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Wednesday's Business and Politics round-up

12 Dec 2018

Commuters reading daily news on their journey to work

Good morning!

Switzerland has this week rejected to agree a new institutional framework to govern its trade relationship with the EU, risking EU sanctions as a result. 

Brussels had wanted the Swiss cabinet to approve the deal, which would see it aligning its rules more closely with the EU and giving the ECJ a role in resolving conflicts.

The Commission has warned Switzerland that if it did not sign on to the new framework the bloc would withdraw equivalence status for the Swiss stock exchange – meaning EU bankers and banks would no longer be able to trade there. 

Switzerland says much of the proposed framework is in its interests, but there are concerns around protection for high wages and the treatment of EU citizens in Switzerland. 


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Conservative estimates

It has in the last hour emerged that Theresa May will face a no confidence vote this evening. 

Tory MPs, including a cabinet minister, were confident over the last couple of days that the 48 letters required to launch a no-confidence vote have been submitted.

When asked last night whether she had been told that the 48-letter threshold had been met, May said "No, I have been here in Europe dealing with the issue I have promised Parliament I would be dealing with."

May has come under criticism by MPs from all sides, both over her Brexit withdrawal deal and her decision to delay this week’s House of Commons vote on the agreement. 

She spent yesterday on a whistle-stop tour of Europe in an attempt to secure further assurances from the EU on the Irish backstop, including meeting with Dutch Prime Minister Mark Rutte and German Chancellor Angela Merkel. 

Wage gauge 

UK wages are continuing to rise at their highest level in almost a decade, according to the latest official statistics.

ONS figures reveal year-on-year wages increased by 3.3% in the three months to October, making this the most substantial rise since November 2008. 

ONS senior statistician Matt Hughes said “Real earnings are now growing faster than at any time since around the end of 2016”. The average weekly wage is now £495 – the highest since 2011, when adjusted for inflation. 

The statistics also show that a record number of people are in work. The employment rate has increased by 79,000 to over 32 million – the highest figure since records began. 

Responding to the figures, IoD Senior Economist Tej Parikh said “The robust labour market continues to be an anchor for the British economy in a period of turbulence, but there is little room for complacency”.

Tej commended the pace at which firms are hiring staff and creating jobs but added that progress on delivering the Industrial Strategy means poor wage growth and skills shortages could become an “even greater sticking point further down the line”. 

Time to take back control?

The government spends nearly a third of its overall budget on outsourcing work to external suppliers, according to new research.

The Institute for Government says outsourcing costs Whitehall £284 billion each year, despite some contractors “struggling”.

The findings come at the end of a year which saw the collapse of construction giant Carillion and, more recently, the shares of services provider Interserve to halve on Monday. 

Emma Norris, Director of Research at the IfG, said the government should “urgently review the health of its procurement markets”.

The government procures a wide variety of products and services, from goods including stationery and medicine to construction projects such as building schools and roads. 

Interserve has been in turmoil since it waded into waste-to-energy, an arm of its business which it is trying to sell off. Faced with a debt of £650 billion, the company has confirmed it is in emergency rescue refinancing talks with its lenders.  
  

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