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Thursday's Business and Politics round-up

22 Jun 2017
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IoD in the news

The Times - Queen's Speech applauded by business groups but fears remain over Brexit 'chaos'
City AM - Business groups welcome government's change in tone towards UK firms
Financial Times - Why doing the right thing pays off in turbulent times
Belfast Telegraph - Smart meter rollout given five-year extension

Stripped of power

The Queen announced the Government’s legislative programme for the next two years at the State Opening of Parliament yesterday, proposing new laws designed to prepare the UK for a ‘smooth and orderly’ Brexit. 27 bills were announced in total, 8 of which relate to Brexit and industries affected by the decision to leave the EU. Measures include converting EU rules into UK law, bills to transform trade, as well as immigration, fisheries, nuclear safety, agriculture and sanctions.

On non-Brexit related plans, the Queen’s Speech announced that the Government will be launching consultations on energy bills cap and reforms to social care funding. Other proposals include a Tenant’s Fees Bill (banning landlords from charging ‘letting fees’), a Data Protection Bill, which would strengthen individuals’ rights and introduce a ‘right to be forgotten’, a High-Speed Two Bill to authorise the second leg of the rail link and a Civil Liability Bill, designed to address the ‘compensation culture’ around motoring insurance claims.

‘The election result was not the one I hoped for,’ wrote Theresa May in the introduction to the Queen’s Speech, ‘but this Government will respond with humility and resolve to the message the electorate sent.’ Failure to secure a majority of seats earlier this month is thought to be the main reason why some of the key Tory manifesto plans did not make it into the Queen’s Speech. Plans dropped include grammar schools, the so-called ‘dementia tax’, abolishing winter fuel allowance for well-off pensioners and ending free school lunches for infants.

Talks between the Conservatives and the DUP are continuing – a Downing Street spokesman said yesterday they were confident the Queen’s Speech would be voted through in the House of Commons next week. Nevertheless, there have been suggestions from DUP sources that negotiations have been stalling over demands for an extra £2bn for health and infrastructure spending in Northern Ireland, signalling that Tory hopes of longer-term confidence and supply agreement to guarantee a majority may be fading.

The Queen’s Speech was dressed down on this occasion, a result of timing issues caused by the snap election. The Queen arrived at Parliament in a car, rather than horse-drawn carriage, while her crown was driven to the House of Lords in its own car. The State Opening of Parliament will next take place in 2019, following the Government’s decision to skip it next year to provide more time for MPs to debate all the legislation related to leaving the EU.

May v EU: Real battle begins

Theresa May will travel to Brussels today to present Brexit plans to EU leaders. Attending her first European summit since the election, Mrs May will present her plans for the issue of expats' rights. Both sides have expressed willingness to secure the rights of EU citizens living in the UK and vice versa, but no decision has been made yet. There are currently around 3 million EU nationals resident in Britain and 900,000 Britons overseas and the importance of settling this issue has been on the radar since the vote to leave the EU. Tomorrow will mark exactly a year since the referendum.

The two-day summit will be dominated by immigration, security and the economy. Mrs May will present her plans, which will then be debated by the 27 EU leaders excluding the British. It is expected that the discussion will also include consideration to relocate the two EU agencies governing medicine and banking from London to a city based in the EU.

The Prime Minister's plans are expected to be published on Monday.

To raise or not to raise

Bank of England chief economist Andy Haldane has put himself at odds with the Bank's governor Mark Carney by suggesting that interest rates should rise soon. Speaking the day after Mr Carney stated that 'now is not the time' to raise interest rates, Mr Haldane said leaving the rate increase until too late could result in steeper rate hike in the future.

In August last year, the Bank cut interest rates to 0.25% after signs of a slowdown following Brexit vote.' Provided the data are still on track, I do think that beginning the process of withdrawing some of the incremental stimulus provided last August would be prudent moving into the second half of the year,' said Mr Haldane.

Although sterling gained a cent against the dollar following Mr Haldane's speech, it is expected that the Bank will vote to keep interest rates on hold when it meets in August.

Mr Haldane also examined the reasons why wage growth has been slow in recent years, noting the decrease in unionisation and the increase in self-employment, flexible and part-time working and zero-hours contracts as some of the longer-term causes.

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