Charlotte Street Partners



Closing ranks

Written by Javier Maquieira, senior associate 
Edited by Katie Stanton, associate partner
8 September 2020

Good morning,

Confusion and anger were widespread yesterday after an article in the Financial Times reported that the UK government was planning to override some of the provisions of the European Union’s 2019 withdrawal agreement on state aid and customs relating to Northern Ireland.
According to the article, supported by three unnamed sources, sections of the internal market bill due to be published tomorrow “will explicitly say the government reserves the right to set its own regime” in those areas, risking the collapse of trade negotiations with Brussels.
Reactions to the news spread like wildfire. European commission president Ursula von der Leyen tweeted that she trusted Downing Street “to implement the withdrawal agreement, an obligation under international law and prerequisite for any future partnership”, adding that the Northern Ireland protocol “is essential to protect peace and stability on the island”.
On the same platform, Ireland’s foreign affairs and defence minister, Simon Coveney, retweeted the FT piece, referring to the reported plans as “a very unwise way to proceed”. So did Scotland’s first minister, Nicola Sturgeon, who said “this will significantly increase the likelihood of no deal, and the resulting damage to the economy will be entirely Tory inflicted”.
But No 10, which has opened an inquiry into how news of the plan was leaked, has insisted that’s not what it’s proposing. The prime minister’s official spokesperson said the government was looking at making “minor clarifications in extremely specific areas” if the UK left the EU without a trade deal, but remained committed to the withdrawal agreement and Northern Ireland protocol. 
At the same time, Boris Johnson has played down the implications of a no-deal situation, saying that Britain would “prosper mightily” if that was the case; a statement many see as paving the way to failure in trade agreement negotiations. Others, however, are taking Johnson’s words with a pinch of salt, a bit of necessary brinkmanship to put pressure on his EU counterparts.
Although the prime minister has threatened to walk away from the negotiating table if a deal isn’t in place by the next European Council meeting on 15-16 October, the real deadline for the talks continues to be mid-November to give enough time to convert the agreement into legal text.
So, as EU top Brexit negotiator Michel Barnier arrives in London for an eighth round of talks today and the unflagging story of Brexit enters its final chapter, fear and uncertainty among business and political leaders in nations across the UK, along with growing mistrust among EU officials, isn’t dissipating. If anything, it’s intensifying.


Two Australian reporters, the Australian Broadcasting Corporation’s Bill Birtles and the Australian Financial Review’s Mike Smith, have flown out China amid a diplomatic standoff between the two countries. Both men, who were the last correspondents for Australian media working in China, were questioned by Chinese authorities before their departure.
Spain has become the first country in western Europe to record more than half a million Covid-19 cases amid a continuing surge in infections and as millions of children return to school. Concerns are also growing over the rise in cases in the UK and France, which have recorded 349,500 and 347,268 infections respectively. Britain logged nearly 3,000 new cases for a second day running on Monday.
Poisoned Russian opposition leader Alex Navalny is now out of his medically-induced coma and “is responding to verbal stimuli”, according to the Berlin’s Charité Hospital where he is being treated. The hospital added that it is still too early to determine the long-term effects of his suspected Novichock poisoning.

Business and economy

According to data disclosed on Monday by HM Revenue & Customs, fraud and error on furlough schemes in Britain could total £3.5bn – between five and 10% of the money distributed. The head of the tax authority, Jim Harra, told MPs that HMRC would not fine mistaken claims but is investigating 27,000 “high-risk” cases. (£)
China has accused the US of practicing “naked bullying” against its tech firms in the latest clash between Washington and Beijing over data security issues. The accusations come as the Chinese government launches a new initiative outlawing illegally obtaining people’s data and large-scale surveillance. Meanwhile, President Donald Trump has vowed to end reliance on China as he escalates his anti-China rhetoric during the last stretch of the presidential campaign.
Pizza Express plans to close 73 restaurants, spanning Aberdeen to Torquay, after creditors approved its company voluntary arrangement (CVA) deal. While a potential buyer is also being sought as part of the restructuring process, 1,100 jobs are reported to be at risk.

