By Richard Pickering, Head of Futures Strategy
Entente cordiale? The question of whom we are negotiating with over Brexit is a pertinent one. The factual answer is Michel Barnier who reports in to the European Council and its President Donald Tusk. However, it is the representatives (typically heads) of the member states who will make the decisions, and a qualified majority of 20 of them (65% of the total EU population) needs to approve it. However, beyond the facts, some members are inevitably more equal than others – the UK needs to focus on convincing both Germany and France, to which others are likely to align. Negotiating with her newly-formed coalition, with the centre-left SPD, is dominating Angela Merkel’s agenda at the moment and weakening her voice in Europe. Meanwhile Macron is on a charm offensive, hosting 140 global business leaders this week. He has reached an accord with May over processing migrants in Calais. He has even shown some empathy for the UK’s position on Brexit, agreeing that France would have ‘probably’ also left the EU given the same vote. However, with the regard to the outcome of negotiations he is unequivocal: ‘Except if you change your mind – you will not be part of the single market’.
Carillion consequences Carillion’s collapse last week has left a number of unanswered questions and calls for reform of the £10bn pa public-private contracts industry. Theresa May has used the opportunity to signal a wider clampdown on how pension plans are managed. Carillion had a pension deficit of £900m. This shouldn’t be much of a surprise. Wealth, which is being accumulated at a slower rate (due to 10 years of low interest rates) minus liabilities, which are increasing (people are living longer), equals a growing gap. However, the accusation is that companies could elect to pay down deficits instead of paying dividends, or more politically, by reducing exec pay. May’s proposals (to be drawn up in a White Paper) feel quite socialist for a Tory government: huge personal fines for execs and more powers to the regulator. Alongside this is a requirement that companies demonstrate that they have taken into account the long-term implications of their actions. Is this a turning of the tide for UK plc?
HQ2 Tech giant Amazon has announced its long-list for a city to host its second American headquarters. It is perhaps a sign of the dominance of global tech companies that their choice of which city to grow in warrants a tender from the city government. However, there is a huge amount to play for. Amazon will invest $5bn and create up to 50,000 highly-paid jobs. For context, that’s about 50% of all economically-active people in Hull, and would revolutionise any UK city’s office market. How far will cities go to achieve this? Toronto offered to set up an Amazon helpdesk; Washington DC offered a 0% corporate tax rate for 5 years, Tucson, Arizona, offered a 21 ft cactus as a gift, whereas Stonecrest, Georgia, has reportedly offered to change its name to ‘Amazon, Georgia’. These are indicative of the kind of offers that UK cities will need to consider in the coming years (maybe not the cactus one), as fewer big occupiers roll out EMEA mega-campus tenders.
Take Me to Church The Royal weddings are really starting to queue up, following Princess Eugenie’s announcement of her engagement to Jack Brooksbank this week. The ceremony will be held at St George’s Chapel in Windsor. Speaking as someone who got married in a woodshed in the Australian Outback, I will concede that St George’s is a reasonable venue. Churches are getting more commercially amenable as collection plates gets lighter. And so with weddings at St George’s being restricted to Royals and Knights of the Realm, are they missing out on a piece of the action? In a word, ‘no’. There are 52,000 CoE weddings each year, spread across 15,933 churches, each costing £474 (bell ringers and flowers excluded). Therefore, income from weddings totals a rather paltry £1,540 pa per church. In contrast, with the bill for Will and Kate’s nuptials totalling an estimated £10m, even if St George’s took 0.01% of that they would still be quids in. Meanwhile, our Retail team managed to bag (Love Actually’s) Grosvenor Chapel for their annual planning day this week, which reminds me of the words of US chat show host Pauline Phillips: ‘A church is a hospital for sinners, not a museum for saints’.