By William Schomberg
LONDON (Reuters) – The election triumph of Prime Minister Boris Johnson has cleared up Britain’s political outlook, but the Bank of England won’t be rushing to respond to the end of the deadlock.
The BoE will keep interest rates on hold this week, according to all 69 economists polled by Reuters.
Where there are differences, however, is over whether the British central bank’s next move will be to cut rates, following recent moves to ease policy by the European Central Bank and the U.S. Federal Reserve, or to raise them in 2020.
Britain’s economy flat-lined before the high-stakes election on Dec. 12, which added to the longstanding uncertainty about Brexit and the drag from a slowing global economy.
Little wonder, then, that in November two of the BoE’s nine interest rate-setters cast the first votes for a cut in borrowing costs since shortly after the 2016 Brexit referendum.
But since then, Johnson’s new majority in parliament has eliminated doubts about whether Brexit will happen on Jan. 31, and buried the prospect of a sharp leftward shift in politics under a Labour Party-led government.
There are also signs that the U.S.-China trade war is easing, raising the prospect of a more benign economy for whoever takes over as BoE governor from Mark Carney, who is due to stand down at the end of next month.
Samuel Tombs, an economist with Pantheon Macroeconomics, thinks Britain’s quarterly economic growth rate will double to 0.4% in the first half of 2020 as companies and consumers catch up with spending they had been putting off.
Britain’s government also plans to increase its spending.
That would create a brief window for the BoE to raise its benchmark rate from its current level of 0.75%, close to its lows for most of the 10 years since the global financial crisis, Tombs said.
“The MPC will be keen to act quickly before Brexit risks emerge again to hike and to build scope to ease again whenever the next downturn hits,” he said in a note to clients.
Johnson promised voters that he would not extend the Brexit transition period that is due to end on Dec. 31, 2020.
But many trade experts question whether a free trade deal with the European Union can be struck by then, raising the prospect of trade barriers in just over a year’s time.
While sterling and British shares soared after Thursday’s election, the prospect of renewed Brexit tensions has remained in focus for investors in British government bonds, with gilt prices implying a 40% chance of a rate cut by the end of 2020.
Ruth Gregory, an economist at Capital Economics, said the message from this week’s BoE meeting might sound similarly cautious, with Britain’s inflation rate below the BoE’s target and the jobs market faltering.
She said MPC members Michael Saunders and Jonathan Haskel could well vote for a rate cut again “and the latest data may have been sufficiently weak for at least one more dovish MPC member — possibly Gertjan Vlieghe — to join them.”
(Reporting by William Schomberg; Editing by Catherine Evans)
Jonathan Kay: B.C. NDP succumbs to the leftist battle over identity politics – National Post
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The next day, the star candidate was joined by Annita McPhee, former president of the Tahltan First Nations government, whose lands comprise part of the Stikine riding. But McPhee didn’t just jump in: she also called on Cullen to jump out. According to a motion adopted in 2011, older male NDP MLAs who retire must be replaced with either a woman or a member of an “equity-seeking” group. Cullen, a white guy born and raised in Toronto, doesn’t qualify.
In the days since, the plot thickened, with the party president releasing a vague statement indicating that “in certain instances, despite extensive candidate searches, our regulations permit allowances for other candidates to be considered.” It also turned out that the definition of “equity-seeking” is quite broad. In the last election, one married male NDP candidate, who’d always presented as straight, abruptly claimed he was bisexual. Another white male candidate got nominated after saying he had a hearing impairment.
I hadn’t heard of the B.C. NDP’s equity-seeking policy until this week. But its existence shouldn’t surprise me. The whole thrust of modern identity politics is to rank the acuteness of human oppression — and, by corollary, the urgency of the associated political demands — on the basis of race, sex and other personal traits. It makes sense that this principle should now be institutionalized, and weaponized, by politicians competing for status and power in a left-wing party that explicitly claims to represent the oppressed. Not so long ago, oppression was defined in NDP circles according to a Marxist understanding of labour and capital — which is why unions had such a prominent role in the party. But those days are long gone. Just last month, in fact, federal NDP Leader Jagmeet Singh used his Twitter account to promote officially debunked conspiracy theories suggesting that a Black Toronto woman was murdered in May by a half dozen (unionized) Toronto police officers.
Coronavirus: Ministers balance science and politics in latest rules – BBC News
It’s not a day for optimists, even though the prime minister himself is one of that tribe.
Tomorrow, it will be six months exactly since he told the nation to stay at home.
This time, Boris Johnson stopped well short of slamming the country’s doors shut.
But what really stood out in his long statement in a miserable-looking Commons was his message that the limits put in place today will last another six months.
Even if you are very fond of your own company, lucky enough to have a secure job you enjoy and a comfy spare room where you can do it, it is quite something to contemplate.
The government now expects that all our lives will be subject to restrictions of one kind or another for a whole year – March 2020 to March 2021.
As each month ticks by, it becomes harder to imagine a return to anything like normal political life, or, more importantly, the way we all live.
We may not be waiting for a return to life as we knew it, but grinding through a moment of change.
‘Shelter the economy’
But if you were listening carefully, something else was different too.
The country became familiar with the slogan “Stay At Home, Protect the NHS, Save Lives” – it was emblazoned on government lecterns, repeated again and again by government ministers in interview after interview, on bus shelters, pop-up ads on the internet, wherever you looked.
