There was a sense of relief in financial markets this week after the US president and China’s vice premier signed a ‘phase one’ trade deal on Wednesday. The deal represents a significant de-escalation in the US–China trade war.
President Trump has hailed the agreement as a “big beautiful monster”. Although some scheduled US tariffs have been cancelled or reduced, the 86-page document leaves most tariffs in place for now. But the deal removes China from the US list of currency manipulators. In return, China has pledged to buy at least $200 billion more of US goods. This consists of $78 billion in manufactured goods, $54 billion in energy purchases, $32 billion in agricultural products and $38 billion in services. A ‘phase two’ deal is set to cover technology and cyber-security issues (so nothing contentious there, then …).
As investors took heart from the deal, most global markets performed well over the week. Several hit record highs. In the US, the S&P 500 was up 1.6% by Thursday’s close. In the UK, the FTSE 100 rose by 0.3%. The FTSE World Europe ex UK index also gained 0.3%.
Putin off retirement?
Perhaps the week’s most dramatic development came from Russia, where the entire government resigned. This appears to be a manoeuvre to facilitate President Putin’s proposed constitutional reforms. If enacted, these could extend his grip on power beyond 2024, when his fourth – and, under the present constitution, final – presidential term is due to come to an end.
The vehicle for prolonging Putin’s rule would probably be the State Council, which is currently merely an advisory body. His successors as president will be limited to two six-year terms in office. The proposals are to be voted on in a referendum, at a time yet to be determined. Following the resignation of the government, Mikhail Mishustin will take over from Dmitry Medvedev as prime minister. President Putin’s move carries echoes of China’s President Xi, who removed the limits on his term of office in 2018.
The rouble and the Russian stock market were briefly disquieted by the developments, but both soon recovered. If there’s one thing that all this politicking points to, it’s continuity.
Europe goes green
On Tuesday, the European Commission announced details of its ‘European Green Deal’. This involves a €100 billion package to fund renewable and sustainable investment. And this is just the first step: over the next decade, the Commission is targeting a total investment of €1 trillion. The aim of these measures is to make the European Union carbon-neutral by 2050 – and to compensate the losers of the transition away from a carbon-based economy.
Much of the package is aimed at encouraging fossil-fuel-dependent countries such as Poland and the Czech Republic to move away from carbon-intensive industries. Poland has so far refused to sign up to the Green Deal; now there is a considerable financial incentive to do so.
Flying to the rescue
In the UK, the government intervened to save Flybe from collapse. The company is Europe’s largest domestic airline and the largest domestic operator in the UK. The move was criticised by Flybe’s rivals. Willie Walsh, the CEO of International Airlines Group, called the rescue a “blatant misuse of public funds”.
Boris Johnson, the prime minister, justified his government’s intervention by emphasising “the importance of Flybe in delivering connectivity across the whole United Kingdom”. The government is doubtless mindful that its majority depends on voters in the regions rather than the capital – regions in which Flybe offers both transport links and a significant source of employment.
Re-assembled
The UK government achieved a notable success this week with the restoration of the Northern Ireland assembly to Stormont. The devolved government had been suspended for 36 months following the breakdown of power-sharing arrangements between unionist and nationalist parties.
The restoration of the assembly came after a deal was proposed over support for the Irish and Ulster Scots languages and as Westminster pledged significant additional spending on healthcare and infrastructure. The amounts involved are, as yet, uncertain.
And finally …
Next week ends with Burns Night. For many, celebrating the birth of Scotland’s national poet involves the full Burns supper: haggis, neeps and tatties (that’s turnips and potatoes to those who don’t speak Scots). And, of course, a wee dram or two.
But while cooking a haggis is a simple business, eating the “Great Chieftain o’ the puddin-race” is quite a different matter. Not everyone – even in Scotland – finds the combination of sheep’s heart, liver and lungs with oatmeal, onions and suet a winning one. National dish it may be, but to some, it’s simply offal.
But fear not! Help for the squeamish is at hand. Aberdeenshire snack-food manufacturer Mackie’s has recently launched a variety of crisps in – wait for it – haggis, neeps and tattie flavour. So, for those who want to celebrate the Scots bard without busting their (bags of) guts, a packet of crisps might do the job. Quite how the crisps fare as an accompaniment to whisky is, as yet, unreported.
Editorial image credit: Greg Balfour Evans / Alamy Stock Photo