Weekend Box: Hunt’s Budget, AUKUS & more
Welcome to the Weekend Box, Audley’s weekly round-up of interesting or obscure political, business and cultural news from around the world.
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ONE TAXING BUDGET
We've had three Prime Ministers in three months and even more budgets to boot. Yesterday, Chancellor Jeremy Hunt seemed to have selective amnesia when he delivered his Autumn Statement and reprimanded the opposition for borrowing their ‘way to growth’. This was exactly what his own party did last month when former chancellor Kwasi Kwarteng cut the top rate of tax and the market went into meltdown.
Hunt did the opposite and announced that more people would pay the top rate of income tax, with the higher rate tax threshold coming down to £125,140. Overall the £55bn fiscal squeeze was a definitive signal to the public and the party that the Truss-era of ‘unfunded tax cuts’ is over. This comes after calculations from the Resolution Foundation that the Truss mini-budget cost the country £30bn. Unsurprisingly this was at the centre of Shadow Chancellor Rachel Reeves’s rebuttal, as she criticised the Conservatives for pretending the ‘disastrous mini-budget was nothing to do with them’ and for their Osborne-infused economics.
While Hunt’s tax rises for higher earners and the windfall tax will land well with those who believe those with the broadest shoulders should pay the most, he may have a tough time convincing his MPs. Indeed, former Levelling Up Secretary Simon Clarke warned the Chancellor not to “throw the baby out with the bathwater and overcorrect” and some backbenchers have already threatened to rebel over tax hikes. However, after the instability of the past few weeks and with the UK economy now in recession, Conservative MPs might not have any choice but to ‘unite or die’. As we gear up for a general election in 2025 and local elections in May (which will be Prime Minister Sunak’s first electoral test), they will also fundamentally have to answer Reeves’ killer question, ‘are me and my family better off with a Conservative government?’
For an Audley deep-dive on the headlines from the budget, read our ‘Boxnote: The headlines of Hunt’s Bad Budget News’ here.
Image credit/Presidencia El Salvador on Flickr/License
IN FOR A BITCOIN, IN FOR A POUND
A year on from making Bitcoin legal tender in his home of El Salvador and promising a volcano-powered ‘Bitcoin city’, President Nayib Bukele is feeling the heat from the cryptocurrency’s collapse. Yet, determined not to give up on his ‘Alexandrian’ dreams, the president is taking what crypto investors call the ‘diamond hands’ approach and doubling down on purchasing crypto and – to get rid of its debt – a free trade agreement with China.
On Thursday, President Bukele shared a tweet declaring that El Salvador would begin buying “one #Bitcoin every day” beginning today. While certain coins have increased in value in the last week, in the context of FTX’s bankruptcy and Bitcoin’s 76% decline, the president to many looks like a reckless gambler who is not ready to admit he has lost. On the other hand, why would he not double down? Given he staked not only his reputation but the future of El Salvador on crypto, in the form of so-called ‘volcano bonds’ that were intended to pay off sovereign debt and fund his ‘Bitcoin City’ but which never came.
The president may also be relying on outside intervention to save his crypto dream, as he announced a free trade agreement with China on Twitter only days after Vice President Felix Ulloa told Bloomberg that the People’s Republic had offered to buy El Salvador’s debt. While this could alleviate some of El Salvador’s economic woes in the short term, some fear this particular bet could be wielded by China for its own strategic and economic benefits.
The Persian epic The Shahnameh tells of how Alexander the Great, one of history’s great conquerors and a model of President Bukele’s, was eventually cut down to size by the angel Israfel, who told the “slave of greed” to stop pursuing “crowns and thrones” which ultimately come to nothing. Maybe President Bukele should take a cue from this thousand-year-old moral lesson and stop pursuing (Bit)coins and thrones. Sometimes, it’s better to know when to quit.
Image credit/Md Shaifuzzaman Ayon/License
QATAR CUP: A WHOLE NEW BALL GAME
This week saw more concern in Qatar, as the world’s media touched down in Doha ahead of the opening game on Sunday.
Mid-way through a live broadcast in a public place, journalist Rasmus Tantholdt was circled by Qatari officials on a golf buggy, who preceded to surround the TV2 Denmark reporter and his cameraman and threaten to break the camera if they did not stop filming immediately. Qatar’s Supreme Committee later apologised for mistakenly interrupting the crew, who had the permits necessary to film.
