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DAILY BRIEFING

DAILY BRIEFING

All eyes on the chancellor, again

Written by Javier Maquieira, senior associate 
Edited by Tom Gillingham, associate partner
24 September 2020

Good morning,

The UK’s Coronavirus Job Retention Scheme was introduced in March on the principle that a balance between keeping people safe from the coronavirus pandemic and protecting the economy could only be struck with unprecedented support from the government.
 
Now that this programme is coming to an end amid a second wave of Covid-19 infections and new restrictions are being enforced across the country, there is renewed pressure on chancellor Rishi Sunak to come up with alternatives.
 
After hours of working on “creative and imaginative” solutions, as the prime minister put it, the chancellor will this afternoon update the House of Commons on the UK government’s plans to continue protecting jobs through the winter.
 
According to The Timestoday’s announcement will feature a multibillion package of support measures, including wage subsidies for part-time workers, VAT cuts, and more loans for struggling businesses. The successor to the furlough scheme could look a lot like the German Kurzarbeit (“short work”) system, through which the Treasury would pay the wages of employees for short-time working – between at least 50% to 60% of their normal hours.
 
Crucially, this new phase in the coronavirus crisis has led Sunak to scrap the autumn budget entirely, as he believes the government’s priority is to see the UK through the coming months, rather than to make long-term tax and spending decisions. The move could cause tension with devolved governments, which need the clarity of a budget to set their own spending limits and avoid depending on estimates.
 
In Scotland, first minister Nicola Sturgeon already hinted at her daily briefing yesterday she would “likely” have closed pubs and bars if she had “had the ability to bring more financial firepower to mitigate the jobs and economic impact”.
 
Providing the right economic support will certainly be key to avoid a short-term economic crisis as businesses all across the UK struggle to keep workers on the payroll. Yet losing sight of the longer term in the process can become, as the Spanish idiom goes, bread today, hunger tomorrow. Who said striking a balance was easy? 

News

A police officer in the US state of Kentucky has been charged over the narcotics raid that resulted in the shooting death of Breonna Taylor at her home. While the other two officers involved in the fatal shooting have not been charged, a grand jury has indicted Brett Hankison on three counts of “wanton endangerment” but not for the death of the 26-year-old black woman.
 
In related news, two police officers were shot in Louisville amid protests over the jury’s decision, both sustaining non-life-threatening injuries. While protests in the city turned tense as the day went on, thousands marched in largely peaceful protests in more than a dozen US cities.
 
The health secretary, Matt Hancock, will tell the public to download a coronavirus tracing app today, backed by one of the biggest government advertising campaigns ever, to convince people that using the long-awaited app will reduce their risk of infecting vulnerable relatives. (£)
 
US President Donald Trump said at a press conference at the White House yesterday that he would not commit to a peaceful transfer of power “win, lose or draw” to Democrat Joe Biden. He has again cast doubt on postal voting and insisted “there won’t be a transfer, frankly, there’ll be a continuation.”

Business and economy

Australian bank Westpac is set to become the second top lender in the country to pay huge fines for breaching money laundering rules. If the A$1.3bn (£0.7bn) fine is finally approved in court, it will be the largest civil penalty in Australian corporate history. Officials have said some of the international transactions the bank failed to adequately report were potentially linked to child exploitation.
 
The European commission plans to clamp down on ‘sweetheart’ corporate tax deals across the European Union as pressure mounts for firms and individuals to share the burden of recessions. The campaign is part of the bloc’s reforms in its €750bn recovery fund and is aimed at specific tax measures that distort the single market. (£)
 
Major carmakers have sued the US government over what they believe are “unlawful” tariffs imposed on certain parts imported from China. Tesla, Volvo, Ford and Mercedes filed their lawsuits against the Trump administration this week, naming the US trade representative, Robert Lighthizer, as a defendant. Elon Musk’s electric car company seeks cancellation of the levies along with a “refund, with interest” of duties already paid.

