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Friday's Business and Politics round-up

13 Dec 2019

Person reading the IoD's news round up with breakfast

Good morning!

A big night for Britain after it took to the polls – more on that below. 

But in other news, EU Member States have reached a climate neutrality agreement – without Poland. Three poorer eastern European countries had demanded more cash for economic transition and support for nuclear power. 

Hungary and the Czech Republic eventually signed up to the deal after the EU agreed that nuclear energy would be recognised as a way of reducing greenhouse gas emissions. Poland remained opposed. 

Commission President Ursula von der Leyen said the deal meant the EU could begin drawing up concrete objectives next year based on its plan to go climate neutral by 2050. 

Polish Prime Minister Mateusz Morawiecki, whose country depends on coal for 80% of its energy demands, said the negotiations had been “difficult”, adding “Poland will be reaching climate neutrality at its own pace”. 

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Boris, Actually

The Conservatives have won an overall majority in the general election, passing the threshold of 326 seats. It gives the party their biggest majority since Margaret Thatcher’s 1987 election win. At the time of writing just two seats are yet to declare. 

The Tories have won 363 seats, constituting a majority of 86. Meanwhile, at 201 seats Labour has lost 59 constituencies. It appears the Conservatives have won over the traditional Labour season the north that voted to Leave in 2016. 

The results mean Boris Johnson will return to Downing Street as Prime Minister. He said they bestow him a mandate to “get Brexit done” and take Britain out of the EU next month. Johnson himself was re-elected in his Uxbridge constituency with a slightly larger majority than before.  

Opposition leader Jeremy Corbyn has confirmed he will not lead Labour into the next general election, after what he described as a “very disappointing night”. Labour’s final results are forecasted to be the party’s worst performance since 1935. 

Meanwhile, Lib Dem leader Jo Swinson has narrowly lost her Dunbartonshire East seat by 149 votes to a candidate from the SNP. The Lib Dems are forecasted to win 12 seats, representing no change since the election results of 2017. 

SNP has strengthened its hold on Scotland, winning 48 of the 59 Scottish seats in Westminster. Leader Nicola Sturgeon implied the result was a “strong endorsement” of Scotland having a second referendum on independence from the UK. 

Responding to the results, IoD Director General Jonathan Geldart said “Business leaders’ thoughts will immediately be turning to Brexit. For directors, ‘Get Brexit Done’ will only have meaning once the details of our long-term future relationship with the EU are clear”. 

Jon explained, “On the domestic front, we must now see progress on the challenges that have been holding the economy back, from skills to infrastructure”. He added directors were waiting for clarity on the Tories’ plans for immigration and large-scale infrastructure projects.

The sterling jumped to a 19-month high overnight, up 2.3% at $1.347 against the dollar. For full election results, you can refer to the BBC’s coverage here

Trade War and Peace 

The US is on the cusp of slashing tariffs on Chinese imports after it reaches a deal in principle on resolving a 19-month trade war with Beijing. Yesterday President Trump tweeted the US was getting close to reaching an agreement with China, adding “They want it, and so do we!”

The US is offering to cut by up to half the import tariffs it has slapped on $360 billion on Chinese goods since the trade war kicked off and to cancel a fresh round of levies that were due to be put in place as of Sunday. 

In exchange, Beijing would purchase more US agricultural products, open its financial services sector to the American market and enhance intellectual property protections for US companies. The US will reportedly reinstate full tariffs if China doesn’t meet the commitments. 

Frank Samolis, trade lawyer at Squire Patton Boggs, commented “Anything which reduces US-China trade frictions while expanding US market access in China is to be applauded” but added “a long-term vision and strategy” for dealing with China would be needed for the long term. 

A spokesman for the Chinese government said “The two sides’ economic and trade teams are maintaining close communication”. Markets around the world reacted positively to the news. 

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