission, Juncker wants Britain out as quickly as possible. But he would, wouldn’t he? The French appear to be somewhat pushy on the matter too, though I can’t help but feel that this is partly posturing and I don’t see that it’s anyone’s interest to rush in – it’s not like the European Commission or Council were prepared for the vote in any case.

Of course, under the Treaty it’s also entirely up to the UK when to trigger Art 50. That said, the realpolitik is different. Patience will not be unlimited and if it looks like Article 50 notification drags too long into 2017 tempers may fray.  

Don’t forget: While we are all selfishly obsessed by Brexit from a domestic perspective, the Turkish crackdown continues, Italy’s banking problem has not been resolved, a President Trump would radically alter the European security dynamic,   France and Belgium have faced appalling terror attacks and refugees continue to seek refuge from brutal conflict. So while Britain may be planning to leave the EU, checking out is not an option. This is our neighbourhood and these problems have no regard for our membership or otherwise of the EU. I suggest that the one of the best ways to maintain goodwill with our friends in Europe is to show that the UK remains committed to the common security and foreign policy interests of the whole region.    

Labour leadership: Corbyn launches campaign.

The only story that comes close to Kanye West’s feud with Taylor Swift for longevity mixed with incomprehensibility is the Labour leadership contest. The latest twists and turns:  

First, in the past 48 hours, 183,000 people have paid £25 to vote in the leadership ballot. To put that number in perspective that’s more than the entire membership of the Conservative party.  However, they aren’t all eligible and the final number is around 140,000:

These folks join the previously eligible voters. I have absolutely no clue what the final electorate is for the election – save for the fact that it is very large indeed. The more I think about it, the shabbier this process seems.

Second, Jeremy Corbyn kicked off his leadership campaign.  I’m not naïve about the fact that different media outlets report with different biases. But this is how two of Britain’s leading news sources characterised Mr Corbyn’s launch:

Guardian:

This refers to Corbyn’s remark that "I have an ability to conveniently forget some of the unpleasant things that are said, because it is simply not worth it." As far as olive branches go, this is a bit on the Bonsai end of the scale.

Telegraph:

Meanwhile Kirkup  focusses on Corbyn’s remark that at the next general election "there would be a full selection process in every constituency but the sitting MP... would have an opportunity to put their name forward…So there will be a full and open selection process for every constituency Labour Party through the whole of the UK."  This means every single Labour MP will have to be re-selected by their Constituency Labour Party (CLP). While that sounds reasonable, particularly given the boundary review, it is loaded with the implicit threat that MPs disloyal to Corbyn (i.e. most of them) will be out on their ears.

He also announced some actual policy: proposals for gender pay audits at all firms employing over 20 staff. He also said that he would be setting out plans to combat five “evils” affecting society – inequality, neglect, insecurity, prejudice and discrimination – drawing inspiration from the Beveridge Report of the 1940s.

PS Buzzfeed has helpfully summarised the feud between Kanye West and Taylor Swift ‘for the people who don’t care but still kinda wanna know’. Warning: do not click through if you are easily offended or aren’t interested.

Luck of the Irish

President Hollande visited Ireland today for a truncated 5 hour trip before his meeting with Theresa May in Paris this evening. This is of course quite easy when you have one of these to fly you around (this, I believe, is one of the two aircraft once dubbed Air Carla One after Carla Bruni):

Aside from security and counter-terrorism in the wake of the Nice attacks, one of the items for discussion between Hollande and the Taoiseach was Brexit. In a press conference Enda Kenny stressed the importance of the UK having the closest possible future relationship with the EU. Ireland faces a particularly potent cocktail of possible risks from Brexit, given the extent of trade and cultural links with UK, a shared land border, the security situation in Northern Ireland and of course the vexed and related question of a United Ireland. Enda Kenny’s suggestion earlier in the week that, given a clause in the Good Friday Agreement, Brexit talks should take into account a referendum on a United Ireland prompted a number of interesting letters to the Irish Times here. HM Government’s position remains that the constitutional settlement is just that: settled.    

ICYMI: Mssr Hollande’s personal barber earns monthly net income of €9,895. NET! Like that’s after tax. The Elysée palace said the hairdresser looks after Hollande’s hair “every morning and as many times as is necessary, [and] ahead of every speech”. He also travels with the French leader on most trips that last longer than a day.

 Today in Parliament

New Leader of the House of Commons David Lidington has confirmed that there will be a need for new select committees for the new government departments, and dedicated question times in the chamber. Keep your eyes open.

Companies and markets

We launched a joint report today with the Chartered Insurance Institute on disruptive technology in finance today. Lots of questions from the audience on the potential impact of Brexit on the UK tech start-up scene. Concern about single market access and the ability to recruit the right talent top of people’s concerns. A particularly perceptive question from an audience member about whether Brexit talks could struggle to keep up with the adoption of emergent technologies such as blockchain which could radically alter cross-border markets.  The Financial Times covered our report here.

Nige on tour

Ryan Heath, reporting from Cleveland, has the skinny over at Politico.  Heath reports that Nige ‘received a hero’s welcome’ at an event on the fringe of the Convention.  Farage repeated that he would be touring Europe helping other independence movements – but that if there was backsliding on Brexit he might consider re-entering politics for the 2020 election.

In any case, Nige is clearing enjoying himself. Corking!   

Video of the day: Lib Dem fightback special

Uploaded by Ben Kennedy on 2015-03-19.

Bizarrely this video of Nick Clegg filming an election broadcast in March of last year has just surfaced. That’s Carly Rae Jepson on the soundtrack!

Brexit Day 27: 'Remind him of anybody?'

It's been a relatively quiet day so far, save for Theresa May's barnstorming first performance at Prime Minister's Questions. Even the news that the UK has given up its presidency of the EU in H2 2017 should not have come as a shock to anyone. Estonia is understood to be shuffled up six months to fill the vacated spot. I will issue an update covering May's trip to Berlin and Paris  tomorrow and any other major developments that have occurred over the previous 48 hours. So today’s bulletin is very short. Enjoy the evening sunshine. See you tomorrow.

Merkel and May meet in Berlin

Just as I am writing Mrs Merkel and Mrs May are beginning their discussions on Brexit with a joint press conference. We will come back to this tomorrow.

PMQs in pictures

But Theresa May’s sigh of relief at the ends shows that it’s tough at the top (click the link to see video).

BTW …Here’s what the new frontbench looks like. That’s James Brokenshire, a trusted May lieutenant and now Northern Ireland Secretary sat to her right and David Lidington, Leader of the House next to him.

