Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

The chilled war

Written by Charlie Clegg, senior associate 
Edited by Scott Reid, associate partner
1 July 2021

Good morning,

“Daddy, what did you do in the Sausage War?” If I’m ever posed the question, the answer will be that I tried to understand it.

Yesterday, the UK government and the EU announced a three-month extension to the truce in the so-called “Sausage War”. This gives us all a reprieve in which to swat up before the dispute either sizzles out or comes back up.

So far, a temporary agreement has allowed Northern Ireland to import chilled meat products from the UK mainland. Usually, the EU would block imports of all but frozen meat products between its single market and countries outside it. The Northern Ireland protocol means the Province is effectively in the single market while the rest of the UK is out. A block on chilled meat products has, however, been prevented by a temporary agreement. As this has neared its end, the UK has threatened to ignore checks on the export of chilled meat, effectively circumventing the ban. In turn, the EU threatened to disregard parts of the Brexit agreement, potentially beginning a trade war with the UK.

The UK and EU have agreed to extend the existing grace period, allowing chilled meat products from the rest of the UK to be sold in Northern Ireland subject to minimal checks. Both sides, however, have yet to hammer out what a longer-term fix looks like.

The Sausage War has therefore been averted more than stopped. And it has, so far, been a war of threats rather than actions: a chilled war, if you will. The saga has, however, made up in headlines what it lacks in ready comprehensibility. Sausages are iconically British, inherently funny: the parallels to a 1984 episode of Yes, Minister have not gone unnoticed.

Yet this spat is one of only a number of others that cannot summon the glamour of Yes, Minister’s “emulsified high-fat offal tube”. By putting Northern Ireland, the UK, and the EU in an unprecedented position on trade and rules, the Brexit deal effectively ensures such disputes become the modus operandi of UK-EU relations. Only diplomatic patience and regulatory creativity are preventing this chilled war from heating up.

The Sausage War is not, therefore, quite the right term for this. It’s a skirmish averted in a conflict that isn’t yet happening between two partners still engaged with each other. UK-EU relations may be chilly but they’re far from frozen.

News

Speaking at an event to celebrate the Chinese Communist party’s 100th anniversary yesterday, China’s president, Xi Jinping, claimed foreign powers will “have their heads bashed bloody” if they attempt to curb his country’s growth. The remarks appear to be aimed at the US. During the event, Jinping also asserted his commitment to reunify China and Taiwan.

Pressure is mounting on governments across the UK to control football-related events after 1,991 people who tested positive for Covid were reported to have attended an event to mark the Euros competition. The figure represents over half of new cases in Scotland.

Labour MPs close to the party’s deputy leader, Angela Rayner, have claimed she is manoeuvring to replace Keir Starmer as party leader if the Labour loses today’s Batley and Spen by-election. Recent polls indicate that the Conservatives may gain the Yorkshire seat which has been held by Labour since 1997. (£)

Business and economy

Chancellor of the exchequer Rishi Sunak will today deliver his first Mansion House Address to the City of London, in which he will set out plans to make the UK the most “advanced and exciting” country for financial services. The speech comes as the chancellor yesterday announced the UK would become the first country to issue green bonds: gilts which will finance the drive to net zero.

The UK government yesterday revealed new state aid rules which, they claim, will be more responsive than the EU rules they replace. The UK will still be bound to state aid commitments in free trade agreements and to World Trade Organisation rules.

Clothing retailer Gap will close all its UK stores in August and September. The company has not disclosed how many jobs will be affected by the move. Gap plans to continue to operate online and is also planning to close stores in France and Italy.

Columns of note

Following Matt Hancock’s resignation as health secretary, the Financial Times’ Robert Shrimsley looks at what this tells us about the UK government’s rules on lockdown and ministerial behaviour. Shrimsley concludes that the Johnson administration’s cavalier attitude to standards will present greater risks if sustained indefinitely. (£)

In the Guardian, film director Agnieszka Holland and Nobel laureate author Olga Tokarczuk describe the suppression of LGBTQ rights in their native Poland. They argue that time is ripe for a Stonewall-like rising to counter the illiberal regime.

Cartoon source: The Times

Markets

What happened yesterday?

On Wall Street, the S&P500 closed up 0.1% while finishing its fifth straight month of gains. The Nasdaq Composite closed down 0.2% after a week of record highs. Uncertainty over the Delta variant of Covid-19 spurred US investors to eschew riskier stocks, instead investing in US government debt, which saw the dollar index finish up three per cent for the month. Meanwhile, sterling was trading at €1.13 and $1.38. In Europe, the Stoxx 600 index slid 0.8% and the FTSE 100 slid by 0.7%.

In company news:

M&C Saatchi yesterday announced a narrowing in its pre-tax losses: this caused shares in the advertising firm to rally.

Stagecoach reported a Covid-related slump in profits yesterday but remains optimistic for the move out of lockdown.

Tech giants Microsoft and Google have ended their six-year-long truce on lobbying against each other.

What’s happening today?

Finals
Ao World
Argentex Group.
Polar C. Hldgs

Trading announcements
AB Foods
Cairn Homes
Loungers Plc
Pz Cussons

Interims
Harworth Gp
Velocity Comp

AGMs
3i Group
C&c Grp
Dp Aircraft I
Ejf Investments
JD Sports
Mckay Securities
Trainline

GMs
Abcam

UK economic announcements
(09:30) PMI Manufacturing

Int. economic announcements
(08:55) PMI Manufacturing (GER)
(09:00) PMI Manufacturing (EU)
(10:00) Unemployment Rate (EUR)
(13:30) Continuing Claims (US)
(13:30) Initial Jobless Claims (US)
(14:45) PMI Manufacturing (US)
(15:00) ISM Manufacturing (US)
(20:30) Auto Sales (US)

Source: Financial Times

did you know?

The front door of Number 10 Downing Street was briefly painted dark green after Liberal prime minister Herbert Asquith took office.

Parliamentary highlights

House of Commons

Oral questions

Digital, Culture, Media and Sport
Attorney General

Business statement
Business questions to the leader of the House

Legislation
The Supply and Appropriation (Main Estimates) Bill: Proceedings

House of Lords 

Questions
Various

Statements
Various

Debates
The importance of the UK foreign aid programme
The Dunlop Review into UK Government Union capability, and the progress update on the review of intergovernmental relation

Scottish parliament 

No business scheduled

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