…July 2024

July has been a month of highs and lows, starting with the general election, which delivered a massive defeat to the Tories and a new Labour government. This was swiftly followed by defeat for the England football team at the Euro 2024 final, so by the end of the month it feels as if nothing has really changed.

And indeed, the Starmer government is just as haunted as Sunak’s by the spectre of Liz Truss’s reckless spending and borrowing plans. Truss herself, as a former prime minister, is provided for by the British taxpayer with a guaranteed income for life. Consequently, the Labour government has adopted a mantra of only spending within the narrow confines of what it can immediately fund. But the country has been crippled by 14 years of austerity and cuts and investment is desperately needed everywhere, and this ignores the massive amounts of credit available to a large first world economy. 

Naturally, Labour has blamed this financial state on the Tories, with the new chancellor, Rachel Reeves, accusing her predecessor, Jeremy Hunt, of lying to parliament over the state of the nation’s finances. Now, lying to the voting public about important things, like taxes or immigration, is just part of the job description, and the public expects this sort of thing from politicians. But Right Honourable members of parliament are not expected to lie to other MPs; so it’s lucky that the English language is so flexible, so rich in tone and subtlety that any meaningful statements can be far removed from reality. See also any speeches on the rapidly unfolding planetary climate disaster. 

In that vein, the new Labour government is in the process of setting up a new publicly owned company, Great British Energy, which aims to build more renewable energy projects. The first of these is a plan to build more offshore wind farms, with GBE having signed a deal with the Crown Estate, which owns most of the seabed up to 12 nautical miles from the mainland. The Crown Estate is the British monarch’s private property portfolio in a corporate form, and is inherited from one monarch to the next. It has a complicated structure of governance and most of the revenues are surrendered to the government. Nonetheless, it does beg the question as to how it is that one man, King Charles, actually owns so much of the country?

Meanwhile, the Conservative Party has opted for a long selection process to choose its new leader, meaning many months of embarrassment for the Tories and comedy for the rest of us as a bunch of mediocre halfwits argue about why the party lost the last election, and whether or not they should advocate for  more of the same policies.

The Covid-19 public enquiry issued a damning report after its first round, which investigated the UK’s response to the pandemic. The enquiry found that many of the processes of government failed to deal with the crisis adequately, with no real effort put into testing, tracing and isolating to stop the spread of infections. The country had prepared for the wrong type of pandemic – influenza rather than coronavirus – and much of that preparation was out of date. Worse still, the report makes it clear that it’s only a matter of time before the next pandemic strikes. Next year the enquiry will focus on vaccines and treatments, followed later by its economic impact.

A global IT outage caused by a faulty software update caused chaos for large institutions, including airlines, banks and health providers, in many countries. The issue was traced to faulty code within a software update from the US company Crowdstrike, which develops cybersecurity software for the cloud. This problem was compounded by a second, unconnected, outage of Microsoft’s Azure cloud services. This incident underscores just how reliant we all are now on these interconnected systems.

The US presidential election, which was shaping up as a face-off between two very old white men has been turned on its head. First, Donald Trump survived an assassination attempt and then Joe Biden finally bowed to pressure and abandoned his bid for re-election. The US vice president, Kamala Harris, has stepped up as the Democratic candidate with a campaign that has re-energised the whole election. 

This election has serious implications for Europe, as a Trump victory will almost certainly lead to less funding for Ukraine in its war against Russia. Latvia has introduced conscription as European nations judge that there is an increasing risk of the Ukraine conflict spreading further. Most Scandinavian countries already have some form of national service, including Denmark, Finland, Norway and Sweden. The Ukrainian president Volodymyr Zelensky is campaigning for the right to use Western-supplied weapons to hit targets in Russia, which would be a dramatic escalation of the war.

Meanwhile, the conflict in the middle east continues to smoulder away, with rising tensions between Israel and Hezbollah in Lebanon. The International Court of Justice has issued an opinion that Isreal’s occupation of the Palestinian Territories is illegal and ordered the Israelis to evacuate these areas and pay reparations to the Palestinians. The campaigning group Human Rights Watch has accused Hamas of committing war crimes in its attack on Israel last October. The new British government is to resume funding for the UN’s Gaza aid relief agency, which was suspended following unsubstantiated accusations from Israel. 

The Labour government is still trying to decide what its policy should be, almost as if Britain might still wield any kind of influence with any of the parties involved. Starmer, who’s wife is Jewish, is naturally inclined to support Israel. But Labour lost a great deal of support in the election over its failure to come up with any way of reducing the enormous suffering and death amongst the civilian Palestinian population. Talks aimed at a ceasefire in Gaza have also continued, with both sides accusing the other of bad faith; the month ended with Israel assassinating the lead negotiator of Hamas.

UNCTAD, the UN trade and development body, provided an update on global trade figures for the first quarter of this year, showing that global trade is recovering but slowly and unevenly. Overall, trade in goods grew by around 1 percent and in services by roughly 1.5 percent in Q1 this year when compared with Q4 of 2023. Consequently UNCTAD is now forecasting 2 percent growth for the first half of 2024, which equates to around US$250 billion in goods, and US$100 billion in services trade.

However, this growth has mainly come the US and some developing countries, particularly China and India, while Europe and Africa have been more sluggish. Some market sectors have been more successful than others, especially around artificial intelligence and green energy use. Interestingly, both office equipment, including printers, and apparel have seen less global trade than expected.

The report says that since the latter part of 2022 there has been a rise in friend-shoring, that is trade between countries with similar geopolitical stances. Not surprisingly, Russia relies more on China now and less on the EU. India is trading more with China and the EU but less with Saudi Arabia, Brazil is trading less with the US and the EU and more with China, while the US is more involved with the EU and less with China. The UK on the other hand is becoming more dependent on the EU…

The report suggests that cuts in US interest rates could further boost global trade but warns that geopolitical tensions and emerging industrial policies around climate control and tariffs could affect this.

This would seem to be a neat summary for the year as a whole. The outlook for the immediate future mirror the weather forecast, with more storms on the way.