Pic: © UK Parliament/Jessica Taylor

Pic: © UK Parliament/Jessica Taylor

 Quote of the day: Thug Life edition

At PMQs Jeremy Corbyn asked the PM about people worried about their future in work.

May, showing a flash of ruthlessness, and decent dramatic timing said:  “You refer to the situation of some workers who might have some job insecurity and potentially unscrupulous bosses….I suspect there are many members on the opposition benches who might be familiar with an unscrupulous boss – a boss who doesn’t listen to his workers, a boss who requires some of his workers to double their workload, and maybe even a boss who exploits the rules to further his own career. Pausing she then asked. “Remind him of anybody?”

Michael Deacon in the Telegraph makes the point that it is cheap to compare May to Thatcher but the ‘remind him?’ moment was triple-distilled Thatcher.

For those of you who are connoisseurs of internet memes, there is a Thug Life remix of this exchange which shows quite how brutal May’s delivery was. Apparently Sky created it but then took it down.

She didn't choose the thug life, it chose her

She didn't choose the thug life, it chose her

Brexit Day 26: 'Get to it and get on with the job'

Parliament rises for Summer Recess on Thursday night – thank goodness. This will hopefully allow some space for ministers to master their new portfolios and to get some serious work done preparing for Brexit negotiations. Today almost had the feeling of business as usual about it. The absence of high drama does seem rather boring. If you are suffering from withdrawal and your addiction to political mayhem is no longer sated here in Blighty, the Republican Convention has kicked off in Cleveland, Ohio. The New York Times will bring you up to speed here.

 I am expecting to reduce the frequency of these updates as we go into the summer break.

 May’s motley crew meets for first time

May’s Cabinet met for the first time today. The Prime Minister told the Cabinet a bunch of stuff we had already heard on the Today Programme this morning (i.e. no backsliding on Brexit, but equally the country should not be defined by Brexit in the coming years. She repeated the call for the Government to focus on the interests of working people and not just the privileged). Here they all are sitting at the nation’s largest poker table. Mrs May was flanked by BoJo and the Cabinet Secretary, Jeremy Heywood. At the end she told Cabinet to “get to it and get on with the job.”

The Prime Minister announced that she would be forming three new Cabinet committees which she will personally chair. They will deal with exiting the EU, social reform and the economy/industrial strategy. That gives some indication as to the PM’s priorities: everything.

Labour managed to get out a reasonably witty response (a low bar to be fair). Jonathan Ashworth, the shadow minister without portfolio, said of Theresa May that: “Her first acts were to abolish the department tasked with tackling climate change; to put someone who wanted to scrap the Department for International Development in charge of it; and to fill the rest of her cabinet with a variety of right-wingers, failures and disgraced returnees from the backbenches.”

Labour leadership: Eagle pulls out

I am losing the will to live. This is going to go on until September! If you must…

Owen Smith will go forward as the unity candidate to fight Jeremy Corbyn. He gained more nominations from MPs than Eagle who agreed to make way for him. Smith will now probably lose to Jeremy Corbyn in the membership vote. Labour will maintain its consistent 100 per cent male leadership record in either event.

 Joined up government – immigration special

Seems to be some teensy inconsistencies in messaging here. BTW Groves is Dep Pol Ed at the Mail. Newton Dunn is Pol Ed at the Sun

Reminds me of David Cameron’s exasperated comment in cabinet: “Sometimes I think only Theresa and I actually believe in our immigration policy”. I observe that of those two, fifty per cent have left the Government.  

From the GOP convention

Sky’s British US correspondent Amy Walker: “It’s not harmonious in the Republican Party – we saw that on the floor today?”

Newt Gingrich, without missing a beat: “We’re doing better than the British Labour Party” *smile*

Bravo, Newt. (h/t Sebastian Damberg-Ott)

Nigel Farage is attending the GOP Convention as an observer. No pics or tweets yet. Perhaps what goes on tour, stays on tour.

Today in Parliament

We had Treasury Questions today with Philip Hammond’s first appearance as Chancellor. For City geeks Sam Woods, the new boss of the Prudential Regulation Authority was in front of the Treasury Committee and discussed potential arrangements for access to the single market at length as part of his appointment hearing. Clients received a detailed summary of both.

A written ministerial statement was issued by the Prime Minister detailing the machinery of government changes following the reshuffle. The detailed changes are set out in the following explanatory notes. There’s all sorts of stuff going on in here which will no doubt be the source of all sorts of Whitehall machinations:

Companies and markets

IMF experts say that Brexit has thrown ‘a spanner in the works on its global growth forecasts’. From Reuters:

Cutting its World Economic Outlook forecasts for the fifth time in 15 months, the IMF said that it now expects global GDP to grow at 3.1 percent in 2016 and at 3.4 percent in 2017 -- down 0.1 percentage point for each year from estimates issued in April…. the IMF said that the impact will hit hardest in Britain itself, where the institution cut its 2016 growth forecast to 1.7 percent, down 0.2 percentage points from its April forecast. It cut the 2017 UK forecast more sharply, by 0.9 percentage points, to 1.3 percent.

I await the OBR’s forecast at the Autumn Statement with bated breath.

 Article 50 corner: m’learned friends update

The Guardian reports there are now seven private actions arguing that only Parliament has the authority to invoke Art 50. The Mischon de Reya legal case on Art 50 went before a panel of judges today.  The judges decided that the claim by fund manager Gina Miller, which is being co-ordinated by Mishcon, should be be the lead case. The defendant is Brexit Secretary, David Davis. The Government fully accepts the jurisdiction of the court over the matter. The case will go to full trial in October and government lawyers say that it is likely to be appealed all the way up to the Supreme Court should the trial rule that the PM does not have the prerogative powers to trigger Art 50.

I stand by my earlier assessment that even if Art 50 was put to a vote in Parliament it would pass – possibly quite easily.

 Fun fact: One of the judges in the directions hearing was none other than Sir Brian Leveson.

In other legal news, David Davis has removed his name from a legal challenge to DRIPA. Apparently it’s not considered good form for members of the cabinet to bring cases against Theresa May.

This is nuclear war

 A reminder that there are many important matters which government must continue to attend to, including the continued ability for the UK to wreak total annihilation on other humans. Trident ‘Successor’ passed a crunch vote in Parliament very easily last night– 472 to 117.  As such the UK is unequivocally committed to remaining a nuclear power whatever the cost.

