The Month That Was……May 2018

A month that saw the beginning of GDPR…..and an end to the tons of unwanted emails it created. Hopefully! Throw in Trump, Brexit, a royal wedding and a few economic twists and turns for good measure……what a month!

 

So just how will May 2018 be remembered?

 

Trump v China

In March, Trump imposed worldwide tariffs of 25% on US imports of steel and 10% on aluminium. These were basically designed as an attack on China and the flexing of US muscles.

 

Some countries were exempted temporarily from those tariffs, including Canada, the EU and Mexico. China was not included in the exemptions and later retaliated with its own duties on some US imports.

 

Mr Trump responded by calling for further US tariffs against China, escalating trade tensions between the two giants.

 

However, May has seen Trumps stance soften……perhaps learning from the lessons of Obama.

 

In 2012, Obama introduced a 35% tariff on Chinese car tire imports. The result was a 28% reduction in Chinese car tire imports, a 14% increase in US tire production and 1,200 jobs saved.

 

Good times?

 

Well, it came at a cost. Firstly, US consumers had to pay $1.1 billion more for the higher cost of car tires. Secondly, 3,700 jobs were lost as a consequence of China retaliating with tariffs on US imported chicken and US farmers lost $1 billion in sales.

 

Not quite the story Obama spun in his State of the Union address in 2012 that claimed “over a thousand Americans are working today because we stopped a surge in Chinese tyres”.

 

Perhaps, just perhaps (and say it quietly) Trump might be a little cleverer than we thought. Or maybe his advisers are a little cleverer than we thought!

 

Eurozone Growth
The European Union economy slowed in the first quarter of the year, official Eurostat figures have shown.

 

However, growth still reached 2.5% year-on-year and the eurozone is still doing better than the UK economy. It was the fifth out of the last seven quarters that the eurozone grew faster than the UK following the EU referendum.

 

As our biggest trade partner, Eurozone economic growth is crucial to our own economic performance.

UK Economy
The UK economy is incredibly dependent on consumer spending (the second largest consumer driven economy in the world – second only to the US) and one of the key ingredients for growth is that wages grow faster than inflation. Or to put that another way…….we have more cash in our pockets to spend.

 

On the positive……

Some welcome news this month that wages rose at an annual rate of 2.9%, faster than inflation for the first time in more than a year.

 

On the negative……

Surging oil prices are set to add to inflation over the coming months and higher energy prices will squeeze household incomes again.

 

Oil has leapt to $80 a barrel recently and some economists are warning it could rise to $100 a barrel in the summer.

 

FTSE Well Lubricated

Higher oil prices might be bad news for the economy but the oil rally sent London share markets to an all-time high. The FTSE 100 surged to a record level, boosted by oil majors Royal Dutch Shell and BP.

 

The FTSE has also been boosted by recent weakness in the pound, which inflates foreign earnings.

 

But will it last?

The Cost of Brexit

The Governor of the Bank of England claimed this month that households were at least £900 a year worse off and the economy is £40 billion smaller as a result of the Brexit vote. Not for the first time, the Governor seems more pre-occupied with column inches than substance. 

 

That’s great and feather in your cap for having a sophisticated abacas to calculate it……but how does that help us?

 

The resources used for these calculations would be better served in addressing the issue and getting creative to stimulate the economy. Just a thought.

 

We only have to wait until next June to replace the Governor and, who knows, the replacement might just stimulate us.

 

Noel v Lloyds

It’s not too often you hear “spare a thought for Noel Edmonds” but he is on an admirable one-man crusade to take on Lloyds bank.

 

Edmonds is seeking compensation from Lloyds after claiming he was on the brink of suicide after falling victim to bank fraudsters. The fraud resulted in a number of bankers and their associates jailed for a combined 50 years in 2017.

 

Edmonds is now suing the bank for alleged fraud but the bee in his bonnet this month was the proposed 11% pay rise for Lloyds Bank chief executive Antonio Horta-Osorio (who earns £6.5 million a year already).

 

Edmonds bought one share for 67p to allow him to attend the AGM meeting and let his feelings be known.

 

Not too many take on the juggernaut of the banking sector, but fair play to Edmonds for having the conviction to take it on. 

 

Deal or no deal. Jail or no jail. We shall see.

May’s Biggest Loser……Option 1 – UK Government

The UK Government will host a summit encouraging six European countries to join the EU for the sake of their “security, stability and prosperity”……8 months before the UK signs its own Brexit withdrawal deal with Brussels.

 

The leaders of EU candidate countries Albania, Montenegro, Macedonia, Serbia, Bosnia and Herzegovina and Kosovo will attend the summit in July in London.

 

Is our Government really that incapable of requesting that the meeting be moved to a different EU member state in the (almost) two years since the referendum?

 

Hypocrisy? Irony? Incompetence? Regardless……you couldn’t make it up. It’s just soooo Brexit isn’t it!

 

May’s Biggest Loser……Option 2 – Royal Bank of Scotland 

Royal Bank of Scotland has ‘agreed’ a $£3.6 billion penalty with US regulators. The long-running probe focused on the sale of financial products including toxic mortgage bonds in 2005, ahead of the financial crisis.

 

Congratulations you are the proud owner of a £3.6 billion fine (as us taxpayers are a 70% shareholder in Royal Bank of Scotland)!

 

This is seen as a pivotal point for the bank as the Government could not sell the taxpayers stake until the fine was known and paid. Which begs the question……

 

Why has it taken 13 years to get to this ‘pivotal point’?

 

We could have cut a deal, sold the taxpayer stake and boosted the public coffers years ago. But that is logical and requires applied common sense.

 

Arghhhhhhh!

 

 

May’s Biggest Loser……Option 3 – GDPR

The General Data Protection Regulation 2016/679 is a regulation in EU law on data protection and privacy for all individuals within the European Union and the European Economic Area and came into being on 25 May 2018.

 

What it was designed to do……was establish global standards on data protection that put the EU at the forefront in protecting its citizens.

 

What it actually did……was put the fear of (insert your chosen preferred word) up business owners panicking at the ambiguous ‘guidelines’ and created billions of SPAM emails that the legislation was designed to stop.

 

Oh, the irony. And EU bureaucrats wonder why no one likes them.

 

 

And Finally……

The official term for unpaid carers is now ‘economically inactive’. It's laughable that in this day and age that is seen as economic inactivity. Surely ‘unpaid’ services have key economic benefits as they are free and our economy is entirely dependent on this sort of unpaid labour.

 

The world has gone crazy. It’s official!