Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

A costly Labour

Written by Maria Julia Pieraccioni, associate
Edited by Tom Gillingham,  associate partner
27 July 2021 

Good morning,

During a March 2016 town hall in Ohio, at the height of the American presidential election campaign, former secretary of state Hillary Clinton was asked how she intended to transition the United States towards renewable energy were she president. Her answer— “we’re going to put a lot of coal miners and coal companies out of business”—almost cost her the election then and there.

The comment Clinton made jarred with workers and unions, who had suffered from decades of disenfranchisement from the Democratic Party, and she ultimately never regained their confidence.

But this left-wing voter malaise is far from all-American.

UK Labour leader Keir Starmer is shepherding a disassociated Labour party, with stark differences between where it started originally and what it embodies today. Take the recent clashes with the Unions over quarantine exemptions. Amidst the ‘pingdemic’, the UK’s largest unions have encouraged key workers, including those in transport and food, to ignore the exemption and stay at home to protect those at work. Starmer has taken an opposite position, urging workers to take part in daily testing but return to work.

The face-off with unions suggests a more centrist Labour party, and this is not the only action that shows a move away from former leader Jeremy Corbyn’s approach. Last week, four left wing groups were proscribed: Socialist Appeal, Labour Against the Witchhunt, Labour in Exile Network and Resist. Most significantly, the move targets organisations deemed to be on the extreme left fringes of the party and “could see up to 1,000 Labour members effectively expelled”.

The comparisons between Starmer and Neil Kinnock, the Labour leader in the 1980s who similarly attempted to purge the party of left-wing extremism only to be defeated twice in general elections, are rampant. A YouGov poll shows his popularity, in the four decades since, has declined to 16%. Keir Starmer has also suffered a steep decline in approval ratings, with one YouGov poll showing that, in July, 59% of the people surveyed believed he was doing “badly” and only 21% believed he was doing “well” as Labour leader.

As it stands, Starmer is walking a tightrope and Clinton’s now infamous campaign misstep shows how swiftly a fall can come when engaging with workers and unions. With so much apparent focus on internal divisions, many of those on the political left could be wondering what the UK Labour Party actually stands for.

News

Team Great Britain won three gold and two silver medals at the Tokyo Olympics yesterday, on a day dubbed ‘Magic Monday’. Swimmer Adam Peaty, divers Tom Daley and Matty Lee, and mountain biker Tom Pidcock struck gold, while triathlete Alex Yee and taekwondo star Lauren Williams won silver.

The number of reported UK coronavirus cases continue to fall for a sixth day in a row, and it is the first time since 4 July that the number of daily reported cases has been below 25,000. However, the figures could be a result of changing social behaviours over the summer among pupils or holiday-goers who are less inclined to get tested. (£)

The US has been urged to stop ‘demonising China’ during the latest talks between American deputy secretary of state Wendy Sherman and Chinese vice foreign minister Xie Feng. The visit comes as a preparatory step ahead of an imminent high-profile meeting between President Biden and his Chinese counterpart Xi Jinping.

Business and economy

Chancellor Rishi Sunak has denied rumours that the government would replace cash with a digital currency but did not exclude the possibility of introducing one regulated by the Bank of England. The taskforce on Innovation, Growth and Regulatory Reform (TIGRR) recently called for a pilot program to issue a digital currency.

Phillip Morris International has called on the UK government to put regulation in place to facilitate the tobacco giant in ending the sale of Marlboro cigarettes in the United Kingdom. Phillip Morris’ CEO Jacek Olczak added that the UK government should treat tobacco like gasoline powered cars, “the sale of which is due to be banned from 2030”.