Many of the votes against came from the SNP which opposes nuclear weapons. Conservative Chair of the Foreign Affairs Committee, Crispin Blunt, said that he would vote against Trident renewal on the basis that its huge cost would compromise other defence spending.

More than half of Labour MPs voted for its renewal, in opposition to the views of leader Jeremy Corbyn. Asked in Parliament by SNP MP George Kerevan if she was prepared to use nuclear weapons, Theresa May unhesitatingly said ‘Yes’ and that this was the point of having a nuclear deterrent. Either she has not watched Threads recently or she was being economical with the truth…

Cringe video of the day

Boris spared no mercy by the US press corps. Some on Twitter point out that perhaps it makes up for the US press corps' deferential treatment of their own.

Brexit Day 25: 'as clear on the general direction as it is naive about the technical details'

It was good to take a day off on Friday – and the Prime Minister’s trip to see the First Minister in Scotland gave some respite from reshuffle mania. The brutal terror attack in Nice followed by the attempted coup in Turkey reminded everyone of the tense security environment in Europe and on its borders – something that will no doubt be a theme in future bulletins.

Government reshuffle part 400

Every so often you are reminded just how many ministers and bag carriers there are. More than a third of the Conservative party’s 330 MPs are on the ‘payroll’ in some way – from Secretary of State down to PPSs. Theresa May’s reshuffle was pretty much completed today and what a remarkable number of resignations, sackings and demotions there have been. Looking at the list, the phrase ‘de baathification’ springs to mind. There is not a single minister in the Cabinet Office who remains in the department. The Business and Communities departments have only one minister remaining in position.

It's been demotional

It's been demotional

Even if dilettantism is a hallmark of our political system, the mismatch between previous experience and ministerial postings is as striking as the lack of continuity.  David Cameron left ministers in post as far as possible allowing them to master their brief. Ed  Vaizey’s return to the backbenches tells a story about the new May government. Vaizey is an arch-Cameroon so was vulnerable to the cull. But he was a well-regarded as minister for culture and the digital economy, held the post for six years and loved the job. He was even respected by the arts world, which for a Tory minister is quite something. You might have thought he would survive. But he was sacked. He amusingly coined the phrase #vexit.

Reshuffle chat

  • The new Economic Secretary to the Treasury (City Minister) – Simon Kirby has no experience in banking or finance. But does have a business background – he established a local radio station in the Brighton area as well as being involved in the pub and nightclub business. He studied at LSE, which means he must be a decent sort.   
  • Mark Garnier, long-standing member of the Treasury Committee finally gets a ministerial gig in the Department of International Trade. Slightly peculiar that given his finance background he didn’t end up in Treasury as the City Minister. I am beginning to wonder if the top of the shop has decided to keep bankers away from financial policy. Nevertheless he has an important role flying the flag and we wish him well.
  • Ros Altmann, the minister of state for pensions has gone, but the new minister, Richard Harrington, has the more junior rank of Parliamentary Under Secretary. Former pensions minister Steve Webb - who now works for Royal London - said he was ‘stunned’ by the news that the role had been downgraded. The DWP confirmed to the FT’s Jo Cumbo that Harrington would have the same responsibilities as Altmann. Aberdeen Asset Management’s Gregg McClymont (a former Labour pensions shadow) welcomed the appointment saying he was a ‘smart guy. Good on detail.’ Altmann is known for being outspoken. Now she’s outside collective responsibility she may present a challenge to the government from the Lords.
  • With the promotion of David Gauke to Chief Secretary of the Treasury, a well-placed reader in the Treasury told me that it’s time to #uncorkthegauke. His replacement as Tax Minister, Jane Ellison will have to fill the shoes of a genuine expert.  
  • The new Business Enterprise and Industrial Strategy department sees Jesse Norman, previously Chair of the Culture, Media and Sport Committee join government for the first time. He’s best known for giving bankers a hard time during his stint on the Treasury Committee and pursuing the issue of doping in sport more recently as chair of the CMS committee. This is an interesting appointment – Old Etonian Norman is one of the intellectuals behind the Cameron project yet was never a minister under the Cameron leadership. His willingness to defy the party whip on issues such as Syria may have contributed to this.   
  • Boris Johnson will have to share the Foreign Secretary’s grace and favour country residence Chevening with Liam Fox and David Davis. The PMOS told the BBC that “It reflects the fact that all those secretaries of state will, as part of their work, be meeting and engaging with and hosting foreign visitors and leaders.” She stopped short of saying that HMG will put it on Airbnb when it’s not is use to save money. Philip Hammond will move into a flat in number 10, Mrs May into number 11.
  • Going to be quite a few changes on Select Committees I should think – something to look out for.

Labour leadership

 Colleague Simon Fitzpatrick writes…

At 5.00pm this evening the starting gun fired on the 48 hour race between the pro- and anti-Corbyn factions within the Labour Party to sign up as many ‘registered supporters’ as they can to save Jeremy or ‘Save Labour’, depending on their viewpoint. Since last year’s Labour leadership contest, the cost of registering as a supporter to get a vote has gone up from a bargain-basement £3 to an eye-watering 25 quid. Who says inflation is at record lows?

Meanwhile the Parliamentary Labour Party today held its first hustings, with Corbyn, Angela Eagle and Owen Smith all on the panel. As is now traditional for behind-closed-doors PLP meetings, it was being live-leaked throughout. According to the New Statesman's George Eaton, one former Shadow Cabinet member said that, of the ‘stop Corbyn’ candidates “Angela had the best lines” but “Owen had the passion and the policies”. The real battle at this stage is between these two to emerge as the clear ‘unity candidate’ to go on to a head to head with Jezza. Smith reportedly told the PLP that he’ll step aside if it becomes clear that Eagle has more MP nominations – a sure sign that he is confident he has more MP nominations – though Angela was quick to point out that the candidate with the fewest nominations is actually the incumbent leader.

Future relationship with the EU

Heads-up: The PM  is going to Paris and Berlin on Wednesday and Thursday.

Brexit Secretary David Davis told Sky at the weekend that he wanted to a secure "generous settlement" for EU migrants already living in the UK. He said “They didn’t pick this circumstance, we did…We want to get a generous settlement for them. We want to do that at the same time we get a similarly generous settlement for British Citizens living within the EU.” However, he warned that the generosity of the settlement – leave to remain, pension rights – could lead to an influx of immigration. He said that a potential way to deal with that would be having a cut-off date after which new entrants to the UK would not be guaranteed such rights. That problem would be dealt with as we got closer to the time, he said.  

