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Cool heads over Ukraine

Written by Javier Maquieira, senior associate 
Edited by David Gaffney, partner
8 December 2021

Good morning,

Three weeks ago I wrote about tensions at the border between the European Union and Belarus and the part it all seemed to play in Vladimir Putin’s destabilising efforts. The dispute between Minsk and Brussels unfolded as satellite images showed a build-up of tens of thousands of Russian troops near Ukraine’s eastern frontier.
 
Since then, fears of a Russian invasion of Ukraine have mounted, despite Moscow’s insistence that such concerns are “shallow and unfounded”. If anything, as the Kremlin’s version goes, Russia wants to make sure Ukraine will not try to seize areas captured by Russian-backed separatists in 2014.
 
In preparation for the worst, Nato leaders including the UK prime minister, Boris Johnson, and the heads of government of the US, Germany, France, and Italy held talks on Monday night to agree a package of sanctions against Moscow should it press ahead with a military incursion in the new year.
 
Measures being considered include cutting off Russia from the international financial settlement system, restrictions on banks and exports of the country’s commodities, and the deployment of “additional forces and capabilities” to eastern Europe by the US.
 
Another countermeasure that the Biden administration is reportedly seeking to agree with European allies – and the new German government, in particular – would involve a halting of the contested Nord Stream 2 gas pipeline, a project that the UK government has long criticised.
 
In response, the Kremlin has accused the military alliance of taking an “extremely aggressive” stance and reminded its leaders of Russia’s “own red lines”, not least a future Ukrainian membership of Nato, against which Putin has repeatedly warned western leaders. 
 
In an attempt to de-escalate the situation, the US and Russian presidents held a rare video call yesterday, spending approximately two hours talking in private. Following the conversation, Washington confirmed that the Biden administration would be preparing specific robust responses in the weeks ahead, saying “things we did not do in 2014 we are prepared to do now”.
 
In Putin’s eye, any breakthrough in diplomatic talks will be highly dependent on binding guarantees that Nato will not expand farther eastwards, as well as a pledge that certain weapons will not be deployed in countries close to Russia such as Ukraine.
 
Whether that will be enough to deter Putin’s ever-expanding ambitions, however, remains to be seen.

News

The UK government has said there are early indications that the Omicron coronavirus variant is more transmissible than the Delta strain, but it is still too early to draw conclusions. In Scotland, the first minister Nicola Sturgeon announced that Covid rules are going to be reviewed daily as she urged employers to let staff work from home until at least the middle of January, where possible.
 
A World Health Organisation official has told AFP news agency that there is no reason why Omicron would be better at evading vaccines than other variants. Dr Mike Ryan said that initial data suggested the new variant did not make people sicker than the Delta and other strains and that existing vaccines should still protect those who contract it from severe Covid cases.
 
Leaked video footage has shown senior No 10 officials joking about a lockdown Christmas party that Downing Street insists did not take place. Boris Johnson is facing accusations of lying after he repeatedly denied that the event, reportedly held for staff at No 10 in December 2020, broke coronavirus rules or took place at all.

Business and economy

Amazon’s cloud computing unit was hit with an outage on Tuesday that brought down popular websites and services for some users, along with critical internal tools used by warehouse and delivery workers. The issues are impacting Amazon Web Services’ main US-East-1 region, hosted in northern Virginia.
 
Weibo Corp’s shares debuted 6.1% below their issue price in Hong Kong on Wednesday. The Chinese social media giant, which raised $385 million for its Hong Kong listing as it became the latest US-listed China stock to seek out a secondary listing closer to home, opened at $256.20 and dipped as low as $254.
 
Asda is reportedly facing the risk of strike action ahead of the Christmas shopping period. The GMB union said it was launching a consultative ballot over the retailer’s choice not to give distribution staff a “meaningful” pay offer. The ballot, which is due to close on 20 December, would go to a full vote with any resounding indication of support for strikes.

Columns of note

Lukas Hardt of the Wellbeing Economy Alliance writes in The Scotsman that this week’s Scottish budget needs to be the first important step in delivering an economy with collective wellbeing at its core. He argues that current government budgets follow an outdated economic model that focuses on fostering indiscriminate growth while ignoring the mounting costs of that approach. Instead, Hardt concludes, spending reviews need to be recast as steps towards longer-term goals and scrutinised against longer-term trends, in order to build a fairer and greener Scotland.
 