Columns of note

In the Financial TimesBilly Nauman breaks down ESG funds into three categories – ‘ESG focus’ funds, ‘impact’ funds, and sustainable sector funds – with the vast majority of them falling into the first category. Nauman notes that these funds are weighted based on companies’ ESG scores, which can be largely subjective. As regulators take more interest in tackling the problem of inconsistent ESG ratings, the responsibility to separate the good ESG funds from the bad (and the ugly) is still on investors, according to Nauman. (£)
Richard Horton writes in The Guardian that the coronavirus pandemic has laid bare the poverty, insecurity and inequality that exists in the UK, arguing that only a fairer society can lay the foundations for economic recovery, and build resilience to future crises.

Cartoon source: The Times


What happened yesterday? 

London stocks closed in the green on Monday, with the FTSE 100 ending the session up 2.39% at 5,937.40, and the FTSE 250 1.66% firmer at 17,642.20. Sterling, on the other hand, was lower against both the dollar by 0.84% at $1.3168 and the euro by 0.63% at €1.1143 amid fears of a no-deal Brexit.
In the US, where markets were closed for the Labor Day holiday, futures on the S&P 500 were up 0.5%.
In company news:
Shares in Associated British Foods rose 0.54% after it said Primark’s annual profit would be at the top of guidance following strong trading at the clothes chain in Q4.
FirstGroup gained 26.89% after the Sunday Telegraph reported that the transport operator’s operations in the US have attracted interest from several major private equity firms.
Future closed 18.43% higher after the media company said its FY20 results are set to be “materially ahead” of market expectations.
Housebuilder Crest Nicholson surged 9.93% after an upgrade to ‘buy’ from ‘hold’ at Deutsche Bank.

What’s happening today?

Arix Bioscience, Digitalbox, Dp Eurasia, Fevertree Drk, Flowtech Fluid., Gaming Realms, Inter. Pers., Luceco, Michelmersh Brick Holdings, Midwich Grp, Nucleus Financ., President Enrgy, Propty Franchis, Ra Internation., Stm Grp., Surgical Innovations

Ashtead Group, Braveheart Inv, Chariot Oil, Civitas Social Housing, Hipgnosis Song., Oxford, Instruments, Royal Mail, Smith (DS), Xps Pensions

UK economic announcements
(00:01) Retail Sales

Int. economic announcements
(07:00) Balance of Trade (GER)
(07:00) Current Account (GER)
(10:00) Gross Domestic Product (EU)
(20:00) Consumer Credit (US)

Source: Financial Times

did you know

Movie trailers were originally shown after the movie, which is why they were called ‘trailers’. As people wouldn’t stay around to watch them, they were rather ineffective. (source: @8fact)

Parliamentary highlights

House of Commons

Oral questions
Foreign, Commonwealth and Development Office (including Topical Questions)
Ten Minute Rule Motion
White Goods (Registration) – Yvonne Fovargue
Extradition (Provisional Arrest) Bill [Lords]: remaining stages
Inclusion of black history in the history curriculum – Theresa Villiers

House of Lords 

Oral questions
Delivery of government’s levelling up agenda in the wake of the COVID-19 – Lord Blencathra
Number of new homes needed by 2025 and delivery of target for 300,000 new homes per year – Baroness Neville-Rolfe
UCAS End of Cycle Report 2019 findings on low entry rate for white ethnic group students from state schools – Lord Farmer
Reported rise in the number of people committing suicide. – Lord Harries of Pentregarth
Sentencing Bill [HL] – Third reading – Lord Keen of Elie
Prisoners (Disclosure of Information About Victims) Bill – Third reading – Lord Keen of Elie
Trade Bill – Second reading – Lord Grimstone of Boscobel

Scottish Parliament 

Scottish Government Debate
The Baroness Cumberlege Report
Financial Resolution
Period Products (Free Provision) (Scotland) Bill
Committee Announcements

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