A good piece from Wolfgang Münchau in the FT today which clearly and concisely sets out his interpretation of the UK’s Brexit options. I agree with his view that the Government appears to have all but ruled out EEA membership as a model (though no one has said it absolutely outright). He says the ‘master plan was as clear on the general direction as it was naive about the technical details’ – presumably referring to the David Davis withdrawal blueprint.

Emergency landing notwithstanding, BoJo has been in Brussels meeting European foreign ministers in his first major engagement as Foreign Secretary. He told the media that “We have to give effect to the will of the people and leave the European Union. But that in no sense means we are leaving Europe. We are not going to be in any way abandoning our leading role in European participation and co-operation of all kinds.” Interestingly, this Council meeting is the first time a US Secretary State has attended. The first glimpse of BoJo as serious politician? He has also given up his weekly Telegraph column (worth about 30 grand a month!) – this in itself will massively reduce foot in mouth potential.

YouTube genius CGP Grey has put together a fantastic video called Brexit, Briefly. Never one to shy away from a prediction, Grey says: ‘I give 30% odds to [this] option: literally nothing happens. The UK plays the stalling game forever, pretending to move forward while doing nothing. This politically tumultuous time becomes a trivia fact for a future video about how the UK has been in the process of “leaving” the EU for 100 years’. 1.2 million views already!

Liberal Democrats: moving on up

Tim Farron has expressed a huge vote of confidence in the future of his own party by proposing a new party. In what is clearly an overture to moderate Labour MPs he said that Tory and Labour parties sat in completely and utterly false and uncomfortable coalitions. The Guardian quoted him as saying that ‘in any other democracy in Europe those people wouldn’t be in the same party as one another – and quite a few would be in the same party as us.’ I wondered how long it would be before SDP 2.0 was floated by Farron. Naturally, the Lib Dem leaders does rather skirt the incoherence in the political philosophy of his own party – though with just 8 MPs now, it perhaps isn’t so much a problem as it used to be.  

Scotland: to be continued

A fascinating dynamic in the Brexit discussion has emerged over the last couple of days. Talks between PM and FM happened at the end of last week with Theresa May saying that Article 50 would not be triggered until a UK-approach had been agreed. Nicola Sturgeon later suggested that this meant that Scotland had a veto over Brexit –  a claim which was robustly knocked back by Team Theresa. Sturgeon later said that Scotland could hold another Indy Ref in H1 2017 if Art 50 was triggered  There’s a lot going on here and we will come back to this in greater detail once things calm down a bit.

Trading places

TTIP is in trouble. Big trouble. In fact, according to Hans von der Burchard in the ever informative Politico, TTIP is politically dead.

At the same time Liam Fox is off to the US to meet Mike Froman, the US Trade Representative to talk about the potential for a UK/US deal. You can see a situation here where the lack of progress on TTIP may open the door to talks (though I am guessing the US could also use this as an opportunity to place pressure on EU leaders). Froman has said – quite sensibly – that the shape of any deal would be dependent on the shape of the UK’s future relationship with the EU.  

Malcolm Turnbull, Aussie PM, has agreed to start talks with the UK on a trade deal after a discussion with Theresa May.  

Companies and Markets

I attended outgoing MPC member Martin Weale’s valedictory talk for the Resolution Foundation this morning. The subject: Brexit – implications for monetary policy. Weale’s take is that the data on the economic impact of Brexit are mixed so far. He said the negative impact on trade would likely lead to a slowing of growth in the longer term. Nevertheless, with a weakened pound he stated concerns about a wage/price spiral developing (as Simon points out above, Labour membership price inflation has rocketed). He hinted that he did not think that the Bank should rush towards a rate cut. He was wary of negative rates, suggesting that the experience of Switzerland was that negative rates had caused mortgage rates to rise – the opposite of what was expected. Former MPC member Sushil Wadhwani was much more dovish – arguing that it was better to cut early and suggested that markets were in denial over the negative impacts of Brexit at present.

ARM Holdings, the UK designer of low-power chips ubiquitous in smart phones, is widely regarded as one of the UK’s finest high-tech firms. It is to be bought by Japan’s SoftBank for £24 bn. It represents a third of the market cap of the UK tech sector. The Chancellor, Philip Hammond, dispelled any concern about the UK protecting a national champion from foreign ownership saying that it showed Britain is open for business - and open to foreign investment.

Tweet of the day

Off topic, but Chris Heaton-Harris MP – a freshly minted Assistant Whip - regularly tweets appalling one-liners to his followers. Here is one of today’s examples:

Knot very funny. 

Knot very funny. 

Brexit Day 21: 'The posh boys have gone. It’s over’

Under new management: the May Government

Theresa May has torn up Cameron’s cabinet. I’ve mentioned over the last few days that no one really knew what May would do. For the lobby and punditry this has been an excruciating but exciting experience. Now we have the facts!

There’s so much to write about I don’t know where to start. Actually, that’s not true. I do:

  • Boris!: The moment he was appointed Foreign Secretary it became clear that May was going to break with the past bigly. I will leave others to wail and gnash teeth over the wisdom (or otherwise) of this choice. Let’s step back and think about why May has taken a risk and given this great office of state to Boris. Firstly, he is the biggest of the Leave beasts. There can be no whinging about lack of Leave representation in this cabinet. Second, he is now completely bound into achieving and selling whatever deal the UK gets with the EU to the British public. Third, this is a big and extremely serious job that will keep him very busy and out on the road. Fourth, Boris is incontrovertibly a global celebrity – he’s already on the map. Cripes.
  • Treasury: Philip Hammond got the job we thought he would. Pragmatic, clear thinking and straight-dealing – a steady hand on the economic tiller. Will have to help deliver Theresa May’s ambitions for a reformed society on a limited budget. Key question is the extent to which the government will be willing to borrow money (very cheaply) to fund investment. The Autumn Statement is not a million miles off. Long-serving Tax minister David Gauke, jumps up to the Chief Secretary position.
  • Rudd to the Home Office: A step up to the Premier League for Amber Rudd. A mark of Theresa May’s trust in her that she has handed her former portfolio to the heavily remain leaning MP for Hastings and Rye. She’s been an MP for just 6 years – this is an awesome climb to power. Not an easy brief to hold on to.
  • Evisceration of the Cameroons: Osbo, Gove, Morgan, Letwin, Crabb, Boles all out. I thought Osborne might make it through in some capacity – but that was naive. He is unceremoniously dumped onto the backbenches. Brutal. Nadine Dorries – the Katie Hopkins of the Conservative party – cannot contain her glee. ‘The posh boys have gone. It’s over’ she tweeted.  
  •  Returning from the wilderness: David Davis and Liam Fox, two unbiddable beasts from the right of the party get two huge jobs -  taking us out of Europe and selling the UK to the rest of the world respectively. A man management challenge if ever there was one. Just how unbiddable? Well David Davis and Labour MP Tom Watson broughtjudicial review against the former home secretary over Data Retention and Investigatory Powers Act last year.   
  • May’s cronies: Her ministers in the Home Office are promoted to Cabinet - James Brokenshire to NI, Damian Green to DWP and Karen Bradley to DCMS. A clear message that loyalty is rewarded.
  • Grayling’s reward: May’s campaign manager is a well-known bruiser and committed Leaver. Some might argue that this job is not as big as expected. I disagree. Transport could end up being a major focus of the May government – HS2, London Airports and regional connections all crucial to the competitiveness of the UK. Remember Justine Greening – in cabinet - has said she would resign if it’s Heathrow.
  • The return of the industrial strategy: Greg Clark, widely regarded as an able and extremely bright minister gets the job of trying to succeed where so many have failed – delivering an industrial strategy. He gets a new department that brings together industry and energy. His full title is Secretary of State for Business, Energy and Industrial Strategy
  • Survivors and thrivers: Sajid Javid to Communities, Liz Truss to Justice, Greening to Education and Women and Equalities. David Mundell remains as Scotland Sec and Alun Cairns for SoS for Wales. Cool, calm, long-standing Europe Minister David Lidington is promoted to Leader of the House of Commons. Michael Fallon stays put at Defence – with Trident to deal with. Gavin Williamson, Cameron’s PPS goes to Chief Whip.
  • Party machine: Patrick McLoughlin is party chair. The well-liked former miner will presumably have to rebuild bridges between central office and local associations which became strained under Cameroon appointment Lord Feldman. He has spent many years in the Whips Office and so probably knows where the bodies are buried.  Gavin Williamson, Cameron’s former PPS is appointed chief whip – the link man between the Parliamentary party and No 10 and responsible for keeping that small majority in line.
  • Theresa May’s secret sense of humour: Leadsom goes to DEFRA. Will have to deal with the agri-lobby - with the UK leaving the CAP and having to do trade deals that’s not my idea of fun. Priti Patel goes to International Development. Priti Patel has sort of called for DFID to be scrapped. Telegraph’s Asa Bennett is all over it:

Headline statistics: May has appointed eight women out of twenty-three Cabinet ministers, one more than former Prime Minister David Cameron. There are also seven ministers who campaigned for Leave in the Cabinet.

Initial questions:

  • How long will this fascinating cabinet hold together? Cameron avoided reshuffling wherever possible. Will May follow the same pattern? Will she be able to?  
  • Three of May’s key appointments – Johnson, Davis and Fox are mavericks not known for following orders. And they’ve all got huge jobs making Brexit work. Interesting to see how they get along!  
  • The leave/remain split dynamic will be interesting  – the remainers are largely steady folks running the domestic agenda, the leavers more spiky and impulsive running the UK’s relationship with the world beyond.
  • What happens in the junior ranks – could be a big shake up there too…

Boris Johnson: the unlikely diplomat

Lots of media chat about how the State Department are unhappy about Boris. The French foreign minister called him a liar. The Germans are either laughing or fulminating depending on who you speak to. The Independent has a map of the number of countries Johnson has offended here. And of course there’s a characteristically wry despatch dug up from the US diplomatic cables archive. (State has some seriously good writers in it)

But enough of the cant. The only measure of Boris Johnson is how he performs in office. This is his moment – will he rise to it?

PS Boris Johnson speaks multiple languages (including, Russian – I think - and French as well as ancient Latin and Greek).

Leadsom’s withdrawal: the inside story

Graham Brady, Chairman of the 1922 committee and returning officer for the Leadership contest, tells of the sequence of events leading up to and following Andrea Leadsom dramatically pulling out of the leadership contest. Interesting payoff at the end of the article: “I think our [leadership election] rules (drafted in opposition) need re-visiting to meet the needs of a party in government….but maybe we aren’t so badly off after all”

Labour leadership

A well connected Labour reader thinks that Corbyn has made a big error in not being on top of the details of the membership eligibility.

Labour list has published the timeline for the membership contest which is long and winding. If all goes to plan a Special conference to announce results will take place on 24 September, a day before the party conference is due to take place.

Michael Foster, a Labour donor is to launch a legal challenge to the NEC’s ruling on the Corbyn ballot. The BBC reports that ‘Mr Foster said three contrasting pieces of advice had been given by three different lawyers, and the matter must be considered by a neutral court of law’.

Companies and Markets

The Bank held interest rates unexpectedly causing a surge in the pound.

Web celeb: Theresa May joins Twitter

Our digital team pulled out some stats on follower growth or Theresa May since she joined Twitter. Imagine that number will be growing in the coming days.

Note this is Theresa May NOT Teresa May -  the latter is a glamour model:

Tweets of the Day

Weird fact 29 - Richard Madeley went to school with Philip Hammond

Weird fact 29 - Richard Madeley went to school with Philip Hammond

Brexit Day 20: 'I was the future once'

I am not issuing a full bulletin today because Theresa May will become PM this evening and we expect her to start naming her cabinet in pretty short order. One of the first things she will have to do is learn the firing protocol for nation’s Trident missile system.

 Our fantasy cabinet is a now an extremely scrappy piece of notepaper. The truth is that everyone is speculating and no one has a clue…but that won’t stop Pesto offering the following:

David Cameron enjoyed his last PMQs at lunchtime (it was his 147th). He finished by using the line he once wielded against Tony Blair: ‘I was the future once’. He  has just given a speech on the steps of Number 10 and has been to Buckingham Palace to tender his resignation. He has been PM for six years and leaves office before his 50th birthday. He will stay in Parliament and represent his constituency. He has changed his Twitter profile already.    

Mrs May then jumped in her car and went the see the Queen too. Here’s a pic from one of my roving photographers outside the Palace of Westminster:

Labour leadership: through the looking glass

I am – as promised yesterday -  including a summary of the latest Labour leadership shenanigans penned by Cicero’s newest team member, Mike Blakeney…And don’t worry if you don’t understand what the Labour membership voting eligibility rules are, nor do I.