Tesco Bank will close all of its personal and business current accounts at the end of November. It will continue to offer insurance products, credit cards and loans. The bank stated that it has seen limited interaction on behalf of customers with their current accounts, with fewer than one in eight using it as their main account. (£)

The Swedish soft drinks producer Kopparberg is suing the UK government for unlawful tax discrimination. According to the claim, the government knowingly provided a tax loophole to UK-based drinks manufacturers, favouring Kopparberg’s competitors and allegedly damaging the company’s revenues. (£)

Columns of note

In The Economist, the finance and economics team aim to settle the debate surrounding the financial profitability of hosting the Olympics once and for all. The research they present, conducted by professors Budzier, Flyvbjerg, and Lunn at Oxford University, conclude that every host Olympic city since 1960 has overspent by an average of 172% in real terms. Consumer spending, coupled with investment in infrastructure, are usually compelling arguments for cities to submit their candidacy in an otherwise financially risky enterprise. But the absence of spectators at the 2020 Tokyo Olympics will undoubtedly set back the city from regaining much of its initial investment. As the article concludes, “the Olympics may become a race no city wants to run”. (£)

Meanwhile, Michael Bociurkiw writes in CNN a striking piece about the unlikely rise of underdog Canadian president Justin Trudeau in the vaccination race. Canada’s sluggish vaccination rollout and start-stop lockdown measures made for a patchy and weak initial strategy. Yet, the fact that Canada has now more per-capita vaccinations than its southern counterpart is either surprising or telling of a more dire situation in the United States.

Cartoon source: The New Yorker

Markets

What happened yesterday?

Stocks in London finished in a mixed territory on Monday, with the FTSE ending the day down 0.03%. However, the sterling remained strong, trading 0.59% stronger than the dollar at $1.3829 and gaining 0.24% on the euro at €1.1709. Top indices on the FTSE 100 rallied the London Stock Exchange, thanks to the momentum brought on by last week’s ‘Freedom Monday’ in England. Confidence in the government’s ability to strike deals with foreign countries to reopen for UK tourists meant airline companies such as Ryanair, IAG (which owns British Airways and Iberia), and easyJet, gained 4.04%, 4.59% and 3.93% respectively.

Meanwhile, stocks in Europe were hit during the day by waning investor confidence dampened by an increase of regulation in the Chinese markets. The pan-European Stoxx 600 was down 0.08% at close, followed by the German Dax, which ended the trading day 0.32% down. Milan’s FTSE Mib and Spain’s Ibex 35 inched upwards by the end of the day, closing up positively at 0.68% and 0.67% respectively.

Across the Atlantic, investors are gearing up for tech earnings by the end of the week. The S&P was down 0.11% at closing, while the Nasdaq Composite inched up at 0.10%.

What’s happening today?

Finals

Cohort

Foreshightgr

Games Workshop

In The Style G.

Ince Group

Moonpig Gr

Interims

Ascential

Capital & Counties

Croda International

Inter. Pers.

Kitwave

Reach Plc

Restore

Sabre Insur

Unite

Vivo Energy

Q2 Results

BP

Trading Announcements

Greencore

Mitie

Virgin Money Uk

AGMs

Arkle Res

BMO UK High Income Trust

Hibernia Reit

Mediclinic International

Mitie

Motorpoint

Mycelx Di

NewRiver

Onthemarket

Petrel Resources

Prospex Eng

Record

TR Property Investment Trust

Vodafone

Wizz Air

Zoltav Res

EGMs

Sdic Power.

Annual Report

Games Workshop

Final Dividend Payment Date

Fidelity China Special Situations PLC

Wynnstay Props

Quarterly Payment Date

Yew Grove Reit.

UK Economic Announcements

(23:01) BRC Shop Price Index

Int. Economic Announcements

(09:00) M3 Money Supply (EU)

(13:30) Durable Goods Orders (US)

(14:00) House Price Index (US)

(15:00) Consumer Confidence (US)

Source: Financial Times

did you know?

At the 1936 Summer Olympics, Japanese pole vaulters Sueo Oe and Shushei Nishida tied. Rather than accepting a tie break, the two cut their medals in half and spliced them together to make a “friendship medal”. (source: @qikipedia)

Parliamentary highlights

House of Commons

The House of Commons is in recess. The House will next sit on 6 September 2021.

House of Lords 

The House of Lords is in recess. The House will next sit on 6 September 2021.

Scottish parliament 

The Scottish parliament is in recess until 30 August but will be recalled on 3 August for Covid updates.

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