Long stories short
- Boris Johnson dropped out of the Conservative leadership contest, leaving Rishi Sunak as the clear favourite (more below).
- Bob Woodward said he was releasing 20 interviews with Trump in audio form because “Trump pounded in my ears in a way the printed page cannot capture”.
- Two climate activists threw mashed potatoes onto a Monet painting in a German museum.
For six months – some would say six years – the UK has shown an admirable ability to shamble along with no functioning elected government and only an overstressed and under-appreciated civil service.
But a functioning government would be helpful right about now. There are at least two real-world crises outside the vortex of the Conservative Party’s solipsism that on any ordinary day would command the next prime minister’s full attention. They include:
World War III. Yesterday Russia’s defence minister placed calls to several of his western counterparts including the UK’s Ben Wallace, claiming Ukraine might be about to detonate a “dirty” radioactive bomb.
- The claim is baseless, and as Wallace noted should instead be seen as another threat of nuclear escalation by Russia. A dirty bomb isn’t the same as a fission or fusion weapon but would be the next step on Putin’s escalatory ladder, intended to deter further arming of Ukraine by the West.
- The context is one of Russian military setbacks in Ukraine, narrowing Putin’s options…
- … and signs that the international alliance against him could be wavering in Italy (where tapes were released of Silvio Berlusconi, Georgia Meloni’s coalition partner, appearing to blame Ukraine for the war) and the US – where Republicans say there’ll be no more “blank checks” for military aid to Ukraine if they retake the lower House next month.
- For now that alliance is following Team Biden’s lead as it revives cold war-style deterrence with warnings of “catastrophic consequences” if Putin goes nuclear. What those consequences would be are being kept deliberately unclear but former US defence secretary William Perry has said they should include direct destruction of all Russian forces in Ukraine by the US if Russia went beyond a dirty bomb to detonate a low-yield nuclear weapon.
That would mark the formal opening of hostilities in World War III, but as Bob Seely, the Conservative MP and Russian history PhD, has noted, the UK is already effectively at war with Russia.
Subprime debt. Late last Friday Moody’s became the third US credit rating agency to downgrade the UK’s economic outlook from stable to negative since last month.
- That will raise the cost of debt service for the Treasury, which reported near-record borrowing of £20 billion last month – £3 billion more than forecast because of debt service costs already rising as a result of the mini-budget fiasco.
- Investors expect extra upward pressure on the cost of government borrowing because pension funds’ demand for long-dated bonds is falling: the defined benefit pension schemes that blew up the bond market last month are shrinking as a share of the overall pensions sector, and their liabilities fall as yields rise – so their appetite for long bonds is falling too.
- Despite the scrapping of most of the unfunded tax cuts in the mini-budget, there is still a £25 billion hole in the UK’s public finances, Bloomberg reports.
- And the pie is shrinking. Tom McTague, Matthew Goodwin and others note accurately that the UK’s economic heartburn can’t all be attributed to Brexit. But they don’t argue with the FT’s assessment, based on OBR numbers, that Brexit is on track to cut GDP by 4 per cent, output by £100 billion a year and government income by £40 billion a year.
Re-establishing a smooth trading relationship with Europe is a central task for the next UK PM if he or she genuinely wants growth. But Rishi Sunak has said he supports the Northern Ireland Protocol Bill, which would assert a right to tear up the protocol if deemed unhelpful for Britain. He’s also rumoured to have made assurances to Tory Brexit ultras about ditching the protocol in return for their backing.
If the price of power is a trade war with Europe, Moody’s downgrade could be the first of many.
Random thought: Brexit, in its grandest formulation, was about Britain’s place in the world. But since the referendum the world has changed. The scope for buccaneering free trade has shrunk as ambitions of Russian and Chinese ethno-nationalism have grown. Democracies are having to align themselves against tyrannies again much as they did in the Cold War. In these changed circumstances, does Britain really want to be flirting with irrelevance?
The time will never be right, Mr Johnson
The Conservative Party – and, more importantly, the country – was spared disaster by Boris Johnson’s decision not to stand. But the fact that it was an issue at all says nothing good about the state of British politics.
CAPITAL ECONOMY, BUSINESS AND FINANCE
Hu cares about growth?
After a delay so as not to cast a shadow over Xi’s appointment to a third term as leader, China released its third-quarter growth figures today. They were half a point better than forecast, at a 3.9 per cent annualised clip compared with 3.4 forecast in a Reuters poll. Three caveats: these are official Chinese figures, so are to be taken with a pinch of salt (as markets duly did; Hong Kong stocks and the yuan fell to 13- and 15-year lows respectively). Of the 3.9 per cent only 1.1 was accounted for by net exports – a far cry from China’s days as unchallenged exporter to the world. And hopes of a return to strong export-led growth are low given the importance Xi attached in his speech to last week’s National Congress of sticking with zero Covid – and sticking with Xi. The precise meaning of the dramatic removal of Hu Jintao, his predecessor, from the Great Hall of the People as the congress wound down may not be known for a while, but the general thrust was clear: Xi wants no alternative centres of power, nor even reminders that anyone else ever wielded it.