Yesterday evening, after a marathon six-and-a-half-hour National Executive Committee meeting, Labour’s senior decision-making body set out the format of the party’s coming leadership contest. The moment of the evening was when the NEC voted to allow Jeremy Corbyn onto the ballot uncontested. So jubilant was Corbyn, that he apparently forgot to stay for the rest of the meeting, giving his opponents free reign to decide on the other key issues – and decide they did.

While Jeremy Corbyn was out celebrating with his supporters on Victoria Street, the NEC was still inside deciding on the nitty gritty of the conduct of the leadership election:

  • They voted that the cut-off point for voting in the leadership election would not be a month before voting closed like last time, but instead would be set six months before the date of yesterday’s meeting. This means anyone who has become a member since the 12th of January, will not be eligible to vote unless they pay again to become a registered supporter. 130,000 new Labour members, the vast majority of whom were joining to support Corbyn, will not be eligible to vote in the election.
  • It is still possible to register as a supporter and gain a vote in the election like last year. However the NEC decided that the price will be hiked from £3 to £25 and that registration will be open for only two days, reportedly from the 18-20 July. This would mean that Corbynistas have very little time to organise themselves. It also means that some of Corbyn’s supporters will have paid £47 to be members already, and will now have to spend a further £25 to have a vote.
  • Those who joined as registered supporters last summer will not automatically be eligible for another vote, they will have to reapply next week and pay £25. If they are a member of a trade union or one of Labour’s affiliated ‘socialist societies’ they do not automatically have a vote, and they will have to pay a fee.

Perhaps most importantly, none of this is very clear. It’s not obvious who is and isn’t eligible, and indeed when they will be able to register. Perhaps that’s the point: Corbyn’s Momentum machine is well oiled, but registering tens of thousands of supporters by Wednesday next week looks like a challenge.

This morning, Corbyn probably woke up regretting his decision to leave the NEC so early, but perhaps he won’t be losing sleep tonight. The real threat to his position was failing to get on the ballot, and that has now passed. The NEC has managed to tilt the playing field a little, but it might not change the result. Many of the Corbyn’s supporters who swept him to power last summer are still there, and it’s worth remembering that he received the votes of nearly half of all members back then, far ahead of his rival candidates. Corbyn’s rivals will be hoping that they have done enough to tip the balance, and that the anti-Corbyn vote will be much more solid this year than last.

It’s not clear what the result will be, but one thing is certain, the Labour Party is in for a bloody, acrimonious and difficult summer. If Corbyn hangs on, a schism in the PLP appears to be likely.

David Cameron’s Last Supper in Number 10

Dishes ordered included: KT Samosa, Rogan Josh, Nashili Ghosh, Sag Aloo and the KT Mixed Grill. Yum!

Cartoon of the day: German sense of humour edition

From Berliner Zeitung: "You just need to let the men have a go..." "... And in the end you take their job" (h/t Liz Ames)

From Berliner Zeitung: "You just need to let the men have a go..." "... And in the end you take their job" (h/t Liz Ames)

Brexit Day 19: 'the Cameron/Osborne "chumocracy" will be buried'

There’s going to be quite a lot of action in the days ahead as the Government forms so you may be relieved that I am keeping this one short today.

Theresa’s new regime

Theresa May will go to the palace in less than 24 hours and will emerge as Prime Minister. In our office, the game du jour has not been Pokemon Go  (my wife explained this to me today) but rather fantasy cabinet.

May has quite a balancing act to make sure some semblance of harmony is restored in the Conservative ranks. That would mean giving some big jobs to Leavers. But there is also a deep need for competence and experience – and there is actually quite a lot of that in the existing Cameron cabinet. This is the most intriguing reshuffle for some time. Pesto has posted that he has been told by a May supporter that the Cameron/Osborne "chumocracy" will be buried. He says he expects Philip Hammond, Justine Greening, Chris Grayling and Amber Rudd to get big jobs.

Questions for anoraks:

  • Will May have a clean sweep? 
  • Where do the Cameroon big beasts like Osbo end up? Will they get a punishment beating?
  • Will Philip Hammond get the Treasury?
  • What does May do with the Home Office? Does she promote James Brokenshire? 
  • What do you do with Leavers like Leadsom, BoJo and Gove? Does Liam Fox – he did the warm up for May on Monday - make a comeback?
  • Will we see moves that send a message? – e.g. Greening to Transport effectively kills Heathrow’s third runway
  • Will we see the junior ranks shaken up?

Everyone is asking the question: just who is Theresa May? Not a huge amount is really known about her – by the standards of today’s politicians, at least - apart from her Desert Island Discs appearance back in 2014. My colleague Julia comments that her choice of Mozart is sound. Everyone has probably read George Parker and Helen Warrell’s 2014 FT profile by now. The Times (the New York one) also carried a profile last week.

May’s coronation marks the end of the beginning of the UK’s Brexit (mis)adventure and probably draws a line under the crisis of government we experienced following Brexit. However, now comes the really hard bit. The preparation for the long, laborious and difficult negotiations that will define the UK’s exit and future relationship with the EU.

Labour leadership: I’ll get back to you tomorrow

The Labour National Executive Committee is meeting today to decide whether Jeremy Corbyn should automatically be included on the leadership ballot. It was not clear what the result was at the time of writing. Jeremy Corbyn has suggested he will launch a legal challenge if he is not automatically included.

So far Angela Eagle is definitely in the race and Owen Smith has indicated he will run too.  

 Future relationship with the EU

 Cicero hosted Jacqueline Minor, The European Commission's Head of Representation in UK for a discussion under the Chatham House Rule this morning. A full house (and those joining the webcast) enjoyed a wide ranging discussion including some fascinating insights into the mechanics of Article 50. Make sure you sign up to future events so you don’t miss out.

