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19 December 2016 |
The relationship between Brexit and immigration has been continually under examination both pre and post the British referendum. The Guardian has reported on the findings of the Joseph Rowntree Foundation study which has found that the vote for Brexit ‘was fuelled by poorer voters feeling that they had very little control over immigrations’. Whilst this was not the only listed reason suggested for the outcome, the study suggests that the Brexit vote was more of a protest vote. This study reflects news and opinion articles published over the year and it now comes to a point in time whereby it is questioned, what is the significance of these studies, how does this help? Does all this anti-Brexit talk create further animosity preventing Britain from moving forward?
Meanwhile, in Switzerland MPs have ‘backed a bill giving jobseekers already in the country priority over applicants from EU member states in times of high unemployment.’ This policy however would violate the deal that Switzerland shares with the EU. Switzerland currently has free movement of people and a free trade agreement with EU despite not being a member of the union. Will the EU punish Switzerland if it tries to impose such methods?
With Article 50 still yet to be exerted, discussion over how Brexit will playout is under question. European leaders however have made it clear that they plan to dictate what Brexit means as the BBC report that ‘the EU's 27 other leaders have met without the UK's Theresa May to discuss their Brexit negotiation plans.’ The doom and gloom with regard to Brexit talk continues as the process which originally was suspected to take two years, may take up to ten years! There has also been talk that Brexit will be transitional. Reuters reports how trade minister Liam Fox explains that there may need to be ‘transitional agreement[s] to smooth its exit from the European Union’. Nonetheless, he insists that these agreements will not and should not see Britain being forced under the same regulations of the European Union.
Whilst Brexit has cast a shadow over European news, it is important to concentrate on the economic crisis that continues within mainland Europe. Italy has been facing an ongoing bank crisis since summer, with the current episode witnessing the world’s oldest bank, Monte dei Paschi di Siena (MPS) potentially needing a bail out. MPS is currently trying to ‘salvage a multibillion-euro rescue by private investors in a frantic attempt to prop up the bank’, explains the Guardian. They are hoping to achieve this through a ‘debt-for-equity swap offer for tens of thousands of retail investors’ which would prevent them from needing a government bailout however, they are still awaiting regulatory approval.
With the crisis still continuing in Italy, warning signs of economic problems are appearing in Germany. Reuters reports how ‘Europe's banking regulator has lowered the individual capital requirements for Commerzbank for next year, Germany's second-largest lender said in a statement on Tuesday.’ Loosening these regulations puts the individual at greater risk as it reduces the money in which a bank stores. Lack of capital was one of the reasons why the banking crisis of 2008 was so damaging, why is it then that the regulator is choosing to loosen their stringent policy?
The UK economy appears to be doing well with inflation rising to the highest level since October 2014, whereby inflation stood at 1.3%. The BBC reports how increases in clothing prices and petrol prices have been responsible for the increasing rates experienced in November which saw inflation rise by 0.3% to 1.2%.
In the meantime, political concern continues as it appears that Jeremy Corbyn’s life span as leader is facing another ticking time bomb. Having already faced a leadership challenge this year, the Telegraph explains how Jeremy Corbyn’s closest allies have warned that Corbyn has twelve months to turn the party around. Whilst they have placed this time frame on the Labour Party’s improvements, they remain optimistic about the party and their ability to challenge the conservatives. Jeremy Corbyn does not seem to be wasting time in this respect as the BBC reports how Corbyn and May have been clashing over the problems within social care. Corbyn has accused Downing Street for creating a crisis for elderly people and their care however, May retaliated during the Prime Minister Question Time, suggesting that the Labour party, during its ‘13 years in government between 1997 and 2010 had done nothing to tackle the problem.’ May suggested that her resolution to the problem was more ‘long term and sustainable system.’ The clash between the two parties and their stances on issues such as elderly care will be important as the next election in 2020 will no doubt creep up on the two party leaders.
Low oil prices were welcomed by many over the last year, however it appears that after the long over supply in the market oil suppliers have decided to take action. Whilst OPEC members were not part of this agreement, other oil producing nations have decided to cut output by 558,000 barrels a day. This has led to Brent crude oil for example rising ‘to $57.89 a barrel, the highest level since July 2015’, reports BBC News. However, if OPEC now chooses to adopt similar methods in order to increase prices once again, will this result in a negative or positive impact on the oil sector?
Meanwhile, JP Morgan is in the process of being sued by Cumulus Media. Reuters explains that a ‘lawsuit filed late on Monday in Manhattan federal court, Cumulus accused JPMorgan of breaching a 2013 credit agreement and "unreasonably" withholding consent to certain components of the Atlanta-based company's planned refinancing’ which would see the company be deleveraged by $305 million. The case continues as Cumulus Media demands a new credit line.
The final analysis of the US elections have been released this week revealing that whilst Donald Trump won the Presidency through electoral votes, he lost the popular vote. Whilst it was initially reported that Clinton was thought to have lost by one million votes, the Independent clarifies that the ‘President-elect is now 2.8 million votes behind Hillary Clinton - five times more than the second biggest deficit’. This news has led further questioning to the electoral system and whether it is in fact fair. Will the US elections of the future be conducted in a different format?
Facing further questioning, Trump’s latest comments concerning Taiwan have left some concerned. The Guardian reports how Trump ‘has called into question the longstanding US foreign policy of maintaining formal relations with Beijing instead of Taiwan, which China considers a breakaway province. He also spoke directly with Taiwan’s president, the first such contact since 1979. Both moves have infuriated China.’ This has in turn resulted in China planning, if necessary, to take Taiwan by force. Trump has made it very clear that he plans to venture outside of current trade agreements placing China in particular at threat as the US is one of its largest importers of goods.
Despite the political turmoil, the American economy continues to improve with the US Federal Reserve choosing to raise interest rates for the second time since 2008. The Guardian reports that this is the first of many increases with predictions suggesting a further two increases in 2017. These increases are a result of the US economy moving towards the goals of maximum employment and price stability which have been set by the FED.