20 February


20 February

Good morning,

If you are a UK government minister preparing for Thursday’s away day to Chequers, and you are reading theFinancial Times this morning, you might just want to pack an extra pair of socks in your suitcase.
For it is being reported that Theresa May plans to keep the cabinet at her official residence until such time as they thrash out a Brexit plan that would see a high level of alignment between EU and UK rules. The prime minister’s overall aim for the excursion is to deliver a settlement on what kind of future trading relationship the UK should have with the EU, an issue that has been the subject of the greatest contention amongst her team.
The difficulty for the prime minister is that any position must satisfy both factions in the cabinet. The noises from Number 10 appear to suggest that May is keen on promising that Britain will continue to maintain European standards after it leaves the EU. However, she is conscious that this may be a compromise too far for Brexiteers such as Boris Johnson, and so is likely to attempt to appease them by suggesting that the country has the flexibility to move away from EU rules over time under a system of “managed divergence”.
We won’t have to wait too long to hear the outcome from the Chequers conversations, as next week May will deliver a speech that sets out her latest proposals for the future relationship between the UK and the EU. 
Brexit Secretary David Davis will play the support act to May’s top billing later today, where he is expected to promise that the British government has no interest in developing a Singapore-style model of light regulation, or throwing the country “into a Mad Max-style world borrowed from dystopian fiction".

Whatever agreement may be reached on Thursday, I predict that it will take more than dinner at a country house in Buckinghamshire to convince Angela Merkel and the other key EU decision makers that the UK plan is a deal worth accepting.


Senior Oxfam executives are to appear before a committee of MPs today amid criticism over the way it handled allegations of sexual misconduct by its staff in Haiti. The International Development Committee will question the charity's chief, Mark Goldring, and chair of trustees, Caroline Thomson, about the safeguarding policies in place at the charity.
Luis de Guindos, Spain’s economy minister and a former Lehman Brothers banker, has become vice-president of the European Central Bank. He was unopposed for the role after Ireland said on Monday that it would withdraw Philip Lane, its central bank governor, from the contest, handing Madrid one of the eurozone’s most prominent policymaking jobs.
A planned strike by academics over staff pensions could result in students at the country’s leading universities having their final-year exams cancelled. As many as 42,000 staff at 64 institutions, including Oxford, Cambridge, Durham, Bristol and Manchester, will walk out on Thursday and Friday in the first of 14 days of strikes that run until March 16, with a further round of strikes scheduled that would last for five months and stretch into the summer term. (£)

Business & Economy

The bookmakers William Hill has been hit with a penalty package totalling £6.2m after it breached anti-money laundering and social responsibility regulations. The Gambling Commission said that the company did not do enough to ensure prevention measures were effective, resulting in 10 customers being able to deposit money linked to criminal offences.

The European Central Bank has frozen payments by Latvia’s third biggest bankafter ABLV was accused by the US authorities of breaching sanctions against North Korea. The US Treasury last week alleged that the lender allowed clients to conduct business with North Korea in violation of UN sanctions, accusations that have led to calls for Ilmars Rimsevics, the head of the Bank of Latvia, to step down from his role.
HSBC has this morning posted mixed results for 2017, the last delivered by departing chief Stuart Gulliver. Europe’s largest bank halted a six-year decline in annual revenues, bringing in $51.5bn in adjusted revenues, a 5% increase on the year before. However, this was below a consensus of projections from analysts. Pre-tax profit for the full year also fell below expectations, despite going up 11% on last year at $20.99bn. Early trading has shown that stocks have slid 3% in Hong Kong. 



What happened yesterday?
World stocks posted their first loss in five days on Monday, ending a winning streak that saw them recover almost half their losses from a strong sell-off a fortnight ago.
The FTSE 100 fell 0.7% or 49.8 points to close down at 7,244.91. The most notable faller on the day was Reckitt Benckiser Group, which saw shares drop 7.2% to £60.98 after the consumer goods firm announced profit margins that were lower than expectations and could continue to be hit this year.
The FTSE 250 also recorded a loss, ending the day 0.4% or 76 points down to 19,657.65. Despite reporting strong global growth, British cybersecurity firm Sophos Group led the index’s biggest fallers, seeing shares down 5.6% to 502.9p.
European markets weighed on stocks globally, given that there were market holidays in China and the US. The MSCI world index, which tracks shares in 47 countries, was down 0.1%.

HSBC Holdings
InterContinental Hotels Group
Lighthouse Group
Novolipetsk Steel GDS (Reg S)

Dunelm Group
Green Reit
Springfield Properties


UK Economic Announcements
(11:00) CBI Industrial Trends Surveys

International Economic Announcements
(07:00) Producer Price Index (GER)

Columns of note

Brexit has turned British political analysts into football fans. That is the view of Gideon Rachman, who writes in theFinancial Times that the issue has become so divisive, that those on either side of the issue are no longer capable of dispassionate analysis. Instead, he argues, they react to news from Europe as though they were football supporters: “cheering anything that seems to confirm their prejudices — and dismissing any discordant information”.
Writing in The Times, Hugo Rifkind says that alleged Russian interference in foreign elections is systematic of a current trend in western politics, whereby opinions are shaped in Facebook groups and social media silos. He says we have reached a “place of political like-mindedness” and the worry is not so much that Russian involvement exists, but instead how little they actually had to do in order to infiltrate the political system, most notably in America. (£)

Did you know?

Yesterday, Americans celebrated President’s Day. Established in 1885 in honor of George Washington, the holiday originally fell on Washington’s birth date of February 22nd each year. It was moved in 1971 to the third Monday in February as a way to create more three-day weekends for workers. The federal government still refers to the holiday as “Washington’s Birthday”.

Parliamentary highlights

House of Commons

Oral questions 
Foreign and Commonwealth Office (including Topical Questions)

Ten Minute Rule Motion 
Postal voting -  Damien Moore

House of Lords
Oral questions
Improving the regulation of charities, social enterprises, and voluntary organisations -  Baroness Barker

Improving social care for disabled people below retirement age -  Baroness Campbell of Surbiton

Scottish Parliament
Scottish Government Debate: Scottish Rate Resolution


House of Commons
Oral questions
Cabinet Office and Chancellor of the Duchy of Lancaster (including Topical Questions)

Prime Minister's Questions Time

House of Lords
Oral questions
Assessment of living conditions in Gaza -  Baroness Tonge

Loss of retention monies by small firms following insolvency of Carillion - Lord Aberdare

European Union (Withdrawal) Bill - Committee stage (day 1) -  Lord Callanan

Scottish Parliament
Portfolio questions
Rural Economy and Connectivity

Stage 3 Proceedings: Budget (Scotland) (No.2) Bill