 Article 50 corner: M’learned friends special

There are various legal interventions bubbling along which, because of lack of space, I haven’t covered in recent days. These centre on the constitutional arrangements for triggering the Article 50. This is the debate in a nutshell

  • Article 50 says that the notification should triggered in accordance with the constitutional arrangements of the member state
  • The UK’s constitution is unwritten and therefore open to interpretation
  • Government lawyers are confident that the PM has prerogative powers to invoke Article 50 without reference to Parliament
  • Other lawyers and campaigners say that the prerogative powers are not sufficient and Parliament must have a vote on  Article 50, given that the referendum result is not a binding one
  • Theresa May has said she will not trigger Art 50 until early 2017

 There are three legal actions I have read about which, at their heart, dispute the ability of the PM to trigger Article 50

  • Deir Dos Santos, an ‘ordinary guy’ and hair dresser is to bring an action saying that the PM would be ultra vires in invoking Article 50. A preliminary hearing is due to take place on 19 July in front of two judges in the divisional court. The judges will decide if there is a case to answer. Mr Dos Santos is being represented by Dominic Chambers QC acting pro bono.
  •  Mischcon de Reya may also bring a legal action on behalf of unnamed clients. A partner at Mishcon said Article 50 cannot be invoked without a full debate and vote in parliament. ‘Everyone in Britain needs the government to apply the correct constitutional process and allow parliament to fulfil its democratic duty, which is to take into account the results of the referendum along with other factors and make the ultimate decision’
  •  Separately, 1,000 barristers, including over 100 silks, signed a letter calling for Parliament to pass primary legislation to invoke Article 50. Lawyers said a Royal Commission or an equivalent independent body should be set up to receive evidence and report, within a short, fixed timescale, on the benefits, costs and risks of triggering article 50 to the UK as a whole, and to all of its constituent populations. The parliamentary vote should not take place until the commission has reported

In fact the Cabinet Office Minister John Penrose told Parliament yesterday that “a decision as momentous as this one must be fully debated and discussed in Parliament. Clearly, the precise format and timing of those debates and discussions will need to be agreed through the usual channels”.  Allowing it to be debated is not the same as offering Parliament a binding vote on Article 50, so presumably this won’t satisfy the objections raised above. And that’s because, despite all the constitutional window dressing, I presume a big motivation for all this lawyering-up is the hope that Parliament might vote against Article 50 (because the majority of MPs backed Remain). The think this might might halt Brexit or delay it (perhaps hoping that buyer’s remorse would set in).

But law always defers to politics.  And surely the politics of the situation mean these legal challenges are a hiding to nothing because:

  • Hello! There’s been a Conservative leadership contest and Tory MPs have fulsomely backed a PM who says ‘Brexit means Brexit’ . That’s a majority right there, because I doubt even the most Remainy Tory MPs would have the nerve to vote against Theresa May on this. I cannot see Remain Tory MPs sinking their own government in order to overturn a referendum result which they have been telling the World and its Dog they accept and respect.
  • Labour MPs from heavily Brexit-leaning constituencies would be very brave (i.e. bonkers) to vote against Art 50. Can you imagine the MPs for Middlesbrough or Sunderland voting against Article 50? Really?
  • Liberal Democrats voting to frustrate the result of a referendum. That’s something I wouldn’t mind seeing!  

I would argue that a vote to trigger Article 50 would pass and the timing of that vote is ultimately in the gift of…the Government!   

Today in Parliament

Mark Carney agreed to release notes of his conversations with George Osborne in respect of Brexit for the Treasury Committee to peruse in private. This is in response to concerns that the Bank compromised its independence in making the case against Brexit.

Companies and markets

A quick sojourn into the wonderful world of Investment Trusts today. This is Personal Assets Trust plc. It is run by dour Scotsmen in order to preserve capital. It performed very well during the financial crisis. It holds super safe blue chip stocks, US Treasuries, UK linkers, gold and cash.  And look at how it’s performed since Brexit!

I covered Italy’s banking problems last week and handily Deutsche Bank’s Mark Wall has put forward a plan to save Europe’s banking sector. Interestingly, the Economist described Italian banks as Europe’s next big crisis last week.

Tweet of the day

Ladies and gentlemen, the Leader of the Scottish Conservatives provides a critique of the political leadership contests:

Brexit Day 18: 'Theresa May has benefited from the Tories’ hunger for power'

Another unexpected  day! Theresa May will be PM by Wednesday evening, with a cabinet reshuffle surely to follow afterwards. David Cameron appeared on the steps of Number 10 this afternoon to say he will chair cabinet tomorrow, lead one more PMQs and will then offer his resignation to the Queen on Wednesday afternoon. Theresa May gave a very brief statement outside Parliament at 1730 surrounded by MPs from all wings of the party. She thanked Andrea Leadsom for her dignity in withdrawal, and David Cameron for his leadership. ‘Brexit means Brexit’ she said ‘and we are going to make a success of it’.

 Mr Cameron was captured thus (click link to watch the video):

Conservative leadership competition: Le roi est mort, vive la reine

The Conservative leadership contest has been the gift that keeps on giving. I thought that I would be writing about the Leadsom Effect today. The way her presence in the campaign would pull Theresa May over to the right and make her more populist. And the way that Leadsom’s pronouncements – including the thermonuclear mumsnet bomb that she detonated in the Times on Saturday -  might just appeal to the anti-politics, anti-business, anti-establishment mood that has pervaded even the grass roots of the Conservative party. And sure enough, May’s set-piece speech this morning squirted around attacks on big business fat cats like a hungry builder with a bottle of HP sauce. This is the new centre ground of British politics.  

However the script, was ripped up. Again. At 1215 Leadsom withdrew from the competition citing the glare of publicity and the level of opposition to her candidacy in the parliamentary party. She gave her support to Theresa May, as did Boris Johnson and Michael Gove. Shortly after her withdrawal, Graham Brady MP, the man running the leadership process, said the party hierarchy would meet to rubber stamp the decision. It looked like he had been caught on the hop. Chris Grayling gave a statement saying that May was on her way back from Birmingham. In this bizarre, slightly chaotic procession of rushed statements, the leadership of the world’s sixth largest economy and control over a fleet of Trident-armed nuclear subs sloshed away from David Cameron towards Theresa May. Jonathan Freeland wrote in the Guardian that ‘there is a reason why the Conservative party is the most electorally successful political organisation in the western world. They have an iron will to power their rivals lack – and they have just shown it once again.’

So it’s time for Dave to pack his bags because Theresa is moving into Number 10. The fact that the UK will be under new management very quickly - rather than watching the Tory party engage a multi-week process of vicious politicking – should be a relief to business, if not to hardcore Leavers who thought that Leadsom was the only option.

Labour leadership: Eagle swoops

It really is game on. I think. Labour Party General Ian McNicol confirmed today that he had received the 50 MP signatures required to trigger a leadership contest. Tomorrow the Labour National Executive Committee will meet to confirm arrangements, including whether Jeremy Corbyn needs to collect 51 signatures from Labour MPs to be placed on the leadership ballot. The fact that this question has no clear answer shows just how poorly drafted the Labour leadership rules are.  Labour’s election co-ordinator, John Trickett MP, suggested that the party should get behind Corbyn, and it appears that the leader has every intention of fighting all the way. So much for a deal.

