Charlotte Street Partners



Impasse after impasse

Written by Javier Maquieira, senior associate 
Edited by David Gaffney, partner
18 November 2020

Good morning,

In the history of the European Union, many issues have been deemed the last straw, the defining blow that would render it unworkable once and for all. If nothing else, European integration is an extraordinarily puzzling process, made even more complex by its densely institutionalised set-up. It is as difficult to understand as it is to govern.
Yet, despite all the vicissitudes the EU has endured, the project has thus far proven resilient. With virtually every global leader facing the political test of handling the Covid-19 crisis, new research by the Pew Research Center has shown more people hold a favourable view of the EU than not in every member state, with a median of 66% of respondents approving of the bloc.
Perhaps more interestingly, 60% of those surveyed in the UK, which formally left the EU on 31 January 2020, said they now felt positively about the single market; an increase of six percentage points over last year and the highest rating recorded in Pew’s global attitudes survey for Britain.
In terms of leadership in responding to the pandemic, UK respondents showed a higher degree of confidence in German chancellor Angela Merkel (76%) and French president Emmanuel Macron (64%) than the prime minister, Boris Johnson (51%). Regardless of how positively EU officials are perceived, however, this data does not account for the challenges they are actually facing at the moment.
Beyond Brexit negotiations, which are incontrovertibly at crunch time now, the bloc has run into yet another stalemate over the carefully negotiated €1.82tn budget-and-recovery package, which was agreed by all 27 members of the union back in July.
On Monday, Hungary and Poland used their veto power to block the finalisation of a new mechanism, the Own Resources Decision, which would allow the EU to borrow money for its new €750bn recovery fund. Budapest and Warsaw justified their stance citing opposition to a conditionality tool that could see funds cut off to a member state found to be violating the rule of law in certain circumstances attached to the budget.
The standoff will be the top item on the agenda during a video conference among EU heads of state and government tomorrow. But even if the rest of its member states were willing to concede to Hungary and Poland’s objections, the seven-year budget still requires agreement from members of the European parliament, who have pushed hard for said rule-of-law mechanism.
The room for conciliation is very limited, and so are the options. Many eyes are now set on Merkel, who since September has led the council of the EU presidency’s efforts to appease Budapest and its illiberal allies, while reassuring the European parliament that no rule of law breaches would be rewarded with taxpayer money.
Of all EU leaders, the German chancellor has proven to have the negotiating skill to find a solution to this impasse. If successful, it would certainly be her chef-d’œuvre before stepping down in 2021; her legacy for the next decade of European integration.


The US Department of Defense has confirmed plans to cut the country’s number of troops in Afghanistan and Iraq by 2,500. The move has alarmed senior Republican politicians, including Senate majority leader Mitch McConell, who has warned President Trump against taking “any earthshaking changes in regards to defence and foreign policy” before leaving the White House. The president has not yet conceded to Democrat Joe Biden – and has fired the head of US cybersecurity for dismissing claims of election fraud – while the cuts are expected to take place five days before inauguration day on 20 January 2021.
The first minister of Scotland, Nicola Sturgeon, announced yesterday that 11 local authority areas will enter level four – the highest of Scotland’s five-tier system of Covid-19 protection levels – from 6pm this Friday, for a limited period of three weeks. Meanwhile, East Lothian and Midlothian will move down, from level three to level two, from next Tuesday. Sturgeon emphasised the importance of people not making journeys from high to low prevalence areas.
Former Labour leader Jeremy Corbyn is to be readmitted to the party after he had been suspended for his critical response to a report by the Equalities and Human Rights Commission, which found Labour had been responsible for “unlawful acts of harassment and discrimination”. The decision by the National Executive Committee’s disciplinary panel to reinstate Corbyn has angered the Jewish Labour Movement, which said the party appeared to have “expedited” his case.

Business and economy

The prime minister has announced today a £4bn “green industrial revolution” plan aimed at creating 250,000 new green jobs and making the UK carbon neutral by 2050. The long-awaited 10-point plan, which seeks to equip a generation of workers with new green skills, includes a ban on the sale of traditional petrol and diesel cars from 2030, 10 years earlier than planned, government investment in offshore wind and hydrogen power, and grants towards making homes more energy efficient, among other measures.
British Airways will launch a voluntary Covid-19 test for passengers on transatlantic flights from three US airports to the UK in a bid to convince governments that testing travellers will make quarantining unnecessary and persuade the US government to open its borders to visitors from the UK. American Airlines is also taking part in the trial, which is set to begin on 25 November and will involve customers being tested 72 hours prior to their trip, as well as during and after travelling.
A report by KPMG has warned that if the UK failed to secure a post-Brexit trade deal with the EU, the country’s growth rate would be cut by more than half in 2021. The accountancy firm has predicted GDP growth would be 4.4% in 2021 without a trade deal, compared with 10.1% if the UK and the EU maintained existing relations. Warning that businesses were not ready for a no-deal Brexit, the report emphasised that such an outcome would delay a full recovery from the Covid-19 pandemic just as the country attempts to escape the deepest recession on record.

