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Wednesday's Business and Politics round-up

16 Aug 2017

Commuters reading daily news on their journey to work

Good morning,

It’s a new day and with it comes yet another statement from Donald Trump on the weekend’s violence in Charlottesville. Speaking from Trump Tower rather than the White House, the President seemed to row back on his comments exclusively condemning the ‘alt right’ marchers. Instead, he sought to pin at least some of the blame on counter -protestors, who he described as the ‘alt left’.

His comments have again been met with widespread condemnation. Contrast them with a tweet from his predecessor Barack Obama, whose response to the weekend's violence has become the most ‘liked’ tweet ever.

Talking of Twitter, those of you not using the social network may have missed the apparent launch of a new political party. Ex-Chief of Staff to Brexit Minister David Davis, James Chapman recently announced the creation of a new centrist political movement, The Democrats. Following a week in which he also delivered a tirade against his old boss; Mr Chapman has set up the new movement in opposition to Brexit. The former Political Editor of the Daily Mail said that its aim was to “reverse Brexit without a second referendum”.

Meanwhile, the Brexit Secretary yesterday launched a long awaited policy paper on customs arrangements, calling it the first of the Future Partnership Papers. Responding to in CityAM yesterday Allie Renison, Head of EU and Trade Policy at the IoD, welcomed the move to spell out the Government's objectives for customs arrangements post Brexit.

That said EU sources were reportedly claiming the paper's proposals for no border checks were ‘fantasy’, and while an alternate suggestion of efficient border checks is also set out in the paper, it concedes that this could present administrative challenges.

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Dublin down on borders

The UK Government will today publish its second policy paper on its Brexit proposals. The paper focuses on the border arrangements between the Republic of Ireland and Northern Ireland, a key litmus test within the overall Brexit negotiations.

In the paper, the Government will suggest no return to the hard borders of the past, with no need for physical infrastructure such as border posts. Whether or not it will be possible to have such a frictionless border with the EU depends largely on what customs deal the UK is able to secure. Labour have been quick to criticise the plans for a lack of clarity, with their Northern Ireland spokesman Owen Smith saying the Government looked clueless as to how to implement their plans.

As the IoD highlighted in its policy report The Irish Question last year, there are few EU countries which the UK has such close economic, political and social ties with as the Republic of Ireland. With 1/3rd of IoD members having business links with the Republic and 2/3rds of IoD Ireland members linked with companies and consumers in the UK, these ties run deep. Speaking to the BBC last week following the publication of her paper on transitional arrangements, Allie Renison Head of EU and Trade Policy at the IoD warned that a lack of clarity on post Brexit arrangements was stalling investment and business planning.

The IoD will respond in more detail after the publication of today’s position paper and all our press releases can always be found here.

Just not fare?

Rail commuters in England and Wales are to be hit with the largest annual increase in rail fares in 5 years. The increase of 3.6% is set by the Government and is tied to RPI (Retail Price Index), which is a measure of inflation. The rise only applies to ‘regulated tickets’, some 40% of total rail fares, but it usually sets a benchmark for wider increases. It will mean increases in the hundreds of pounds for some season ticket holders, with an annual ticket from Bournemouth to London for example going up by over £200.

While the Government says the increase is justified and necessary to maintain investment and improvements to the network, the move was met with derision from consumer groups. Shadow transport secretary Andy McDonald pointed out that fares had risen at double the pace of wages since 2010.

Credit where credit's new

The recent growth of both public and private debt in China has cushioned a more drastic slowdown in the country's economy and set it on a 'dangerous’ trajectory, according to a report published yesterday by the IMF.

The report comes on the back of moves from the Chinese government in recent years to divert the country away from a reliance on exports and towards more consumer driven growth. This move has seen debt rise to $28tn in the years since the financial crisis and led to worries from the IMF and others that a sudden correction (for instance in the housing market) could have a damaging impact on the world's second largest economy.

The Fund also warned that some of the methods China is using to keep the economy expanding at at decent pace (government funded infrastructure projects, state-backed banks investing in property) could mean they have less in reserve to react to a new downturn. It also pointed to the precedent set by credit booms in other countries over the past few years, saying that the vast majority had been followed by marked slowdowns in growth.

Needless to say, the report was rejected by Beijing, with officials insisting that a healthier growth outlook for this year was evidence that the government’s moves to rebalance the economy are having a positive impact.

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