Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Sub-marine politics

Written by Katie Armour, senior associate
Edited by Scott Gibson, associate partner

6 October 2021

Good morning,

Jersey is a British crown dependency with a population of just under 100,000 and this week it became the unfortunate focus of France’s disgruntled and frustrated leadership.

Tensions have flared once again over the implementation of the Brexit agreement and the French are fed up. One Macron ally said: “enough already, we have an agreement… and it should be applied 100%”.

Led by France, the EU could reportedly “hit” Britain and Jersey’s energy supply in a matter of days, as retribution for failing to provide sufficient fishing licences to French fishing fleets.

It’d be no small hit. The UK is a net importer of energy from French nuclear power stations and subsea cables link EDF energy to the Jersey Electricity Company. In 2020 alone France exported a net 8,700 gigawatt hours of energy to Britain.

One can imagine the fishing fiasco is bad domestic PR, but for Macron, there’s more at play.

It was only last month that the UK, US and Australia announced a new nuclear-powered submarine pact (AUKUS) that would strip France of a £27bn contract. The French have, understandably, been somewhere between prickly and hostile ever since.

Even some Conservative MPs have recognised this as a diplomatic pressure point, with Tom Tugendhat suggesting France be brought into the second stage of the AUKUS pact.  

Emmanuel Macron is also mindful of the countdown to French presidential elections in April, which, at the moment, he’s not sure to win.

So it’s all to gain for him in this tussle, and for us, much to lose.

The picture in Britain, meanwhile, is stark. Labour shortages continue to plague petrol forecourts and threaten Christmas stock supplies and the immediate future of British farming.

Warnings of a winter of discontent with devastating energy price rises were on the cards weeks back before this additional threat was put on the table. Now reports show UK energy suppliers quoting deals more than £700 above price cap.

Fights with the French are becoming all too frequent and notably egged on by our prime minister insisting on the pointed use of franglais. But the bigger picture in this instance is energy security and how to separate it from volatile foreign policy.

Britain is an island in need of a robust and reliable power supply. Interconnectors are great except in times of crisis. If we rely on imports and supply is down elsewhere, we’re all out of luck. If we frustrate the people with the power to halt that transfer we’re vulnerable too.

French minister Clément Beaune said: “The Channel Islands, the UK, are dependent on us for their energy supply. They think they can live on their own and badmouth Europe as well. And because it doesn’t work, they indulge in one-upmanship, and in an aggressive way”.

While playing to the gallery on both sides of the channel may appeal to a jingoistic audience short term, it does long term damage to Anglo-French relations. We need to live with our neighbours. Otherwise “donnez moi un break” may lead to more things being broken. Entente cordiale would serve us all better.

News

Boris Johnson will use his speech at the Conservative party conference in Manchester today to say his party has the guts to change the UK and move the country towards high-wage, high-skill employment. He will also accuse previous Labour and Tory governments of “dither and delay”.
 
The UK government’s decision to cut Universal Credit by £20 a week has been implemented today. The BBC has put together a selection of case studies which illustrate the immense impact the decision will have on families across the country.
 
Home secretary Priti Patel has announced there will be an inquiry into the “systematic failures” that enabled Wayne Couzens to retain his role as a police officer despite concerns about his behaviour. Speaking at the party conference she said the inquiry would give the independent oversight needed “to ensure something like this can never happen again”.

Business and economy

European natural gas prices rose to record highs yesterday, which in turn dragged down bond markets and signalled to investors potential wider economic damage. Prices jumped by 23% to €117.50 a megawatt hour, up from just €18 six months ago. (£)

 

Environment secretary George Eustice has warned that the UK will “probably always” require some form of seasonal workers scheme to pick fruit and vegetables during peak seasons. The chief executive of the British Growers Association suggested that boosting the numbers could “create some slack in the system” that might prompt further investment. (£)

Columns of note

Roger Boyes warns in The Times that tensions in the Eastern Med are “coming to the boil”, stressing that Putin and Erdogan are calling the shots while Europe and the US fails to assert their authority. (£)

 

Peter Oborne argues in The Guardian that access to the Tory party is being bought by a “new class of tycoon funders”. He suggests that in the wake of the Pandora papers’ revelations we need to be asking more questions about what they’re getting in return and taking a closer look at donors’ tax contributions.

Cartoon source: The Times

Markets

What happened yesterday?

London stocks closed in a positive state on Tuesday, as markets show resilience in both the UK and US.

The FTSE 100 ended the session up 0.94% at 7.077.10, while the FTSE 250 was up 0.33% at 22,730.65.

Sterling was in a stronger state, trading 0.24% higher against the dollar at $1.36 and 0.34% stronger against the euro, changing hands at €1.17.

In company news:

Shares in Greggs surged by 11.1% after it announced its full year outcome was due to be ahead of previous expectations because of strong sales performance in the third quarter.

Sainsburys was in positive territory for the second day in a row, with shares increasing by 1.9%. Speculation is growing it could be the next target of a takeover in the supermarket sector.

What’s happening today?

Finals
Netcall

Interims
Allied Minds
Tesco

Trading Announcements
Ferrexpo
Sirius R E.

Interim Management Statement
City of London

AGMs
Goodwin
Miton Global

Interim Ex-Dividend Date
Medica Group P.

Interim Dividend Payment Date
Savills

UK Economic Announcements
(09:30) PMI Construction

International Economic Announcements
(07:00) Factory Orders (GER)
(10:00) Retail Sales (EU)
(12:00) MBA Mortgage Applications (US)
(15:30) Crude Oil Inventories (US)

Source: Financial Times

did you know

Despite being just 2.4 miles apart, the Diomede Islands have a 21-hour time difference between them (Source: Insider)

Parliamentary highlights

House of Commons

The House of Commons is in recess until 18 October 2021.

House of Lords 

The House of Lords is in recess until 11 October 2021.

Scottish parliament 

Parliamentary Bureau motions
 
Portfolio questions
Justice and veterans
Finance and the economy
 
Scottish government debate
Scotland in the world – championing progressive values
 
Business motions
 
Parliamentary Bureau motions
 
Members’ business debate
Rest and Be Thankful

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