Category Archives: Government

Britain, Economic, Government, Politics

UK Economy: Growth stagnation following Brexit?

UK ECONOMY

Intro: Whichever way we measure it, economic growth in the UK is not looking particularly good

It would not be unassuming to believe that the UK citizen has become confused or for admitting to bafflement at the array of economic data that has been released regarding the impact of the vote to leave the European Union.

The most recent came at the end of last week from the IHS Markit’s Purchasing Managers’ Index which indicates that Britain’s decision to leave the EU has led to a ‘dramatic deterioration’ in economic activity, not seen since the aftermath of the 2008 financial crisis.

The data shows a fall in both manufacturing and service sectors and is described as the first significant set of data measuring business reaction to the referendum result. The figures displayed in PMI surveys are generally viewed as being reliable and an authoritative indicator of economic predictions.

This outlook came just after the IMF’s World Economic Outlook report slashed its growth forecasts, saying its prediction for the UK in 2017 was now a 1.3 per cent cut, down from the 2.2 per cent.

But there have been contradictory statements. The Bank of England admitted it saw ‘no evidence’ of a sharp economic slowdown and positive employment figures in the UK showed record numbers of people in work.

And perhaps in a desperate attempt to glimpse and portray a silver lining, it was reported that Britain was undergoing a staycation boom, with the tourism industry in particular set to reap the benefits of millions of people now choosing to holiday at home rather than travelling abroad thanks to the weakness of pound sterling.

The first point to consider is that predictions are just that, a prediction or an estimate on the economic outlook. And indicators only say how people think they might act; in these uncertain times such sets of data are more of a gamble than ever.

It is probably much better to concentrate on what has actually happened, although it is still very early to see all the consequences and implications coming through in the data.

In the first half of 2016, figures show that the global economy did better than expected, with stronger than forecasted growth in the Eurozone area and Japan, as well as a partial recovery in commodity prices.

The fall of the pound has already had an effect, making companies in the UK more attractive for takeover by foreign firms. ARM Holdings, one of the UK’s biggest technology companies, based in Cambridge, is to be bought by Japan’s Softbank in a £24 billion deal. Stirling-based Supaglass, the UK’s largest independent glass wool maker, is set to be purchased by one of Russia’s largest roofing and insulation groups in a deal reputedly worth around £8 million.

According to figures compiled by the chief statistician in Scotland, there was no growth in the Scottish economy in the first three months of this year. Overall, however, UK GDP grew by 0.4 per cent over the same period.

The expression ‘swings and roundabouts’ could have been coined to describe the economy. It undoubtedly varies and no-one can be certain of any set of predictions: many factors which will affect the British economy are beyond are control and not affected by Brexit at all.

Notwithstanding, though, any reasonable prudent or objective view would have to conclude that the prospects for UK growth are not looking particularly good either for the short or medium-term.

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Government, Politics, Turkey, United States

Turkey’s failed military coup…

TURKEY

Intro: Turkey’s failed coup now gives Recep Tayyip Erdogan a chance to seize more power

IN just the space of four decades Turkey has seen four governments ousted by its military, the most recent was in the late 1990s. Until now, another coup had been considered extremely unlikely. Many senior army officers resent Turkey’s increasingly authoritarian and autocratic president, Recep Tayyip Erdogan, for his single-handed attempts to reshape society along Islamic lines and to rein in the military. Few would have reason to think that an attempt to depose him would ever have been successful. Mr Erdogan has won every election since 2002, and retains the support of roughly half the electorate. A decade of economic prosperity, Mr Erdogan is considered a lesser evil than army rule even by many of his committed opponents.

The attempted coup on July 15th, was dismantled in just a matter of hours amid a massive show of popular support for continued civilian rule. According to official sources, at least 265 people were killed. Mr Erdogan has emerged from the episode stronger than ever. His ultimate desire of changing the constitution to grant the presidency executive powers may now be within reach. Mr Erdogan wants power around himself and not shared through parliament.

The Turkish president plays a masterful game at being both victor and victim. This is the man who brought Turkey’s secularist old guard to heel and gave a voice to the country’s conservatives, but, at the same time, also claimed to be surrounded by enemies both at home and abroad. For Mr Erdogan, the world is divided into two groups: on the one hand, his voters; on the other, a coalition of foes that includes the political opposition, Western countries ostensibly envious of Turkey’s progress, the global financial elite, and a secretive Islamic movement, the Gulen community. In the eyes of his supporters, the coup attempt has proven Mr Erdogan right. He will now likely claim a mandate for amassing even more power and eliminating the remaining centres of opposition.

To the relief of most Turks, the military is no longer the credible and alternative power base it once was. It will be the first target for any purge under sweeping changes being considered by Mr Erdogan. While the coup had the support of only part of the officer corps, this was not a coup by the military as an institution but more of a mutiny. The plotters did, however, deploy large numbers of troops and heavy armour in both Istanbul and in Ankara, where their aircraft bombed the national parliament. Over 2,800 military personnel, including a number of generals, have been arrested.

Another target on Mr Erdogan’s radar will be the Gulen movement, a Muslim sect headed by a cleric, Fethullah Gulen, who was a close ally of the Turkish president before falling out with him in 2013. The government immediately charged the group with masterminding the violence. The government labelled the Gulenists a terror group this year, and it now has a green light to pursue anyone even remotely suspected of links to them. Some Turkish officials insist that the Gulenists have their finger prints all over this latest coup attempt. On July 16th, Binali Yildirim, Turkey’s prime minister, demanded that America extradite Mr Gulen, who lives in Pennsylvania. “The country that stands behind this man is no friend to Turkey,” he warned.

