What just happened
Long stories short
- The WHO said it would send a team to China next month to investigate the origins of Covid.
- The UK’s Supreme Court overturned an appeals court ruling and cleared the way for Heathrow to build a third runway – if it still wants to.
- Much of the US from the Rockies to the east coast was put on snow watch; blizzards are forecast for next Wednesday (more below).
- President Macron of France tested positive for Covid.
Brexit latest. Apologies again to non-UK readers. We’re sticking with this because (the quality of) our lives depend on it. So. Ten working days to go. Fourteen if we include weekends, which we probably should. Still no white smoke, but Ursula von der Leyen told the European Parliament yesterday: “There is a path to an agreement now. The path may be very narrow but it is there.”
It runs between fisheries, which as we’ve noted are emotive but resolveable because they account for such a small share of UK and EU economies; and dispute resolution, where progress has been made this week with agreement on the principle of non-regression. Each side has promised not to undercut the other on labour, social and environmental standards, and the EU seems to have agreed to take the UK at its word rather than insist on a specific enforcement mechanism.
Why is the path so narrow? State aid. The remaining boulders / farm gates / barbed wire rolls represent subsidies. The great irony of this argument is that it turns out to be between European liberals opposed to industrial subsidies that might hurt competition, and British Conservatives who want the option of using them to prop up the post-Brexit economy, or propel it to new and unimagined prosperity, depending on your view.
We can guess which side Thatcher would have been on.
What would Team Johnson like to subsidise? Tech, green energy, and probably cars. That’s the short answer. The longer one is that while Johnson’s government is anxious not to be seen as advocating a seventies-style industrial strategy based on picking what inevitably turn out to be losers, it is deeply envious of Singapore, which has thrived by paring back regulation while investing heavily in cutting-edge sectors like biotech and AI; and, secretly, France (think Airbus).
Did you say cars? Indeed. This is where the rubber hits the road. Cars account directly for 9 per cent of UK manufacturing and 14 per cent of exports. Johnson needs names like Nissan to expand and switch to electric cars in places like Sunderland, not shut down and go elsewhere because of tariffs in the event of no deal and increased drag on international supply chains even without one. By brand:
- Nissan. Greg Clark arranged a £61 million aid package to keep Nissan in Sunderland after the EU referendum but that won’t be enough without a deal. The company says it doesn’t have a no-deal plan B.
- BMW plans to continue building Minis in Oxford for now even if Brexit means passing on price increases to customers, but says it is “flexibly positioned” to increase manufacturing in Germany and China.
- Bentley is flying in parts to prevent them being held up at Channel ports.
- Honda had to pause production at its Swindon plant because of bottlenecks last week.
Temporary bottlenecks and shutdowns because of jitters now are very different from permanent ones because of no deal. The Society of Motor Manufacturers and Traders says if no deal is reached the sector’s output will fall by half.
Last note in the irony column: if there’s a deal, much of the basis for the state aid argument falls away. In the meantime that argument is holding up a deal.
Wealth investment, fairness, prosperity
Just a trickle
Trickle-down economics hasn’t worked. That is the experience of a lot of people from Detroit to Dagenham, but now there’s proof, or what passes for proof in economics. Two UK researchers have produced a paper for the LSE’s International Inequalities Institute measuring the effect of tax cuts for the rich on growth and unemployment in 18 economies over 50 years. They found no positive impact from such cuts on growth or unemployment, and benefits accruing only to the 1 per cent. The authors tell Bloomberg that their findings mean finance ministers looking for a way out of their Covid crunches shouldn’t be afraid of soaking the rich with, say, a 5 per cent tax on wealth. There is a problem here: finding that tax cuts for the rich don’t help the poor is not the same as finding that tax hikes for the rich do. For this reason the LSE paper is unlikely to make waves with Americans for Tax Reform – but it deserves to elsewhere.
New things technology, science, engineering
Jennifer Granholm’s thing for electric cars
Joe Biden is expected to appoint Jennifer Granholm as his energy secretary. Assuming she gets the job, the stage is set for an almighty race between the US and China in electric car production. Granholm is a former governor of Michigan who in that post helped Biden save the US car industry at the time of the 2008 crash. She later got $1.35 billion in federal funding for Michigan to start switching to batteries and electric cars. The Chevy Bolt is one result. From next year, if Congress cooperates – big if – she’ll have White House backing to make electric cars the centrepiece of Biden’s $2 trillion green infrastructure plan. But even then she would start a long way behind China. The US has two established electric car makers. If you include start-ups, China has 400.
Our planet environment, natural resources, geopolitics
Up to three feet of snow is forecast for next week for much of the US east of the Rockies and south as far as South Carolina. Record snows are meanwhile falling in Japan; nearly two metres in 48 hours in Fujiwara in central Hokkaido. I hate to say it, but this is not just consistent with global warming, but a function of it. Two processes are at work: rising temperatures mean the atmosphere can hold more water (about 500 cubic kilometers more than in the 1970s), and a weakening polar vortex means more cold air drifts down from the top of the world in winter to freeze all that moisture. Assuming temperatures go on up, more and more of this snow will fall as rain, but in the meantime on the increasingly rare occasions when it’s cold enough, snowy places will get more of it, not less. It will then melt quicker, increasing the risk of avalanche, but that’s another story.
The 100-year life health, education, living, public polic
Axios reported on Tuesday that the US Food and Drug Administration has granted emergency approval for an at-home Covid test that delivers results in 20 minutes. Sorry to be late with this, but it’s big news because no prescription is required and this sort of test could help map the spread of Covid in the US – where most Americans will have to wait till the spring for a vaccination and more than 2,500 are still dying from the virus every day. The test is “only” 95 per cent accurate but anyone worried about a false positive or negative could always get a second test. A bigger barrier to uptake is price: $30 per test. The maker, Ellume, hopes to distribute 200 million of them by next summer. That’s $6 billion in revenue right there.
Belonging identity, society, beliefs, countries
The International Criminal Court has said it won’t try to prosecute China for crimes against Uighur Muslims in Xinjiang, because it can’t. The Rome Statute on which the court’s authority is based says it cannot go after crimes in countries that haven’t signed the statute. China, like the US, falls into that category. The ICC has been able to launch investigations into alleged crimes by American servicemen in Afghanistan only because Afghanistan is a member of the court. The upshot: there is overwhelming evidence that at least a million Uighurs have been illegally detained in “reeducation” and forced labour camps, but for the time being there is no way of holding China to account.
Opinion: Simon Briscoe
What’s bad? Our public services or the data?
Emerging GDP data in Britain is telling us one of two things – and both are shocking. Either the response of Britain’s public services to the Covid-19 crisis has been by far the worst in Europe. Or our GDP data, the main measure we have of tracking the economy, is distorted relative to many other countries. Read the rest of this article here.
Thanks for reading, and do share this around.
Photographs Getty Images