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Week in review: “I’m not a quitter”
On a visit to Japan this week, UK Prime Minister Theresa May confirmed that she would be leading the Conservative Party into the 2022 UK election. Despite June’s poor election result and criticism of her premiership, she made clear that she was “in this for the long term”. May was on a three-day mission to work towards a bilateral trade agreement following Britain’s formal exit from the European Union and to reiterate Britain’s support for Japan amid an increasingly bellicose North Korea.
Back in Europe, Brexit negotiations were marred by disagreement over the terms of Britain’s “divorce bill”. In a heated press conference, the EU’s chief negotiator, Michel Barnier stated that Britain wants an “impossible” deal and that “no decisive progress” had been made, while UK Brexit Secretary, David Davis highlighted the UK’s “duty to taxpayers” to examine the EU’s demands. UK Trade Secretary, Liam Fox added that Britain must not be blackmailed by Europe over the issue.
Hurricane havoc in the US
The southern United States was hit by a large tropical cyclone this week, the first hurricane to hit US landfall for 12 years. The storm intensified and became a Category 4 hurricane last Friday, flooding Texas with unprecedented rainfall. On Thursday, a chemical plant in Crosby, Texas suffered two explosions due to damage caused by the floodwater. Thus far, 38 deaths have been confirmed. Early estimates of financial cost caused by Harvey are massive, with some calculating up to $100 billion. The hurricane has also had an impact on petrol prices after oil pipeline networks to the Eastern US and several oil refineries were shut. In contrast to previous hurricanes, the oil price fell as traders focussed more on the potential fall in demand from damaged US refineries than the hit to supply from reduced production.
Unfortunately, the US isn’t getting any respite – a new hurricane, Irma has been rapidly intensifying over the Atlantic Ocean and threatens to hit the Caribbean and US in the coming days.
Eurozone goes from strength to strength
After several years of sluggish growth, concerns over sovereign debt crises, and the threat of far-right parties, Europe has had a positive 2017 thus far. Populist revolts came and went, and recent second-quarter growth was stronger than expected.
On Thursday, there was more positive news as the Eurozone economy got the seal of approval from Moody’s. The rating agency upgraded its 2017 forecasts from 1.7% to 2.1%. Moody’s noted strong performance in Germany and significant improvement in France and Italy. Consumer confidence and strong export figures have driven the more optimistic growth projections.
Two dropouts from FTSE index
It was the end of the road for two companies in the FTSE this week as Provident Financial and Royal Mail were ejected from the UK’s leading equity index.
Subprime lender, Provident had only entered the index in 2015 following success in its credit card and door-to-door loans business. However, a second profit warning in three months and the cancellation of an interim dividend led to the resignation of the CEO and a 66% fall in the company’s share price. In contrast, Royal Mail experienced a far steadier decline, driven by falling letter volumes and intense competition in the parcels market. They will be replaced by housebuilder, Berkeley Group and NMC Health, a private healthcare provider based in the United Arab Emirates.
The FTSE index rose 0.4% over the week to Thursday 31 August.
And Finally…
Some seafaring locals in Cornwall were left a little disappointed this week. In a bid to set a world record for the number of people dressed up as pirates, the people of Penzance fell short. Unfortunately, all hands were not on deck as several attendees missed the count when they decided to pop into a local pub. But the young scallywags weren’t all to blame – Penzance’s pirates numbered only 10,574, almost 4,000 pirates short of the world record of 14,231set by Hastings in East Sussex. Penzance’s Mayor expressed disappointment in the failed bid, calling his Hastings rivals “impostors”.
