Bills, borders and balancing acts

By Richard Pickering, Head of Futures Strategy

Humility and resolve  Today, the Queen set out the legislative programme for the next two years, and it seems that Theresa May has indeed accepted the degree of humility that she promised. In announcing 14 bills and two draft bills, provisions on: grammar schools, fox hunting, the ‘dementia tax’, an end to school lunches and an end to the pension triple lock were all conspicuous by their absence. Similarly missing was an announcement on Donald Trump’s proposed state visit to the UK, suggesting that this might not now happen. Much of the speech was dedicated to provisions around Brexit, including new bills on trade, customs and repeal of legislation. Technology provisions covered matters such as data protection, electric cars, commercial satellites, space bases and HS2. Finally, the unanimously popular provision on banning unfair tenant fees was included together with proposals on house building and housing market transparency.

Start of EU negotiations  Almost one year on from the referendum, negotiations have commenced between David Davis, and Michel Barnier over the UK’s future relationship with the EU. The UK appears to have accepted the EU’s position that there must be substantial progress on the terms of the exit (including the ‘Brexit Bill’) before talks can commence on the terms of a new trade arrangement. The most immediate points to be discussed include the status of UK and EU citizens living abroad, and the nature of Northern Ireland’s new relationship with the EU. The latter may be influential on the UK’s final position on the single market / customs union, with the alternative to remaining in the single market seemingly being a hard border. However, as Davis (quoting Churchill) noted, ‘The pessimist sees difficulty in every opportunity; the optimist sees opportunity in every difficulty’.

A fine balance  The fine balance between promoting growth and containing inflation last week took as step to the right as the Monetary Policy Committee voted in favour of maintaining interest rates, but only by 5-3, rather than 8-1 as previously. Mark Carney has been quick to dismiss speculation, whilst noting, ‘As spare capacity erodes, the trade-off that the MPC must balance lessens, and all else equal, its tolerance for above-target inflation falls’. As Kristin Forbes (who voted to raise the rate the past three times) steps down this week, it remains to be seen how this will affect the MPC’s decision going forwards. Her parting comments: ‘The increase in headline inflation isn’t just a temporary effect of the exchange rate that’s going to go away … For a period now, we have been underestimating the inflationary pressures — I wouldn’t be surprised if we continued to do that.’

Gig politics  A rare run of sunshine sets an optimistically welly-free tone to this week’s Glastonbury festival. The 900-acre site, which has formerly played host to international stars like Jay-Z, will this year feature tea-total, vegetarian allotment-owner ‘JC’. Mr Corbyn will take to the Pyramid Stage as the warm-up act for rapper Killer Mike. Of course, politics and pop aren’t such unlikely bedfellows, as former lead singer of rock group Ugly Rumours Tony Blair, might attest. Weaving contemporary pop into his campaigns, Blair employed symbolical songs such as ‘Things can only get better’ (D:Ream, 1997); ‘Call on me’ (Eric Prydz, 2004) and ‘Right here, right now’ (Fatboy Slim 2005). Meanwhile, from the current iTunes chart, JC and Theresa have the following potential options: Unpredictable (Olly Murs), Bad Liar (Selena Gomez), and No Promises (Cheat Codes). They’d be well advised to opt for ‘There’s nothing holding me back’ (Shawn Mendes), or perhaps they could reflect on the words of Freddie Mercury…. “Is this the real life? Is it just fantasy? Caught in a landslide, No escape from reality.”



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