Good morning,

A new week, but a similar news cycle by the looks of things: Angela Merkel is still trying to persuade other EU leaders that there should be a ban on UK holidaymakers entering the EU, regardless of their vaccination status, because of the risk of the Delta variant.  There’s an EU meeting on the subject today but, according to this Times article, other countries don’t view this as an EU decision and want to make their own minds up.  The UK’s proposed scheme of allowing the double-jabbed to travel back form amber list countries without having to self-isolate on return is not likely to get underway until August now, despite hopes for something to be in place ready for the school holidays and the likely end of all restrictions in the middle of July.  There are some complex issues to solve around policing the scheme, managing exemptions and those under the age of 18 that may or may not have to have one jab, let alone two. Emmanuel Macron takes Angela Merkel’s view and thinks this is a Europe-wide issue and will be siding with her in the debates.

France had a regional election over the weekend where Marine Le Pen was hoping for her party’s first ever regional win.  Exit polls are showing though that her far-right National Rally party has lost out to the centre-right Republicans, who are making a good account of themselves amongst the electorate and not only taking voter share from Ms Le Pen, but also president Macron’s En Marche party too.  These elections should be taken with a pinch of salt though, as the turnout was said to be just 30%, though the outcome is likely to dent Ms Le Pen’s presidential bid when the nation goes to the polls in April next year.

We’re in last few days of the Northern Ireland protocol’s grace period and are yet to get an agreement or extension between the UK and EU.  EU Commission vice president Maros Sefcovic is taking a bold step and is going to talk directly Members of the Legislative Assembly.  This puts him ahead of both Michael Gove and Sir David Frost, the former having declined the invitation and the latter yet to respond.  The new DUP leader, Sir Jeffrey Donaldson, has said that “Mr Sefcovic will find when he engages with the Northern Ireland Assembly today that anything achieved in Northern Ireland has been based on the consideration of a range of interests… Balance not predominance is what has delivered stability in Northern Ireland.  The protocol from its conception to its operation has been a lesson in imbalance, inequality and imposition and has been described as not sustainable. We agree, but grace periods and extensions are not the solution. An extension of the unsustainable is not the answer”.  Mr Donaldson was confirmed as his party’s leader on Saturday after Edwin Poots resigned after just three weeks in the post.

Other UK politics over the weekend have largely centred around the Health Secretary (both outgoing and incoming).  Matt Hancock jumping before the pressure on the PM to push him became unbearable has led to Sajid Javid getting back around the top table 16 months after he was uncomfortably exited as Chancellor because he refused to sack his economic advisors – which was a Dominic Cummings request.  Appointing Mr Javid avoids the PM having to undergo a cabinet reshuffle and also gives a very tough job to an experienced hand.  Mr Javid is likely to be able to be the bearer of good news early on, when he will likely announce the end to restrictions can take place in Mid-July, but then needs to crack on with solving the health and social care issues/lack of funding/chaos that has only been exacerbated by the pandemic – and as a former chancellor, he’s likely to know that simply throwing money at the problem won’t balance the books, although it would be a start!

A report by the business, energy and industrial strategy committee on the government’s wider Covid bounce back strategy largely criticises the planned approach for being “nothing more than a list of existing policy commitments, many of which are hopelessly delayed”.  The government’s “plan for growth” scheme is apparently a “short-termist, unclear and unwelcome approach to industrial policy, when business is crying out for long term consistency and clarity”.  The report may be damning, but it does make a range of practical suggestions for the government to implement that might make things a little more palatable. The FT has the story.

The Financial conduct Authority has banned one of the world’s largest crypto exchange from operating in the UK.  Binance had been applying to become regulated but having given up doing so after “intensive engagement” with the regulator they now find themselves unable to undertake any regulated activities in the UK without prior consent and must remove all advertising and financial promotions by Wednesday.  The move by the regulator is likely to be one of many, as they’ve identified more than 100 unregulated crypto firms that they consider to be “high risk and volatile”.  The Telegraph has the story, whilst the price of Bitcoin is slightly higher today, despite the enforcement news.

Looking to the week ahead:  Markets run the risk of being incredibly dull for the first four and a half days of the week, as the US non-farm payrolls number comes out on Friday.  Hopefully that isn’t the case, but if it is then the market may be looking for another monster number out of the US if it is to make strides forward, as expectations are that people are more actively seeking work in the US now because payroll protections and subsidies are coming to an end.  Asian markets have got off to a very quiet start, though the Hong Kong market had its morning session cancelled after a ‘black rainstorm’ warning.  This is the highest level of warning and is likely to bring flash floods.  Today is quiet on the data front, though Andy Haldane is speaking on ‘levelling up’, one of his last appearances as a member of the MPC.

Have a great week.


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