Charlotte Street Partners



Rishi outshines Boris

Written by Scott Reid, Associate Partner
Edited by Kevin Pringle, Partner
9 July 2020

Good morning,

As the youngest of three sons, I can wholeheartedly vouch for the benefits of being the most junior in the family when it comes to judging performance.

Some middling achievement at school? Joyous day, because at least I did better than the other two. Or not keeping pace? No matter; I was never meant for greatness anyway. And besides, have you seen how badly he did? As I smugly see it, expectations for the junior party are low and the bar for success is always relative.

The same ‘heads I win, tails you lose’ approach might currently apply to the contrasting fortunes of chancellor Rishi Sunak and prime minister Boris Johnson as they have ridden out the present crisis. Sunak – never minding the fact that he presides over a steep economic downturn, and it’s pretty easy to make friends when you’re dolling out cash – rides high as one Britain’s most popular politicians, with an approval rating of +41. Johnson on the other hand, only six months out from a landmark election success, languishes on a rather paltry +2.

Sunak continued his giveaway in yesterday’s summer economic update as he announced a further stimulus package to the tune of £30bn. The package included a job retention bonus of £1,000 to employers for every retained furloughed employee; a lifting of the threshold for paying stamp duty in England and Northern Ireland on properties up to a value of £500,000; a cut in VAT for hospitality sales from 20% to five per cent; and an “eat out to help out” discount that will apply a 50% discount of meals eaten at participating businesses in August up to £10 per head. Free cash for a job, a house and a meal – what’s not to like?

But Sunak should beware. The problem of the junior whose star shone too brightly was played out in France this week as president Emmanuel Macron sacked his otherwise successful prime minister Edouard Phillippe. Sure, cabinet refreshes at this point in an administration are de rigeur for French politics, as a president assesses his re-election chances. But comments by Phillippe’s successor, Jean Castex – a politician remarkably similar to Phillippe in outlook and background – that “he does not seek the limelight” were more telling for the president’s ambitions during the second half of his term.

Johnson and Macron are similar in this respect – politicians who are happiest when riding high in the polls and able to talk up their ambitions to transform their countries, preferring to delegate the usually onerous tasks of governing to colleagues. That Sunak seems to have made a success of his policy decisions to date with the public, with some talking of his potential to eclipse Johnson as a future leader following yesterday’s performance, will not have gone unnoticed in No 10.


A leaked letter sent by international trade secretary Liz Truss has warned that the UK’s post-Brexit border plans risk increased smuggling from the EU and could face legal challenge from the World Trade Organization. The memo was sent yesterday to Rishi Sunak and Michael Gove expressing four “key areas of concerns” about the UK’s planned departure from EU trading and customs rules at the end of 2020. These also included risks posed to the UK union if EU tariffs were applied to Northern Ireland by default, and an undermining of the UK’s independent international trade policy.

The Scottish government has confirmed it will lift quarantine restrictions for passengers arriving from 57 countries on the UK government’s “reduced risk” travel register from July 10. First Minister Nicola Sturgeon caveated that restrictions for arrivals from Spain and Serbia would remain in force, however, due to localised outbreaks of Covid-19 and confirmed that the position would be reviewed at the next review point of July 20.

The risk of exceeding the Paris climate agreement’s target to cut global temperature increases to 1.5C over the next five years has risen, a new study suggests. The World Meteorological Organisation assessed a 20% chance that the threshold will be broken at least one year before 2024, and a 70% chance in one or more months in those five years.

Australia has this morning cancelled its extradition treaty with Hong Kong and offered a five-year visa extension to Hong Kong citizens resident in Australia. The changes are thought to affect about 10,000 Hong Kong citizens in Australia, but the government also said it would “adjust the policy settings” for new skilled and graduate visa holders, followed by a pathway to permanent residency.

Business and economy

United Airlines has warned that up to 45%, or 36,000 of its frontline US workers could be made redundant after October 1 when a government prohibition of dismissals ends. The Chicago-based airline attributed the cuts to depressed travel demand, which is currently operating at around 20% of last year’s capacity and held “no end in sight” according to a company spokesperson.

Meanwhile, New York-based tailoring retailer Brooks Brothers has filed for bankruptcy protection putting its 500 stores and 4,000 global employees at risk. The 202-year-old Brooks Brothers followed similar moves by J Crew and Neiman Marcus last week, leading analysts to speculate whether the recent mass adoption of working from home spells a new structural challenge for western clothiers. (£)

Columns of note

Gillian Tett writes in theFinancial Timesabout her “culture shock” at the lack of face masks worn between New York and London. The FT editor-at-large recently returned to London for a family visit, and suggested that the British capital was far more lax in its approach to the now “embodied” habits of social distancing and civic responsibility that prevail in Manhattan. (£)

And inThe Atlantic, Helen Lewis looks at the turning of millennials against a once-celebrated hero in JK Rowling for her comments over transgender activism. (£)

Source: The Telegraph


What happened yesterday?

The London market responded lukewarmly to the chancellor Rishi Sunak’s £30 billion stimulus package amid rising coronavirus cases in the US and Australia. The FTSE 100 closed down 0.55% yesterday at 6,156.16 points with sterling 0.3% on the dollar at $1.26 but 0.1% lower on the euro at 1.14.

In company news:

Marketing and communications group WPP (-5.25%) fell after Credit Suisse reinstated its “underperform” rating, pointing to “rising industry disruption” and an accelerated to spend on digital advertising.

Elsewhere, Asia-focused banks HSBC (-2.91%) and Standard Chartered (-1.49%) were both also lower following a report that the US could target the pegging of Hong Kong’s currency with the dollar as collateral for China’s new security law.

What’s happening today?

Ilika Plc


Trading Announcements

3i Infrastructure
Charles Stanley
Land Securities
Octopus Ap
OptiBiotix Health
Oxford Technology Venture Capital Trust (OXH, OTT and VCT funds)
Pets At Home
Templeton Emerging Markets
Triple Point 11
Twentyfour Sel
Worldwide Healthcare Trust

UK economic announcements
(00.01) RICS Housing Market Survey

Int. economic announcements
(07.00) Balance of Trade (GER)
(07.00) Current Account (GER)
(13.30) Initial Jobless Claims (US)
(15.00) Wholesales Inventories (US)

Source: Financial Times

did you know

In 1900, Sir Arthur Conan Doyle caught fire during a cricket match at Lord’s when, as a bystander, the ball hit a box of matches in his pocket.

Parliamentary highlights

House of Commons

Oral questions
Digital, Culture, Media and Sport (including Topical Questions)

Attorney General

Business Statement
Business Questions to the Leader of the House – Mr Jacob Rees-Mogg

Estimates Day
Estimates Day (2nd Allotted Day): Department for International Development and the Foreign And Commonwealth Office; Ministry Of Housing, Communities And Local Government – Jesse Norman

Diplomatic implications of RAF Croughton expansion – Andrea Leadsom

House of Lords 

Oral questions
Impact on the cashflow of small and medium-sized companies of banks quarantining internet transfers of cash on the grounds of security – Lord Mackenzie of Framwellgate

Publication of the report of the Intelligence and Security Committee entitled ‘Russia ‘sent to the Prime Minister on 17 October 2019 – Lord Campbell of Pittenweem

Impact of the restrictions in place to address the COVID-19 pandemic on the financial sustainability of churches and places of worship – Lord Black of Brentwood

Agriculture Bill – Committee stage (day 2) – Lord Gardiner of Kimble

Scottish Parliament 

First Minister Statement

Ministerial Statement
Response to Chancellor’s Summer Economic Update

Supporting Further and Higher Education

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