Presumably hoping to seize on a gap in the political drama, Angela Eagle launched her bid to oust Corbyn officially today. “I’m not a Blairite, I’m not a Brownite and I’m not a Corbynista. I am my own woman – a strong Labour woman” she said to a rapturous cheer. In a rebuke to Momentum she said: “I’m not here for a Labour party that just takes part. I’m here to win.” It was all rather overshadowed by developments in the Conservative camp.

 Question: Will Owen Smith chuck his hat in too?

 Snap general election?

There have been calls, particularly from the left, for Theresa May to call a general election. They argue that it’s wrong that the PM should be chosen solely by a handful of Tory MPs and have no personal electoral mandate at a time like this. Labour’s John Trickett MP said in a statement that: "It now looks likely that we are about to have the coronation of a new Conservative Prime Minister. It is crucial, given the instability caused by the Brexit vote, that the country has a democratically elected Prime Minister”. He continued – rather unconvincingly – that he was putting the whole of the party on a General Election footing. Caroline Lucas MPs of the Greens People said something very similar.

There are also those of a Remain persuasion who hope that a second election will allow the public to recognise that they have made a huge mistake and unwind the whole Brexit thing. This argument isn’t very convincing to me because the mandate for Leave is 17,410,742 people – far bigger than this government or any that would follow it. Only 11,334,576 voted for the Conservative majority in 2015. Or, we can look at it another way: just where does the ‘Stop Leave’ coalition come from? Is it Labour, the Lib Dems and the SNP? That doesn’t seem to work. Under May the Conservative party – remainers and leavers - would presumably fight a snap election on an ‘out means out’ platform, and say that it is the party that is most competent to deliver Brexit. And they would probably win a majority in doing so. That doesn’t change a thing. In any case, we live in a Parliamentary system and (as we know from A-level politics) the executive stems from the legislature. If Theresa May does not want to call an election, well that’s up to her.

But what are pros and cons of calling a snap election?

Reasons for May not to call an election:

  • She has said very clearly that there will not be one
  •  She doesn’t have to offer one
  • There’s no May manifesto
  • It’s a real pain – including going through the votes in Parliament under Fixed Term Parliaments Act to dissolve Parliament
  • The country has probably had enough of this for now
  • Business and the markets have dealt with enough instability
  • There’s no guarantee of victory  

Reasons for May to call an election

  • Labour is in disarray – this could destroy the party
  • UKIP is rudderless
  • Lib Dems have not had time to capitalise on the Leave vote
  • A victory would give her a clear, direct mandate
  • She could increase the Conservative majority
  • The Conservative party can probably afford it, the others can’t

Will she or won’t she? For now, I think I am taking what May has said at face value. However, given recent events, taking anything anyone says at face value is probably extremely naïve.

Trading places

George Osborne was in New York today, to persuade Wall Street that the UK is not turning into Little Britain and is still open for business. In an op-ed in the Wall Street Journal George Osborne channelled his namesake John Osborne (or perhaps Noel Gallagher) saying ‘there is no point looking back in anger; in great democracies like ours, when the people speak, we respect their verdict.’ Osborne is also travelling to China and Singapore in the coming weeks.

 Companies and markets

The markets responded strongly to the emergence of greater political certainty. That certainty effect in full:

Sterling – boing!

Sterling – boing!

Housebuilders: ka-ching! 

Housebuilders: ka-ching! 

Soap opera: I was intrigued to see a story about pongy soap purveyors Lush picked up in Ryan Heath’s excellent Brussels Playbook this morning. Under the headline: Lush Founder: Voters said they don't want our EU staff - we'll grow our business in Germany instead the Bournemouth Echo quotes Lush founder Mark Constantine as saying the referendum had signalled to his immigrant staff that they were “not wanted by people in Poole”. Lush is to move production for continental European customers to Dusseldorf, in a move that is reported as linked directly to the referendum result. “It’s not a question of cutting local production, it’s a question that the growth is going there” Constantine said. He’s also quoted as saying “Mo [wife and co-founder] said when she went to Germany last week it was awfully sad to see that’s where the centre of things would be in the future and not here. But we don’t know that yet. All we know is we’re moving our mainland European production over there, along with those people who wish to go.”  

My Remainer tendencies are very well known, but I will say when something doesn’t quite add up to me. That last part of Constantine’s quote was pretty equivocal. Lush had already announced its new Dusseldorf factory in February. An article from that time said the factory would be opened to take pressure off its UK and Croatian factories. Read the two articles side by side and the message is completely different. Lush was already doing this. I don’t doubt that Brexit strengthens the logic for opening the German factory. The vote clearly places non-UK workers in an uncomfortable position. But the reporting that Lush is doing this just because of Brexit doesn’t seem to tally with what the company has previously said.   

Farnborough International Air Show, one of the world’s largest aviation trade shows, kicked off today. Outgoing PM David Cameron opened it and announced a partnership with Boeing to create 2,000 jobs in the UK. The UK confirms it is to buy 8 Boeing Poseidon submarine hunting aircraft (because: Russia). The bosses of Rolls Royce and BAE Systems put a brave face on Brexit this morning (they don’t really have a choice). The sad truth is that the world is not a particularly stable place at the moment which will help their defence divisions. BAE’s boss, Ian King, pointed out to Radio 4 that the EU is not a defence entity and that co-operation was at an intergovernmental level. The UK’s closest defence partner aside from the US is France and its unlikely to see this change any time soon. Warren East of Rolls said that 75 per cent of its business in the next decade was probably coming from outside the EU. On display at Farnborough this week is the F-35B, which is soon to enter service in the UK and makes it second appearance in public here. The US is the lead partner of the largest, most expensive defence procurement in history, with NATO members United Kingdom, Italy, Australia, Canada, Norway, Denmark, the Netherlands, and Turkey part of the programme.

Plane spotter corner: Here’s my picture of an F35 at RIAT, Fairford yesterday.

Plane spotter corner: Here’s my picture of an F35 at RIAT, Fairford yesterday.

Tweet of the Day

Time to sell shares in Eton...

Power cuts...

From air show to hair show. Time to go long Maggie’s hairstyle?

From air show to hair show. Time to go long Maggie’s hairstyle?

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.:

RBS Economics

RBS Economics

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