Columns of note

Alice Thomson explains in The Times how our socio-economic background has become a matter of life and death in times of Covid-19, playing a bigger role than almost any other factor other than age in who catches the virus and how they fare. The higher coronavirus mortality rate in the most deprived areas is becoming even starker during the second lockdown, hitting hardest where there is already lower life expectancy. Thomson argues that if Boris Johnson is to keep his commitment to “levelling up” the country, he needs to tackle the widening Covid-19 class divide and give priority for a vaccine to the least well-off. (£)
Rosemary Goring argues in The Herald that the supremacy of fiction over fact in the latest series of The Crown is especially unjust, given the several significant examples where the story departs too far from the truth while meddling with the living. Goring sees the series’ “insidious realigning of the story” as another unedifying example of what former US president Barack Obama calls “truth decay”, and risks framing the royal family “as gargoyles who swallowed the princess alive” for years to come. 

Cartoon source: The Times


What happened yesterday?

London stocks finished lower on Tuesday following another rally on Covid-19 vaccine news in the previous session. By close of play, the FTSE 100 was down 0.87% at 6,365.33, while sterling was stronger against both the dollar by 0.39% at $1.3250 and the euro by 0.25% at €1.1167. Meanwhile, across the pond, Wall Street stocks slipped over weak US consumer spending data, with the S&P 500 and the tech-heavy Nasdaq Composite declining 0.5 and 0.2%, respectively.
In company news:
EasyJet was 1.93% lower after the budget airline swung to a £1.3bn annual loss, the first in its history, after capacity almost halved as a result of the coronavirus pandemic.
Imperial Brands rallied 7.34% after the tobacco company reported a rise in annual sales, driven by a demand for tobacco, and forecast profit growth in 2021.
Intermediate Capital shares jumped 7.85% as the asset manager posted a sharp rise in first-half profits amid strong demand for its funds and a recovery in portfolio valuations over the period.
Homeserve was up by 2.43% after the repairs and improvements business said it expects to deliver group profit before tax and appreciation for the 2021 financial year slightly ahead of current estimates.

What’s happening today?

British Land
Speedy Hire
Tatton Asset M.

Orient Telecom.
Picton Prop
Rainbow Rare

UK economic announcements
(07:00) Retail Price Index
(07:00) Consumer Price Index
(07:00) Producer Price Index

Int. economic announcements
(10:00) Consumer Price Index (EU)
(13:00) MBA Mortgage Applications (US)
(13:30) Housing Starts (US)
(13:30) Building Permits (US)
(15:30) Crude Oil Inventories (US)

Source: Financial Times

did you know

Bilinguals’ personalities change depending on the language they are speaking, according to psycholinguists at Lancaster University. (@8fact)

Parliamentary highlights

House of Commons

Oral questions
Prime Minister’s Question Time
Ten Minute Rule Motion
Supported Accommodation – Steve McCabe
Ecodesign for Energy-Related Products and Energy Information (Amendment) (EU Exit) Regulations 2020 – Alok Sharma
The Construction Products (Amendment Etc.) (EU Exit) Regulations 2020 – Christopher Pincher
General debate
Solar flares and electricity grid reliance – Paul Maynard

House of Lords 

Oral questions
Reports on treatment of migrants and asylum seekers at the border of Croatia and Bosnia-Herzegovina – Baroness Helic
Plans for campaigns on behaviour change before COP 26 – Baroness Boycott
Appointment of Cabinet-level to coordinate cross-government policy to strengthen families – Lord Farmer
Conflicts of interest before engaging specialist advisers to inform government response to the COVID-19 pandemic – Lord Scriven
United Kingdom Internal Market Bill – report stage (day 1) – Lord Callanan

Scottish Parliament 

Portfolio Questions
Transport, Infrastructure and Connectivity
Justice and the Law Officers
Scottish Green Party Debate
Safe Schools
Declaration of a Nature Emergency
Members’ Business
S5M-22629 Clare Adamson: Pancreatic Cancer Awareness Month 2020

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