Columns of note

In the Financial Times, Philip Stephens looks at how Donald Trump has put the world’s most powerful democracy on the side of authoritarianism. The US president’s transactional approach to foreign policy has left no place for grand strategies, let alone values, which explains, Stephens argues, his warm relationships with fellow hardline nationalists such as India’s Narendra Modi and Israel’s Benjamin Netanyahu. In the case of China, Xi Jinping was hailed by Trump as a potential business partner until the US president decided he could win votes by bashing Beijing, according to the author. (£)
 
Afua Hirsch explains in the Guardian how “lookism” – the ridiculous idea that women become socially, professionally or aesthetically redundant after a certain age – continues to hold women in broadcasting back. Hirsch argues that what happens to female broadcasters is not just a symptom of what happens to women in general, but also a cause. Speaking as a woman of colour, she concludes that if white female broadcasters are at risk of “being discarded the minute they no longer conform to ideas of youthful female beauty, it looks less than peachy for everyone else.”

Cartoon source: The Telegraph

Markets

What happened yesterday?

London stocks finished higher on Wednesday despite a weak purchasing managers’ index data in the UK. The FTSE 100 ended the session up 1.2% at 5,899.26, while sterling was stronger against both the dollar by 0.24% at $1.2764 and the euro by 0.48% at €1.0927.
 
In the US, the S&P 500 lost 2.4% after the Federal Reserve emphasised the need for Congress to agree on a new round of stimulus to support the economic recovery. The Nasdaq Composite fell three per cent, bringing its losses to about 12% since August.
 
In company news:
 
JD Sports Fashion was 3.83% firmer following well-received first-quarter results from Nike.
 
SSP Group – the travel hub catering and retail specialist – advanced 12.34%, despite warning of “considerable” job losses and saying it expects second-half sales to plummet by 86% amid the coronavirus pandemic.
 
3i Group rallied 1.67% after the private equity and venture capital company said results at its Action discount retail business beat expectations in the past three months.
 
PZ Cussons was down 2.33% after a good start to the current financial year, despite the manufacturer saying it expected tougher trading with the UK and other markets in recession.

What’s happening today?

Finals
Cvs Group
Dfs Furn

Interims
Biome Tech, Ebiquity, Faron Pharma, Global Yachting Group, Pendragon, Portmeirion, Rtw Venture Fu., SIG

AGMs
Alcentra Gbp, BMO Managed Portfolio Growth Trust, BMO Managed Portfolio Income Trust, Caffyns, Foresight Solar, Integumen, Kainos Group, Mercia Asset, Miton Global, Nwf, Premier Vet Grp, Secs.scotland, Shearwater, Sure Ventures, Triad, Versarien

Int. economic announcements
(00:00) Continuing Claims (US)
(09:00) IFO Business Climate (GER)
(09:00) IFO Current Assessment (GER)
(09:00) IFO Expectations (GER)
(13:30) Initial Jobless Claims (US)
(15:00) New Homes Sales (US)

Source: Financial Times

did you know

There is no ‘critical period’ to learn a second language. Adults actually learn languages faster than children. (source: @qikipedia).

Parliamentary highlights

House of Commons

Oral questions
Digital, Culture, Media and Sport (including Topical Questions)
 
Attorney General
 
Business Statement
Business Questions to the Leader of the House – Mr Jacob Rees-Mogg
 
Backbench Business
General Debate on the situation in Yemen – Tim Loughton
 
General Debate on the settlement and annexation of the occupied Palestinian Territories – Stephen Kinnock, Crispin Blunt, Layla Moran, Andy Slaughter
 
General Debate on the Rohingya Humanitarian crisis and the effects of the Covid-19 Pandemic – Jeremy Corbyn, Sir Peter Bottomley
 
Adjournment
NHS hysteroscopy treatment – Ms Lyn Brown

House of Lords 

Oral questions
Impact on the delivery of the new Emergency Services Network of the decision to ban Huawei equipment – Lord Harris of Haringey
 
Troubles-related incident victims payment scheme in Northern Ireland – Baroness Ritchie of Downpatrick
 
Expansion of mental health services for young people to deal with concerns expressed during the COVID 19 pandemic – Baroness Massey of Darwen
 
Encouraging schools to participate in Keep Britain Tidy’s “Great British September Clean” campaign – Lord Robathan
 
Legislation
Agriculture Bill – Report stage (day 4) – Lord Gardiner of Kimble

Scottish Parliament 

First Minister’s Questions
 
Portfolio Questions
 
Ministerial Statement
Draft Infrastructure Investment Plan 2021-22 to 2025-26
 
Stage 1 Debate
Protection of Workers (Retail and Age-restricted Goods and Services) (Scotland) Bill

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