TECHNOLOGY AI, SCIENCE AND NEW THINGS
It will have taken ten months, but in December an EU oil embargo on Russia is supposed to take effect. It will end European imports of Russian oil but also deny European insurance services – including British ones – to shipping companies that break the embargo. Plenty of tankers are being lined up anyway for what will be irresistibly lucrative if risky business, shipping oil mainly from Russian terminals in the Baltic to the Far East. Braemar, a shipbroker, counts 240 ships, from relatively small to supertanker size, ready to do the dirty. Bloomberg calls it “a vast shadow fleet”. The Biden administration is worried that even a fleet of this size won’t be enough to avoid a global oil supply shock that drives up prices in the US as midterms loom. It assumes, in other words, that US public support for Ukraine is conditional on prices at the pump, and is imploring the European governments to let shipping firms access insurance as long as they don’t pay Russia more than $60 a barrel. One way or another it seems the West is determined to go on funding Putin’s war.
The 100-year life health, education AND GOVERNMENT
An increase in Covid cases across America this winter could collide with rising cases of flu and another respiratory infection called RSV, leading to warnings of a “tripledemic”. The flu season has begun earlier than usual, according to the NYT, while children with RSV are already filling up paediatric units in several states. “It’s going to be a rough winter,” said Dr Diego Hijano, a paediatric infectious disease specialist at St Jude Children’s Research Hospital. Most cases of Covid, flu and RSV are mild, but public health experts urged people, particularly those at high risk, to stay up to date with their vaccines for Covid and flu to avoid overwhelming hospitals. There is currently no vaccine for RSV, which has similar symptoms to flu and Covid, but at least two candidates are currently in late-stage clinical trials.
Our planet CLIMATE AND geopolitic
Conservationists in southwest England want to grow a hedge longer and even more magnificent than Hadrian’s Wall. It will follow the 100-mile length of Dorset’s existing Jubilee Trial, the Telegraph reports, and involve the planting of thousands of sapling honeysuckle, elm, hawthorn, dogwood and blackthorn bushes. Hedgerows already line much of the trail but there are gaps and there is no such thing, in the pursuit of biodiversity, as a too-thick hedge. The Great Big Dorset Hedge Project aims, among other things, to give inbreeding insects the chance to procreate on a wider canvas, enhancing their genetic resilience. Hadrian’s Wall is 72 miles long.
CULTURE soCIETY, IDENTITY AND BELONGING
Ready for Rishi
Rishi Sunak seems all but destined to be named the UK’s next prime minister later today, following a tumultuous weekend in which Boris Johnson dropped out of the race. As of this writing Sunak is the frontrunner with 183 nominations, while Penny Mordaunt lags behind with 31. She must reach at least 100 by 2pm to take the contest to a vote by party members. Failing that, Sunak will take the mantle, making him the third prime minister this year. He faces a deteriorating economic picture (see above), exacerbated by the policies of his predecessor Liz Truss; and a clamour from opposition MPs for a general election. But that’s not all. Fractures in the Tory party mean Sunak could quickly face friendly fire from those who still believe Johnson was robbed of his time in office.
24/10 – Nominations for Conservative Party leadership race close at 2pm; BT and Openreach staff and Liverpool dock workers go on strike; strike ballot opens for GMB ambulance drivers; 25/10 – Royal Mail strike action, 26/10 – Raindance Film Festival begins; 27/10 – Royal British Legion launches annual poppy appeal, 28/10 – Result of possible Conservative members’ vote, 30/10 – British Summer Time ends.
24/10 – Diwali; trial of the Trump Organisation for tax fraud in New York; Tigray peace talks in South Africa, 25/10 – Olaf Scholz hosts Berlin conference on Ukraine reconstruction; appeal hearing for Brittney Griner in Russia; Alphabet Q3 results, 27/10 – European Central Bank interest rate decision due, 28/10 – 60th anniversary of the Cuban Missile Crisis ending, 30/10 – Brazil votes in second round of the country’s presidential election.
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Additional reporting by Jessica Winch, Ella Hill and Sebastian Hervas-Jones.
Photographs Getty Images
in the tortoise app today
The US snow crab harvest has been cancelled after billions of them went missing from the waters around Alaska. The industry is normally worth $132 million a year. What caused them to vanish?