Well the ‘momentum’ appears to lie with Labour and its rejuvenated leader so far this party conference season. Though at the time of going to press we are yet to capture the highlights of the Conservative party conference, from there we can expect more bloodletting rather than the jovial sing-along and frivolity of Corbyn’s landmark speech in Brighton. Corbyn thinks Labour’s a party in waiting – and seems to be holding a broad coalition together over Brexit, for now anyhow – and wants Theresa May to step aside. Importantly, he thinks politics in 2017 has caught up with the financial crisis of 2008 and that the centre of gravity has shifted firmly left, with a different approach needed.
As the prime minister rebounds swiftly to defend the free market and prepares for Conference, she can draw some comfort from the re-election of ‘Mutti’ Angela Merkel for a fourth term as German chancellor (though note alarming inroads by the extreme right), plus the impact of her Florence Speech which has softened the ‘tone’ of the now familiar post-talks press conferences with Michel Barnier, the EU’s elected Brexit negotiator, and UK Brexit secretary David Davis.
Being heard over and above, and asserting herself against, the splinter Brexit voices in her maverick cabinet is important. Even by his own standards, Boris Johnson’s 4000 cheeky opus smacked of bare-faced gall. So, not much change in terms of Tory in-fighting and nothing of substance yet on Brexit. Yes, there has been the promise of a transition standstill where we remain in the single market for two years after Brexit to create more business certainty and accord more time to adjust. However, the three key intractables – EU nationals, borders and the budgetary cost…we’re going to have to contribute £20bn+ after we exit – all referenced in last month’s blog, remain just that!
And just when things were beginning to steady, the Aerospace Bombardier crisis in Northern Ireland is a worrying early pointer to the perils ahead on bilateral trade negotiations and the delicacy of DUP support propping up Theresa May’s government.
Domestic especially credit/cost of living woes
While the debate on the continuing legitimacy of capitalism and how the hybrid model we actually have can be made to work better, let’s drill down into the economy and regulatory focuses.
Following the Asset Market Study, we’ve had the FCA refer investment consultancy services to the CMA, which is now conducting an 18-month Inquiry. However, we can celebrate the five-year anniversary of the introduction of auto enrolment on the 1st October, along with some other important pension consultations on allowing PPF to take account of bridging payments and increasing the cap for its Financial Assistance Scheme.
Unemployment is at a record low level of 4% but scratch beneath the surface and some worrying precarious employment trends and dynamics are revealed. Still, it compares favourably to other EU nations including France where unemployment stands at 12%.
All eyes are on the Bank of England as we watch for any decision by its Monetary Policy Committee on interest rates, with consumer and mortgage debt and strained incomes all balanced precariously in the event of an eventual upward lift. The Bank of England is holding a conference to belatedly celebrate 20 years of being granted operational independence over monetary policy (which was actually 6 May 1997). However, the situation is bad for levels of personal debt. Pundits predict that when interest rates do rise, the personal predicament of many consumers will deteriorate rapidly, with 3m UK account holders with persistent credit card debt alone. Timely, therefore, is FCA’s consultation on staff incentives and performance management in consumer credit firms – as there’s clearly an interplay here with the vicissitudes of consumers and credit firms’ financial business models.
29th September 2017