Good morning,

So much for that “oven ready Brexit” deal that we were promised by Mr Johnson when he was canvassing for votes this time last year. He said on Friday that it’s now time for Britain to prepare for an Australia style deal with the EU – that’s to say no deal at all – as talks with the EU were effectively over. Michael Gove was quick to say on Sunday that the door was still ajar for talks and there is chatter over the Internal Market Bill being reworked by parliament to make it less contentious in a bid to allay European concerns that whatever might be agreed in a deal, we will just ignore anyway.

More than 70 business groups, that collectively represent more than seven million workers have come together to call on both sides of the negotiating table to get something done, fearing that political motives are being put ahead of common sense and the protection of livelihoods. The FT has the article detailing what they’ve said.  Meanwhile Boris has approved a national advertising campaign to launch this week,  warning businesses that time is running out for them to prepare for January 1st – again, do forgive businesses for thinking you had this under control. A recent Institute of Directors survey showed that almost half of businesses will not be fully ready for trading on WTO terms come the end of the year and we don’t think TV adverts are going to make the difference here – though maybe a three word slogan might do the trick?

Another task on the government’s hands is getting regions to comply with tighter restrictions. Over the weekend the government failed to reach an agreement with Andy Burnham and it now looks like the government are going to yield and get the cheque book out. Robert Jenrick wouldn’t be called on how much the cheque would be for when he appeared on BBC Breakfast this morning. Liverpool got £40 million and has a population of 1.5 million, whereas greater Manchester has a population of more than 3 million, so you’d expect it to be at leas twice the size.

There’s still the issue that these measures may not be effective and that a national lockdown might be the only result. Wales are set to announce one as early as this morning, with the ‘fire break’ saet to last at least two, possibly three, weeks. The government has been advised once again that the only way to get on  top of this is to go for a national approach, with SAGE member Jeremy Farrar saying that the current restrictions will not prevent the continued spread of the virus. He’s advocating a three week lockdown to “allow us to reset before winter, stop the transmission spiralling, protect and prepare health services, give time to get the test-trace-isolate systems fully functional and save lives” – which all sounds pretty reasonable. Reuters has the details.

On the continent there are more restrictions coming into force just about everywhere and Ireland is setting up for a national lockdown too. Expectations now are that Europe will see a double dip recession, with numbers in the fourth quarter expected to be lower than the Q3 data, which obviously saw a big recovery from the initial lockdown. This is going to have an impact on final year forecasts and also the time that it takes to get back to pre-covid levels. There’s a story in the Times that says FTSE 100 and 250 business leaders don’t expect to see demand back to where it was until the end of next summer.

Across the Pond: The Fed are considering tougher regulations to try and stop asset bubbles forming in a world with such easy money. The debate is multi-faceted, in that the Fed are concerned that markets take too much risk when rates are low and because of that risk and the possible consequences, the central bank are quick to react and make further interventions to stop a meltdown. However, if there were to be more regulation then money would flow less freely, consumption might be constrained and the economy might be worse off as a result. There are no imminent changes, but a Joe Biden win might fuel a change in tact for the Fed and other regulators. The FT has the story.

Betting odds on a Trump win have shortened over the weekend, which is being put down to the news stories circulating over Joe Biden’s son, Hunter, having links to business in Ukraine and China and using his father’s political influence for his own gains. As well as causing the odds to shorten (though Biden is still the favourite, with an indicted 60% chance of winning to Trump’s 40%) it has also opened up further scrutiny of Facebook and Twitter, who acted quickly to block the reports, which sounded calls of political bias. They’ll now have to answer to Senate committees next week.

Overnight we’ve seen economic data from China that the rest of the world can only dream about; their economy has grown 4.9% year on year! The market was expecting more than this, but even so that’s pretty impressive. China are confident that the numbers are sustainable, although a lot of the progress has been down to state backed funding for industrial projects – that said, they’ve got enough reserves to keep spending for years, so it probably is sustainable.

Over the weekend we saw Jacinda Ardern take a landslide win in the New Zealand elections. Her Labour party also scored an outright majority in parliament, the first time that has happened since the country switched to proportional representation in 1996. Despite the outright majority there is still talk that the PM will form a coalition alliance with her allies from the last government. The Independent has more.

This week’s data is probably most ‘interesting’ on Wednesday, with UK inflation numbers and also public sector net borrowing, which Rishi will probably be wincing at, knowing that there’s still plenty more to come. Nancy Pelosi has said that tomorrow is the last day that an aid package can be agreed upon if it is to be rolled out before the election, giving them two weeks to get the paperwork done before the big day and markets have hit the ground running on the hopes that this will materialise.

Have a great week


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