That phrase was retired after the most intense period of the lockdown, but echoed today with one important additional condition.
Boris Johnson’s driver today was to “save lives, protect the NHS” and “shelter the economy”.
As we discussed here yesterday, concerns about the economy played more strongly in Downing Street after fierce resistance from backbenchers, and arguments from the next-door neighbour in No 11 of the economic risks of a short, sharp closure programme.
Fears about how the country makes a living have always been part of the decision-making process for the government, grappling with these acute dilemmas.
But the political appetite inside the Tory party for sweeping restrictions has certainly dimmed.
The changes announced today do make economic recovery harder, the “bounce back” the government dreamt of looks harder to achieve, but they are not as draconian as they may otherwise have been.
Ministers used to make great play of following the science, now they are certainly following the politics too.
Only the unknowable progress of the disease will, in time, suggest which call was right.
Covid: How the coronavirus pandemic is redefining Scottish politics – BBC News
The pandemic has probably done more than anything to define Scottish devolution in 21 years of Holyrood decision making.
Before coronavirus, the Scottish Parliament’s policy choices – from free personal care for the elderly to minimum pricing of alcohol – made it distinctive.
Now, Scottish ministers are making life and death decisions affecting everybody almost every day.
The exercise of emergency powers to combat Covid-19 commands public attention like nothing before.
We’ve had six months of lockdown restrictions and after a recent period of relaxation, they are tightening again as coronavirus cases rise.
Paying attention is essential to knowing whether or not you can go to work, visit your granny or have friends round for dinner.
It is First Minister Nicola Sturgeon rather than the prime minister, Boris Johnson, who is deciding for Scotland because public health is devolved.
Many of her decisions so far have matched those by the UK government for England and the devolved administrations for Wales and Northern Ireland.
That was especially true in the early stages of the crisis when there was much talk of a four nations approach – but differences have emerged over time.
The Scottish government has generally been more cautious about lifting restrictions than the UK government.
Bars and restaurants stayed closed in Scotland for longer and it was slower to lift quarantine for people arriving from Spain, before this was reimposed across the UK.
By contrast, the Scottish government was the first in the UK to restore full-time classroom education in schools after the summer.
Scottish ministers did coordinate with the other administrations to introduce the “rule of six” for people attending social gatherings.
However, on closer inspection, the Scottish rule differs from that for England in two key respects.
It is more restrictive in limiting the six people to two different households and more flexible in exempting children under the age of 12.
This is devolved decision making in action as never before.
Some argue divergence across the UK is confusing and undesirable, but opinion polls consistently suggest the Scottish public trust Holyrood to set the pace.
After a period in which Conservatives argued that Scotland should leave lockdown in lockstep with the rest of the UK, a multi-speed approach became accepted.
The pandemic, however unwanted, has given Ms Sturgeon an opportunity to demonstrate leadership and the public seems to appreciate that too.
An Ipsos Mori survey for BBC Scotland in May suggested 82% of people thought Ms Sturgeon was handling the pandemic either very or fairly well.
By contrast, only 30% from the same sample of around 1,000 Scottish adults gave Boris Johnson similar credit.
More recent polling has produced similar indications even although coronavirus outcomes are not profoundly different between the UK nations.
The Office for National Statistics reported that England had the highest increase in excess deaths in Europe to the end of May. At that point, Scotland had the third highest behind Spain.
While politicians of all stripes have been working to suppress coronavirus, coronavirus has suppressed much of our everyday politics.
Previous Holyrood priorities like completing an expansion of free childcare, introducing new devolved benefits and reviewing the school curriculum have been deferred.
Major controversies such as the Scottish government’s mishandling of complaints about the behaviour of the former first minister, Alex Salmond, seem less potent.
The Scottish government parked preparations for an independence referendum in 2020 to prioritise its response to the pandemic.
That has not meant opinion on the major constitutional question in Scottish politics has remained static.
As coronavirus has swept the country, a trend has emerged in opinion polls suggesting there is now majority support in Scotland for independence.
Some analysts suggest this could be directly linked to the focus on devolved leadership in the crisis.
The trend has worried Conservatives enough to change their Scottish party leader and some in Scottish Labour have unsuccessfully tried to change theirs.
Those who favour the union point out that Scotland has been supported by what they call the “broad shoulders” of the UK economy throughout the pandemic.
Lockdown is largely underwritten by the Treasury with huge funding for furlough and other schemes to support business.
Nationalists say this help would be replicated by Holyrood if it had the economic powers of independence.
Unionists question the scope for doing so in a country which, as a devolved part of the UK, had a notional deficit of £15bn before the pandemic took full effect.
Economics will always be important in the debate over independence as will the public’s sense of identity.
In the 2014 referendum, Scotland voted 55%-45% for continued union. If indyref2 was held tomorrow, the polls suggest the result would go the other way.
There is much that could sway opinion further – both for and against independence – in the coming months.
The economic crisis the pandemic brings, the impact of Brexit and the efforts of politicians to overcome the continuing health emergency could all have a bearing.
The public could weary of politicians telling them what they can and can’t do especially if their livelihoods are on the line.
Arguments over all this and more will find expression in the campaign for next May’s Holyrood elections.
Together with elections to the Welsh Assembly and local government in England, these will be the first major votes of the pandemic.
A pandemic that has already given new definition to devolved power and could be playing a role in shaping opinion on the future of the Union
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