Writing in the Financial Times, Brooke Masters explores the EU’s growing attractiveness for foreign investment in innovative start-ups, which reflects the bloc’s recent success in areas such as fintech and biotech. Masters opines that rapid action is needed if the EU wants to take advantage of its ability to create a true cross-border market for financial services and consolidate a leading position in the global stock market battle. (£)

Markets

What happened yesterday?

London stocks closed higher on Tuesday as concerns about the Omicron coronavirus variant waned. The FTSE 100 ended the session up 1.49% at 7,339.90, while sterling was in a mixed state, last trading 0.23% weaker against the dollar at $1.32 but stronger against the euro by 0.1% at €1.18.
 
Across the Atlantic, Wall Street stocks also rallied. The S&P 500 closed 2.1% higher, bringing it within 0.5% of the record closing price it hit before the new variant was first reported last month, while the tech-heavy Nasdaq Composite climbed three per cent.
 
In company news:
 
Ferguson rallied 5.92% after the plumbing and heating distributor said its expectations for annual results had increased as it reported a surge in first-quarter profit.
 
Ashtead Group gained 3.94% as the equipment rental firm upgraded its expectations for the full year, reporting a record first-half performance and hailing momentum across the business.
 
PageGroup was up 3.83% after the recruitment business said it expected full-year operating profit of around £165m, up from previous guidance of £155m.
 
Informa was 3.59% higher after the publishing, business intelligence, and exhibitions group announced a special dividend and a plan to sell its data and research business, Informa Intelligence.
 
Babcock International reversed earlier gains to close down 0.98% after the defence engineering firm reported an increase in underlying interim profit but expressed caution over the Omicron variant and ongoing inflation and supply chain constraints.

What’s happening today?

AGMs
Europa Oil&gas
Gattaca
Volta Fin
Alternative Liq
Int.biotech.
Ashoka India Equity Investment Trust Plc

Final results
Hardide
SSP Group

Int economic announcements
(12:00) MBA Mortgage Applications (US)
(15:30) Crude Oil Inventories (US)

Source: Financial Times

did you know

The United Arab Emirates has announced that in January it will shift to a working week of four-and-a-half days, with a Saturday-Sunday weekend, to better align its economy with global markets.

Parliamentary highlights

House of Commons

Oral questions
Northern Ireland
 
Prime Minister’s Question Time
 
Ten Minute Rule Motion
Community Wealth Fund
 
Legislation
Nationality And Borders Bill (Half Day): Conclusion of Remaining Stages
 
Opposition Day Debate
Opposition Day (7th allotted day – 2nd part) There will be a debate on a motion in the name of the Official Opposition. Subject to be announced
 
Adjournment
Dignity in dying

House of Lords 

Oral questions
Government criteria for allocating money from the UK Community Renewal Fund; and the analysis by the Centre for Inequality and Levelling Up at the University of West London
 
Creation of a permanent national memorial to those who lost their lives as a result of COVID-19
 
Amending the Children and Families Act 2014 and the eligibility requirements for obtaining an Education, Health and Care plan
 
Military developments on the border between Ukraine and Russia
 
Debate
Article 11 of the UK–EU Trade and Cooperation Agreement for the establishment of a Parliamentary Partnership Assembly (PPA) consisting of Members of the European Parliament and of Members of the Parliament of the UK
 
Legislation
Education (Assemblies) Bill [HL] – third reading
 
Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill – third reading
 
Armed Forces Bill – consideration of Commons amendments
 
Police, Crime, Sentencing and Courts Bill – report stage (day 1)

Scottish parliament 

Portfolio Questions
Covid-19 Recovery and Parliamentary Business
 
Net Zero, Energy and Transport
 
Ministerial Statement
Scotland’s Redress Scheme
 
Scottish Government Debate
Scotland Loves Local
 
Approval of SSIs (if required)
 
Members’ Business
S6M-01675 Graham Simpson: East Kilbride Rail Line Dualling

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