Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Another brick off the wall

Written by Charlie Clegg, senior associate 
Iain Gibson, associate partner
6 May 2021

Good morning,

So that was Super Thursday. Although we won’t know all the results until at least Saturday and how “super” it will prove is subjective.

The Hartlepool by-election has, however, provided a hors d’oeuvre to the coming glut. The Conservatives’ Jill Mortimer took the seat from Labour with a 6,940 majority. In a seat where the Brexit party took 10,603 votes at the last general election, Farage’s latest outfit, Reform UK, gained only 368 this time round.

Death, sickness, scandal, and career change have a habit of visiting MPs in the most inconvenient constituencies: Berwick-upon-Tweed in 1973; Christchurch in 1993; Corby in 2012. Yet, unlike Hartlepool, these have tended to be inconvenient for the governing party and opportune for the opposition. By-elections have tended to give electors an opportunity to express frustrations with the government, even if those electors step back in line at the following general election.

Since the EU referendum, however, something strange has been going on. By-elections and council elections in England and Wales have more often tended to reflect national intentions. This is the second time since 2016 that the UK governing party has gained a constituency from the opposition in a by-election. Before the previous time – in Copeland in 2017 – this had last happened in 1982, when Thatcher’s government was enjoying a Falklands War boost.

In Copeland, Jeremy Corbyn’s leadership could be blamed for an anomalous result; Hartlepool proves Labour’s problem is bigger. The disappearance of the Brexit party, who took a quarter of Hartlepool’s votes in 2019, has only increased the problem. “Winning back the red wall” was always going to be one of Sir Keir Starmer’s biggest challenges: Hartlepool, and a raft of other local results, suggest he’s bungled his first opportunity.

We should not, however, write off Starmer just yet. The initial picture of a bad night for Labour has been coloured by results from northern England. Big cities, Scotland, and Wales could show something different. Between now and the next Westminster general election, the economic legacy of Covid will throw up many stumbling blocks for the government along with many opportunities for Starmer. The question is whether or not he will be able to recognise and take them.

Yet hope of future change is hardly going to silence Starmer’s emboldened internal critics. The nature of Labour’s route back looks set to form the party’s next big internal battle. We have many more results to get through in the coming days, but for Sir Keir Starmer, this particular Thursday has already been anything but super.

News

As discussed above, the Conservatives have gained the Hartlepool constituency from Labour in a by-election. After a day of elections across the UK, local results in England are also showing strong gains for the Conservatives. Results of the Scottish and Welsh parliamentary elections will be announced today and tomorrow along with further English local and mayoral results.

Leaked emails from Public Health England staff show UK officials are increasingly concerned about B16172: the Covid variant believed to be partly responsible for the surge of the pandemic in India. The documents show clusters of the variant have been founded in England and that the UK government is expected to raise its status to a variant “of concern”.

Royal Navy ships are preparing to leave Jersey after French fishermen abandoned their protest over perceived disadvantages to them post-Brexit. Jersey’s external relations minister, Ian Gorst, said negotiations with the fishermen had been positive.

Business and economy

The Bank of England has predicted that, buoyed by Covid recovery, the UK economy will grow at 7.25% this year: its fastest rate in over 70 years. This does, however, come after the pandemic saw the economy contract 9% last year. Unemployment is also expected to peak at 5.5%, lower than the 7.75% predicted in February.

The Financial Conduct Authority has fined Sapien Capital £178,000 after the boutique investment bank failed to conduct due diligence on a client likely linked to financial crime. The client, the Solo Group, appeared to have engaged in circular trading.

Sainsbury’s has hired Paula Nickolds to take charge of its £7.8bn homeware and retail arm. Until the start of last year, Nickolds was head of John Lewis, where she had worked for 25 years. The move comes as Sainsbury’s signals its larger outlets will increasingly resemble department stores.

Columns of note

One in every 13 Londoners may have left the city as the pandemic has sucked life out of the capital. Politically, London seems isolated: a Labour stronghold against which is targeted the language of levelling up. In the Guardian, Andy Beckett argues the city has gone through ups and downs in the past and could yet reinvent itself as a centre of a more inclusive example of Englishness.

74% of millennial clients of the Boston investment management company, Fidelity, define themselves as philanthropists. While these represent a small pool of a generation defined by financial instability, this attitude has the potential to transform investment massively as wealthier millennials grow older. In the Financial Times, Gillian Tett investigates how asset managers are already taking notice. (£)

 

Cartoon source: The New Yorker

Markets

What happened yesterday?

On Wall Street, the S&P 500 closed up 0.8% while the Nasdaq Composite was up 0.4% in a reverse of its four-session losing streak. This comes as US markets look set to make up most of their pandemic-related losses.

In Europe, the Stoxx 600 closed down 0.2% while London’s FTS 100 closed up 0.5%.

In currencies, Sterling weakened 0.1% against the dollar to $1.389. The dollar slipped 0.4% while the euro rose 0.5% to $1.206.

In company news 

Next has increased its full year profits by £20m to £720m, buoyed by a reopening trade boom; however, the clothing retailer has warned the surge could be short-lived.

Tourism giant Tui is to offer travellers to green list countries a subsidised Covid test for only £20.

60% of Rio Tinto shareholders have voted against the exit package offered to the mining giant’s former chief executive, Jean-Sébastien Jacques. Jacques resigned last September after the company conducted mining blasts at the sacred Juukan Gorge aboriginal site in Australia. (£)

What’s happening today?

Finals
Numis

Trading Announcements
InterContinental Hotels

AGMs
ConvaTec
Holders Tech.
InterContinental Hotels
Man
Rightmove
Schroder Asian
The Barkby Gro.

EGMs
Ruffer Inv. Co.
Romgaz S

GMs
Romgaz S

UK economic announcements
(09:30) PMI Construction

Int. economic announcements
(07:00) Balance of Trade (GER)
(07:00) Industrial Production (GER)
(07:00) Current Account (GER)
(13:30) Unemployment Rate (US)
(15:00) Wholesales Inventories (US)
(20:00) Consumer Credit (US)

Source: Financial Times

did you know

Hartlepool’s last Tory MP, John Kerans, spent his final years in Sir Keir Starmer’s home town of Oxted, Surrey.

Parliamentary highlights

House of Commons

The House of Commons is in prorogation and will next sit on 11 May.

House of Lords 

The House of Lords is in prorogation. The House will next sit on 11 May 2021.

Scottish Parliament 

The Scottish parliament is currently dissolved pending the result of yesterday’s election. 

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