While speaking to the European Parliament’s Subcommittee on Human Rights on Monday, Qatar’s labour minister Ali bin Samikh al-Marri said that while Qatar accepts constructive criticism, he decried the “unprecedented campaign” of criticism. This criticism is only going to get fiercer as information starts pouring out from journalists on the ground in Doha, suggesting dire consequences if further media reports on the World Cup classify as part of this ‘campaign’.
It does not bode well for an already highly controversial tournament, nor for those organisers who are keen to divert attention away from Qatar’s politics to football.
This is by no means the first time the country has been criticised. Qatar’s rules have been under scrutiny since 2010 when the Gulf nation was granted the opportunity to host the tournament. For instance, Amnesty International have consistently noted the authorities in Qatar quell press freedom through abusive laws and detaining those who criticize the Government. Meanwhile, broadcasters are not allowed to film in Government buildings, hospitals, migrant workers’ accommodation sites and inside people’s homes.
The cracks have been showing in Qatar’s staging of the World Cup for years. As more media outlets flood into Doha, the treatment of TV2 Denmark suggest these cracks are beginning to show.
Imace credit/Photo: Lachlan Fearnley/License
EUSTICE GETS RAUCOUS ON AUKUS
Sparks flew within the Conservative Party this week, as former environment secretary George Eustice criticised the UK's free trade deal with Australia and Liz Truss's part in it. Eustice said the deal ‘is not actually a very good deal for the UK’ and warned that lessons must be learned for future negotiations.
The deal, signed on 17 December, was the first to be renegotiated entirely post-Brexit and was hailed as a significant win by the Government. They said it would unlock £10.4bn in additional trade, help lift tariffs on all UK exports and build a potential bridge to a larger Trans-Pacific partnership. The key concession to Australia was unlimited imports of Australian lamb and beef to the UK, where Australian farmers’ economies of scale could see them undercut UK domestic farmers.
Eustice claimed that this concession was not in the UK’s interests and that ‘the UK gave away far too much for too little in return’, due to Truss’s impulse to clinch a deal in time for the G7 conference. Truss’s rush led her, he said, to ask her opposite number what he would need to conclude a deal by the G7. ‘Of course, he then set out his terms which eventually shaped the deal. We must never repeat that mistake’.
Some have seen Eustice’s comments as an act of revenge, as Truss sacked him when she took office. However, he did previously write to then PM Boris Johnson in June to warn that the mistakes of the UK-Australia deal must not be repeated with India, another significant deal in development. More Tory tensions erupted around that deal, again being negotiated against an arbitrary deadline – this time Diwali, which was then missed after Suella Braverman expressed ‘reservations’ that the deal would lead to increased immigration, infuriating the Indian Government.
Since then, PM Rishi Sunak seems to have taken note not to rush. Sunak met Indian PM Narendra Modi on Wednesday at the G20 and now both sides are talking about a deal being completed by March. ‘I wouldn’t sacrifice quality for speed. And that goes for all trade deals’, he said.
Image credit/Alexas Fotos
A HARD EGG TO CRACK
The UK is experiencing its largest-ever outbreak of avian flu. Over the past year, 48 million birds have been culled across the UK and EU, with numbers set to rise over the winter months. Since the start of October, 113 captive birds are confirmed to have died from the H5N1 strain of avian flu – almost equalling the total over the previous 12 months.
Aside from fears about another zoonotic influenza infection taking hold (remember last time?), concerns are rising about potential disruption to this year’s traditional Christmas Day feast.
Supermarkets including Asda and Lidl are rationing the purchase of eggs, while butchers have advised customers to consider alternatives like Beef Wellington or pork for their festive celebrations.
If this wasn’t bad news enough, it’s now unclear whether stocks of champagne will last until Christmas. Moët Hennessy, whose brands include Veuve Clicquot, Dom Pérignon and Moët & Chandon, have hailed this the new ‘roaring 20s’ as surging demand depletes the stock of their best products. Sales of their most expensive champagnes have soared thanks to ‘pent-up demand for luxury’ from the most affluent following Covid lockdowns, as well as increased demand from the US thanks to the weak pound.
So while poultry farmers scramble to find new livelihoods, and shoppers poach eggs from one another’s trolleys, we will be playing a tiny violin for the top 1% who will be facing a Cava Christmas.
And that’s it for this week. I hope you found something of interest that you might want to delve into further. If so, please get in touch at cwilkins@audley.uk.com.
For now, that’s the weekend box officially closed.