9 February

Scott Reid

9 February

Good morning,

It is the most important government shutdown facing the US … since at least last Thursday.
Yes, the announcement may not come as a surprise, but the US government has shut down for the second time in three weeks after Congress failed to pass a new spending bill before federal funding expired at midnight (05.00 GMT). After a debate which spent a week in the Senate, the logjam is because of the refusal of a single senator, Republican Rand Paul of Kentucky, to approve a $300 billion extension of a funding cap, adding that, “I think the country’s worth a debate until 3 in the morning, frankly.” Workers who have yet to hit snooze on their 6 o’clock alarms may yet disagree.
But before you tune out of the monotony, there is hope. Senators are still expected to approve the deal in a series of votes that began at 1 am (06.00 GMT) on the promise of stricter caps. Should the measure pass the House of Representatives, where its outcome is less certain, then the government could reopen before the workday begins.
Last minute deals – or, indeed, no deal at all - were also themes on this side of this Atlantic this week, as the Prime Minister’s much-hyped two-day “war cabinet” for Brexit came to naught yesterday. Little detail was given as ministers left Downing Street after the marathon five-hour meeting broke up, save for one cabinet source who said there was “no kind of agreement at all.”
Time is now most certainly ticking for the Prime Minister, who The Sun reportshas instead ordered a cabinet “away day” at her official country estate at Chequers. I for one am dubious as to how far team-building exercises might go to solving the impasse, but with the formal opening of the second phase of Brexit negotiations just around the corner in March, at this point the government should be willing to try anything.
For now, at least, the British public look on as hopes of a quick trade deal with the EU may narrowly avoid going down the drain. But in one of the week’s odder headlines, this might be more than you could say for one furry passenger of a US airline yesterday…



HM Revenue and Customs (HMRC) has written to more than 500 firms over the last three months as the government seeks to clamp down on unpaid internships. As part of the Taylor Review into working practices, which was published last year and concentrated on the part-time and flexible working patterns within the so-called ‘gig economy’, the government has now charged HMRC with minimum wage enforcement for interns. The media, performing arts, law and accountancy are expected to be the sectors put under the toughest scrutiny.
Two British Isis militants have been captured by US-backed Kurdish fighters in Syria, having been implicated in acts of torture and execution. The two men, Alexanda Kotey and El Shafee Elsheikh, were the last remaining members of “the Beatles” group, so-called for the British accents of its members, who are allegedly responsible for the murder of approximately two dozen hostages in Syria.
Human eggs have been grown to maturity in a lab for the first time in a breakthrough for fertility science. Scientists working at the University of Edinburgh announced that they had removed egg cells from women’s ovarian tissue and matured to them to the point of fertilisation. It is hoped that the advance may replace IVF as a fertility treatment, and preserve the fertility of women undergoing cancer treatment.



Trinity Mirror is to buy Richard Desmond’s Daily Express in a deal worth £126.7 million. The sale brings to an end Mr Desmond’s 18 years as a UK newspaper owner and will also include titles such as the Daily Star and OK! Magazine. As well the Mirror titles, Trinity Mirror owns a string of local papers and is the UK’s biggest regional newspaper owner.

Global stock markets have continued to fall after US Dow Jones Industrial Average closed down by more than 1,000 points for the second time this week. In early trading this morning, Japan’s Nikkei 225 index slid by 3.2 per cent, while China’s Shanghai Composite fell by 5 per cent. The Dow Jones was down 4.2 per cent yesterday, whilst the S&P 500’s 10% decline from its January high means that the index has officially entered correction territory.
Japanese business leaders have warned that they could leave the UK after Brexit if trade barriers hit profits. Speaking after a Downing Street summit with 19 leaders from Japan’s biggest business operations in the UK, including carmakers Nissan, Honda and Toyota, the Japanese Ambassador to the UK, Koji Tsuruoka, said that, “If there is no profitability of continuing operations in the UK… then no private company can continue operations. It is as simple as that.”
Twitter has reported a profit for the first time in its 12-year history despite a decline in its number of users. The social network posted a $91 million profit in the final three months of 2017, with revenue raised from more effectively targeted advertising and sales growth in the US, compared with a $167 million loss last year. It also saw a drop of one million in the number of its active monthly users, from 69 million to 68 million.



What happened yesterday?
The pound was up, and the markets were down as the Bank of England signalled that interests rates may rise sooner and higher than it had indicated. The Bank voted unanimously to hold interest rates at 0.5 per cent, but upped its forecasts for economic growth and an inflation figure above its 2 per cent target in three years’ time, leading analysts to now confidently predict a rise in May. The pound spiked on the news, up more than 0.8 per cent against the dollar and euro yesterday, before cooling to $1.39 and €1.14.
But sterling’s gains were the markets losses as the FTSE 100 closed down almost 1.5 per cent at 7,170.69. It is worth noting that a stronger pound tends to hit the FTSE as its constituents derive around 70% of their earnings from overseas.
Due to the concerns over interest rates, housebuilders Persimmon, Berkeley Group, Barratt Developments and Taylor Wimpey were all hit, with shares in each down more than 4 per cent. The biggest faller, however was the cyber security solutions provider Sophos whose share plummeted more than 17% after reporting a 19.6% drop in adjusted operating profit in the third quarter. At the other end of the scale, contracts provider Compass Group led the FTSE’s gains, up 5.32 per cent after posting healthy margins for its first quarter.


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Reflecting on a week of ups-and-downs on global stock markets, Gillian Tett comments in the FT that it holds both positives and negatives when predicting a future financial crisis. Although the past week has revealed the market’s continuing reliance on cheap debt (indeed, 40% higher relative to GDP than it was a decade ago) and the higher frequency of market swings that will occur as interest rates rise, Tett concludes that these factors also mean any future crisis will be easier to ride out and short-lived due to healthier cash flows.
Writing in The Times, Philip Collins comments on a sad irony that those areas which most loudly supported the campaign to leave the EU have been betrayed by their political leaders. Doubting whether the “Mogg-Johnsons” of this world have much sympathy for their supporters in Grimsby, Hull and Sunderland, Collins suggests their wider discontent was poorly channelled through a vote to leave.



In addition to its earliest attested use (1756) meaning “low or disreputable people”, the word slang is also autological, being an abbreviation for “shortened language”.



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