Mr Erdogan has long sought to undermine his parliamentary political opposition. Last year he responded with massive force to a growing insurgency in the southeast by groups aligned to the banned Kurdistan Workers’ Party (PKK), fanning the flames of the violence and providing an excuse to link moderate Kurdish MPs to the terrorists. They have since been stripped of parliamentary immunity, and now face terrorism charges. Bomb attacks by the PKK and by Islamic State, which Turkey says it is battling in Syria, have legitimised a government crackdown on independent media and free expression. The main independent newspapers and television broadcasters have been taken over by government organisations aligned to the previously issued instructions of Mr Erdogan. Prosecutors have opened some 2000 cases against people suspected of insulting the president since 2014. Following the coup, such repression will probably intensify.

Perhaps most troubling, the coup will provide an opportunity for Mr Erdogan to eliminate what remains of Turkey’s independent judiciary. On July 16th, the government announced that 2,700 judges had been suspended from duty. Two members of the constitutional court have also been detained.

The irony is that the coup’s failure demonstrated just how weak a threat Mr Erdogan actually faces. Almost all people spoke out against the coup, including the entire political class, as well as the overwhelming majority of Turkey’s citizens. That is the good news. The bad is that today’s sense of unity risks being drowned out tomorrow by calls for vengeance. The day after the coup attempt a group of men clad in Turkish flags marched down Istanbul’s main street shouting “We want executions”. The death penalty was abolished in Turkey in the early 2000s. Media photographs and video footage online from the coup’s aftermath showed protesters on one of Istanbul’s bridges beating soldiers and whipping them with their belts.

The failed coup is a golden opportunity for Mr Erdogan to heal a deeply divided society. Past experience suggests that he will instead respond with a vicious crackdown. During the night of July 15th, Turks of all stripes managed to protect their country from a relapse into military rule. Yet, the fragile democracy that many of them died to defend is now in Mr Erdogan’s increasingly untrustworthy hands.

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Britain, Government, Politics

Theresa May: Paving the way ahead…

BRITAIN’S NEW BREXIT GOVERNMENT

Intro: One of Mrs May’s early priorities will be to bring together and unite a party which has witnessed brutal blood-letting over the past few months. Her ‘Brexit means Brexit’ statement is at least a clear and unequivocal approach

The appointment and inauguration of Theresa May as British Prime Minister will hopefully begin the long process of restoring some order and semblance after the post-Brexit turmoil which has marked the most tumultuous period in UK politics of the post-war period.

The former Home Secretary is widely perceived as a unifying figure, one that is surely needed to heal the wounds and divisions of a government, party and nation inflicted by one of the most ill-tempered political campaigns in modern history. That culminated in the UK’s decision to exit the European Union.

While Mrs May made an impressive start with her first speech outside Number 10 as Prime Minister, one in which she spoke out strongly in favour of the Union (of Scotland, England, Wales and Northern Ireland) and against social injustice, we should hope that she will do more than just speak about these subjects – and that her actions match her words (the vital missing element in the behaviour of her predecessor).

One of Mrs May’s early priorities will be to bring together and unite a party which has witnessed brutal blood-letting over the past few months. Her ‘Brexit means Brexit’ statement is at least a clear and unequivocal approach. Appointing David Davis – a Eurosceptic admired by his supporters for his views on issues such as civil liberties and taxation – as the new ‘Brexit Secretary’ suggests a safe pair of hands.

The new Prime Minister has also set her sights on operating a Government across the spectrum that approaches gender balance with more women in key roles providing a fresh approach. Many junior ministerial appointments are also likely to be filled by women. More importantly, though, is that Mrs May must also find a way to bring the country back together after the anger and hostility which has marked so much of the bitter exchanges of the EU referendum campaign. The most concerning aspect of the Brexit aftermath has been the rise in hate crime, which jumped by a massive 42 per cent in the two-week period surrounding the date of the vote. The new Government has a responsibility to ensure the transition to Brexit, while firm in approach, bypasses the rancour and intemperate approach which scarred much of the campaign and did collisional damage to Britain’s credibility on the international stage.

The Scotland question, too, is never likely to be far from Mrs May’s thoughts. Nicola Sturgeon, the First Minister of Scotland, has rightly reminded the UK leader that Scots voted to stay in the EU, but to her credit Mrs May in a meeting with the First Minister in Edinburgh has said she will do all she can in accommodating Scottish requests and by exploring all options put to the UK Government. A new SNP mantra, of “If Brexit means Brexit, then Remain means Remain” seems likely to ignite renewed interest on a second vote for Scottish independence. This may be the only practical and legal route of keeping Scotland within the confines of the European Union. But the obstacle here will be whether Westminster will be so keen to allow such a vote, with it having the final say on the constitution.

But before Brexit, another independence referendum in Scotland or even national reconciliation, Mrs May has the future of the UK’s nuclear defences to sort out as MPs vote on the renewal of Trident on Monday (18 July). With the Labour Party in turmoil and in open revolt on the issue, Mrs May is herself facing the prospect of many Conservative MPs opposing the Government, as they feel the £30bn cost could be better allocated to conventional weapons. In less than seven days since taking office as Prime Minister, a backbench rebellion is already brewing.

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