A month that saw the World Cup
thrust upon us pretty much 24 hours a day…..you would be forgiven for missing
all the political and economic shenanigans that have been going on!
So just how will June 2018 be
remembered?
Trade Wars
Not content with picking a fight with China, Trump
flexed his muscles with the EU. The steel tariffs
that caused a stir with China are now being imposed on EU steel imports also.
As a counter attack, the EU has
issued a 10-page list of tariffs on US goods ranging from Harley-Davidson
motorcycles to bourbon.
It all seems a little petty at face
value (who’d have thought it with Trump involved!) and a little tit-for-tat but
it certainly has an unnerving feel and investment markets certainly get spooked
by it.
When all the political pouting and
posturing is done, hopefully an amicable middle ground can be found for all
countries.
Interest Rates
For what feels like the 300th month running, the debate about when interest rates will rise grew louder.
Whilst the Bank of England kept
interest rates on hold, there was a ‘firm signal’ that an August rate rise is
likely.
In a decisive move, the Bank’s
chief economist, Andrew Haldane, joined two other members of the Monetary Policy
Committee who voted for an immediate rate rise to 0.75%. The nine-member MPC
was split 6-3, with the Governor of the Bank, Mark Carney, leading the group
who voted to hold interest rates at 0.5%.
The last time three people ‘dissented’
from the overall view, in June 2017, interest rates rose the following
November.
We shall see……it could all be ‘much
ado about nothing’ if economic results are weaker than forecast.
Petrol
Petrol prices rose by 6p a litre in
May - the biggest monthly increase since the RAC began tracking prices 18 years
ago.
Average petrol prices hit 129.4p a
litre, while average diesel prices also rose by 6p to 132.3p a litre.
Why? A combination of higher crude
oil prices and a weaker pound was to blame for the increases. Oil prices broke
through the $80-a-barrel price, which is a three year high.
As well as the higher global market
price of crude oil, the pound's current weakness against the US dollar also
makes petrol more expensive as oil is traded in dollars. And yes……you can blame
Brexit for that!
Brexit
Theresa May has been warned that
time is running out to secure a Brexit deal as she faced the other 27 EU
leaders at a summit in Brussels.
The PM briefed all her counterparts
for the last time before October, when both sides hope a deal will be done on
the UK's March 2019 departure. Irish leader Leo Varadkar said the lack of
progress was "disappointing". He said he expected fellow leaders to
send a "strong message" to Mrs May that talks had to
"intensify".
No kidding! We haven’t managed to
negotiate anything of any significance as yet and we leave in March. That
really is quite an achievement.
The PM has called her cabinet
together for what has been billed as a ‘make or break’ meeting at Chequers on 6
July to agree the UK's blueprint for its future relations with the EU. Make or
break? It might just break my patience with the dithering!
Key dates:
18 October, 2018
EU summit during which both sides
hope to agree an outline of future relations between the UK parliament and the
EU.
31 October, 2018
The EU’s chief negotiator has said
negotiations must be complete before the end of October to give the 27 EU
countries time to sign off the deal. MPs in the UK Parliament will also get to
vote on the final deal.
House Price Falls
UK house prices saw the biggest
monthly fall for nearly eight years (according to the Halifax), as demand for
homes weakened.
Housing demand had softened in the
early months of this year, with both mortgage approvals and completed home
sales edging down. On an annual basis, price growth has now slowed to 2.2%.
There is a double whammy to the
news. Firstly, we are a nation of homeowners that needs a healthy property
market (we have so much wealth tied up). Secondly, consumer spending is linked
to financial confidence and there is a direct correlation with confidence and
house prices.
First-time buyers might just be
getting a little breathing space though, which is never a bad thing!
June’s Biggest Loser……Option
1 – UK Government (again!)
Parliament got very excited (and
all news and media outlets to be fair) with debating and voting on splitting
hairs on what is and isn’t acceptable in negotiations with the EU.
To be honest, I don’t truly believe
that MP’s understood what they were voting on and they were given strict
instructions from party politics on which way to vote. Forget your constituency
opinion, vote as you are told in other words. Democracy at its best!
For those that actually want to
understand how pointless the vote was, here goes……
MPs were deciding whether the UK
should stay part of the European Economic Area after it leaves the EU - a
similar arrangement to non-EU countries Norway, Iceland and Liechtenstein.
Like EU members, these countries
are part of the EU single market - in return they are obliged to make a
financial contribution and accept the majority of EU laws. The free movement of
people also applies in the zone as it does in the EU.
Supporters of the EEA argue it
would give the UK the closest possible relationship with the EU without
actually being a member, as it would offer full access to the single market.
After the House of Lords altered
the Government's EU Withdrawal Bill in favour of EEA membership, the House of
Commons agreed to change it back on Wednesday evening.
Which begs the question……what was
the point of a week of pointless political headlines!
June’s Biggest Loser……Option
2 – Royal Bank of Scotland (again!)
The Government has incurred a loss
of £2.1bn after selling another tranche of shares in Royal Bank of Scotland.
The shares were sold at 271p each,
almost half the 502p a share paid in the Government's bailout of RBS a decade
ago when it rescued the bank at the height of the financial crisis. The
Taxpayer holding in RBS will fall to 62.4% from 70.1% due to the sale.
The return was “based on the
reality of the situation that RBS is now in", said Treasury Economic
Secretary John Glen.
What a load of tosh. The Government
has proved a lousy investor and the rescue has cost the taxpayer far more than
just financial terms. Look at the state of some of our public services 10 years
on as a result of propping up the mess created by corporate greed. The Government
should not be in the business of owning banks.
That is the reality of the
situation.
Arghhhhhhh!
June’s Biggest Loser……Option 3
– Beer Shortage
Supplies of meat, chicken and beer
are facing disruption by an industry-wide shortage of carbon dioxide.
At least five CO2 producers in
northern Europe are offline for maintenance, with only one big CO2 producer in
action in the UK
Hot weather + world cup + CO2
shortage = a shortage of beer!
First world problems!
And Finally……
Food giant Heinz is set to ditch
the name of its famous Salad Cream for the first time in 104 years by changing
it to ‘Sandwich Cream’. The maker claims that as only 14% of buyers actually
used the sauce on salads, the name no longer reflects its modern purpose.
Nice one millennials.
No comments:
Post a Comment