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DAILY BRIEFING

DAILY BRIEFING

He who wields the knife

Written by Javier Maquieira, senior associate 
Edited by Tom Gillingham, partner
7 February 2022

Good morning,

Duplicitous, sly, immature, petulant, and high-handed are just a few of the adjectives a handful of cabinet ministers and senior Conservative MPs reportedly used to describe the chancellor of the exchequer over the weekend.
 
They were referring to Rishi Sunak’s alleged leadership manoeuvring as the prime minister fights for his premiership with a new No 10 team and pledges to establishing backbench committees to advise on government policy in a bid to shore up support.
 
Critics of the chancellor’s behaviour have said he should be fired for disloyalty after he publicly distanced himself from Boris Johnson’s personal attack on the leader of the opposition, Sir Keir Starmer, last week, when the prime minister claimed the Labour leader had failed to prosecute the paedophile Jimmy Savile when he was director of public prosecutions.
 
According to YouGov, Sunak remains the most popular Conservative politician in the UK, a position he has retained since his initial bounce in popularity in 2020 as the fresh face of the government’s bailout schemes in response to the first wave of the coronavirus. In line with his free market Conservatism credentials, some argue a central part of his leadership campaign would rely on keeping the City of London onside, as the chancellor seeks to reform financial regulation to promote “international competitiveness” and overhaul stock market rules.
 
However, Sunak’s hypothetical move next door would be far from a bed of roses. Speaking before the House of Commons on Thursday, the chancellor announced a package of measures to mitigate the UK’s cost of living crisis as the fear of a “perfect storm” was made worse by the latest upward move in interest rates from the Bank of England.
 
The £9bn package includes a one-off repayable £200 discount in October and a rebate on council tax bills to “take the sting” out of a £700-a-year rise in the average household’s energy bills in April. Yet some have suggested it would only cover half the projected increases, with the Scottish government saying the £290m it is expected to receive from the Treasury was too little to cope with energy poverty in Scotland.
 
While the cost-of-living crisis and his close association to Johnson could seriously hinder Sunak’s chances of becoming prime minister, the ongoing ‘partygate’ scandal could represent the chancellor’s best chance of succeeding the incumbent leader. Whether he dares to wield the knife or decides to pave the way for others to do it, though, remains to be seen.

News

The Prince of Wales has paid tribute to the Queen on her Platinum Jubilee for the “remarkable achievement” of reaching 70 years on the throne. Prince Charles welcomed his mother’s wish that Camilla, Duchess of Cornwall, be known as Queen Consort when he becomes king. He said he and his “darling wife” were “deeply conscious of the honour”.
 
US officials have claimed that Russia has assembled about 70% of the military capability needed for a full-scale invasion of Ukraine in the coming weeks as Moscow prepares to move heavy-duty equipment to the border. The officials have also said they did not know if Russian president Vladimir Putin had decided to take such a step, adding that a diplomatic solution was still possible.
 
In related news, the French president has said he can deliver “a historic solution” to the Ukraine crisis ahead of his arrival in Moscow for talks with Putin. Following a flurry of diplomatic activity that included talks with US president Joe Biden this weekend and three phone calls with the Russian leader, Emmanuel Macron will land in Moscow today to seek a “de-escalation” of tensions on Ukraine’s eastern borders.

Business and economy

The chairman of Tesco has warned that the worst of rising food prices is “yet to come” with a potential five per cent surge in spring. John Allan, who has chaired the supermarket chain since 2015, told the BBC’s Sunday Morning programme that the food inflation rate would rise quickly as the big hike in energy costs filters through the supply chain. 
 
The business secretary, Kwasi Kwarteng, has ruled out the prospect of the UK government cutting VAT to provide further support as the cost of living continues to rise. The minister told Sky News that such a move would be “quite regressive” because “rich people will benefit just as much as people on lower incomes.”
 
A study by the NewClimate Institute has found that some of the world’s biggest businesses are failing to live up to claims they will hit net-zero emissions targets. Google, Amazon, Ikea, Apple, and Nestle are among those failing to change quickly enough, according to the research, which suggests the 25 companies studied will cut their carbon emissions by only 40% rather than the 100% cuts pledged.

Columns of note

Writing in The Times, Clare Foges argues that Boris Johnson, once an internationalist, open, and liberal politician, has become what he always loathed. If he ever wants the possibility of redemption in the public eye, the author writes that the prime minister should resign “with dignity” soon, putting the nation and the party first. (£)
 
In The Independent, Sean O’Grady looks at the full intent of the Queen’s message on the occasion of the 70th anniversary of her accession to the British throne. He concludes that while Her Majesty hopes that the institution she has steered through seven decades will continue and thrive under Kings Charles, William, and George into the 22nd century, she has no intention of allowing her son, Charles, to take on any of her substantial constitutional duties yet.

Markets

The week ahead

Analysts will be looking out for the UK’s quarterly and monthly GDP estimates this week as they are published on Friday, offering an indication of the strength of the pandemic recovery. Elsewhere, there will be key data on US inflation and Germany’s production and trade figures, while rate rises are expected in Mexico and Russia. The EU will update its economic forecasts on Thursday.
 
Consumer goods companies, drugmakers, and motor manufacturers report earnings this week. Unilever’s full-year results on Thursday will face close scrutiny after the unpopular attempt to buy GlaxoSmithKline’s consumer health division and news that activist fund Trian Partners has acquired a stake.
 
Results from Coca-Cola and PepsiCo will reveal whether a resurgence in coronavirus cases around the world knocked soda demand in the December quarter. Nissan and Honda will be revealing their P&Ls this week, but investors will be watching to see whether Toyota, which was the world’s top car seller in 2021, can minimise the impact of chip shortages in the coming months after the Japanese carmaker announced in January that a supply glitch would force it to cut output for February.

What’s happening today?

Intl economic announcements
(20:00) Consumer Confidence (US)
(07:00) Industrial Production (GER)
(07:00) Halifax House Price Index

Source: Financial Times

did you know

As many as 23 waxwork versions of Elizabeth II have appeared in Madame Tussauds during her 70-year-long reign. (Source: BBC News)

Parliamentary highlights

House of Commons

Oral questions
Work and Pensions (including Topical Questions)
 
Motion
Social Security Benefits Up-rating Order 2022
 
Guaranteed Minimum Pensions Increase Order 2022
 
Consideration of Lords amendments
Northern Ireland (Ministers, Elections and Petitions of Concern) Bill
 
Adjournment
Support for the dentist industry and NHS backlogs

House of Lords 

Oral questions
How government measures that property developers must pay for remedial work to fix unsafe cladding will help residents of properties with building safety defects not related to cladding
 
Condition of the oil tanker FSO Safer moored in the Red Sea and the risks it poses to the environment
 
The Royal Commission on the Criminal Justice System announced in the 2019 Queen’s Speech
 
Government what plans to amend the Highway Code
 
Legislation
Leasehold Reform (Ground Rent) Bill – consideration of Commons amendments
 
National Insurance Contributions Bill – report
 
Judicial Review and Courts Bill – second reading

Scottish parliament 

No business scheduled

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