13 Dec 2018

The US Homeland Security is currently unfunded, forcing a potential shutdown

Aside from political problems here in the UK the US has its own with the risks of a partial government shutdown from next Friday (21 December).

Potential US shutdown


Funding for the majority of the US government has already been approved, however 25% of it, including Homeland Security will be unfunded, forcing a shutdown if no agreement can be found in the next eight days. At the heart of the matter is a dispute over funding for President Trump’s border wall, which saw a public argument between Trump and the Democrat’s Nancy Pelosi erupt in the oval office earlier this week. Trump wants $5bn for the wall, an increase on the $1.6bn that was previously agreed and whilst the Republicans still control both houses of Congress, there is a general feeling that there are not the Republican votes necessary to pass a funding bill in the House given resentment against Trump from Republican representatives who are set to lose their seats come January following the midterms.


Irish Banks: An Post sets Jan deadline for mortgage interest 


The Irish state post office, An Post, has set a deadline of January 30th for potential partner lenders to express an interest in setting up a mortgage product joint venture, according to reports in the Irish Times this morning. The move by An Post comes after comments in recent months that signalled its intention to enter the market next year with rates that would undercut the mainstream banks "by up to 1%". However an end-January deadline for interest would suggest it will miss, by quite some distance, its intention of being able to launch a product by April next year. 


The company has issued a request for information in recent days, saying: “Prospective partners are being offered the opportunity to share information with An Post on their ambition to enter into a partnership arrangement with a view to developing a sustainable An Post mortgage business in the Irish market.” 


ICG: WB Yeats arrives


ICG last night confirmed that its new ship, the WB Yeats, was delivered to the group at Flensburg in Germany. The new ship can accommodate 1,800 passengers and has 440 cabins. Deck space extends to 2,800 lane metres for freight with an additional car deck capable of transporting 300 passenger cars. The ship was commissioned with flexibility in mind - it can service all of Irish Ferries' existing routes, it will adhere to Ice Class specification which will allow for a wide geographic area of operation and it can also be cut and extended at a future point should opportunities arise. 


The ship incorporates emissions scrubber technology and ballast water systems which will deliver optimal fuel consumption and meet all known future environmental regulations. She will commence service on the Dublin-Holyhead route in January but will service the Dublin-France route from March and during the peak summer months.


Irish Economy: Strong and Stable


Yesterday was a day of contrasts where political stability is concerned on both sides of the Irish Sea. While Theresa May survived a motion of no confidence, the margin was far from decisive and she has signalled that she will not lead the Conservatives into the next election. In Dublin, the main opposition party, Fianna Fáil, agreed to facilitate the minority Fine Gael led administration in remaining in office until 2020. Ireland's 2016 General Election produced a messy result, with no one party securing even a third of the seats on offer. Following protracted discussions, 


Fianna Fáil agreed to a 'confidence and supply' deal that permits Fine Gael and a number of notionally independent politicians to get their key policies through the Dáil (lower house). Under the terms of the initial deal, three budgets were to be passed and any motions of no confidence voted down. October saw the third of those budgets make its way through the Dáil, sparking discussions on whether or not to extend the agreement. Fianna Fáil said that recent developments in London informed its decision to extend the deal, saying that the country is "in a period of heightened danger over fears created by a hard Brexit". 


No details on any new policy priorities for the extended life of this administration were provided, but Fine Gael noted "a number of pieces of legislation" that Fianna Fáil wishes to have passed in the near term. The previously agreed 2:1 split of spending hikes to tax cuts where the utilisation of fiscal space is concerned will be retained. Given Fine Gael's lead in the opinion polls and its significantly strengthened support since the 2016 vote, we had speculated that it could go to the country next May in an unprecedented three-in-one election alongside the Local Government and European ballots. Absent any shocks, yesterday's deal with Fianna Fáil removes this possibility, giving Ireland stable government into the next decade. 


INM: Departure of CFO


INM yesterday announced that its CFO, Ryan Preston, is to leave the company by mutual consent at the end of January. Mr. Preston joined INM as CFO in December 2014 having previously served as Group FD for Europe at Tesco. The media group said that it “is currently engaged in a process to appoint a successor to Mr. Preston and this appointment will be announced in due course”. INM has refreshed its leadership team in recent times, with Michael Doorley taking over as CEO in October 2017 and Murdoch MacLennan as Chairman in March of this year. 


May lives to fight another day


After last night’s confidence vote, in which May secured victory, but with 117 of her MPs voting against her (200 in favour), she heads to Brussels today for an EU Summit. Her task is to try and get some serious concessions from Brussels on the Irish backstop to try and bring some of those opposing MPs onside and therefore increase the chance of her getting a ‘meaningful vote’ on her Brexit deal through the British Parliament. This remains an uphill struggle since Brussels looks to be offering supplements like a ‘legal codicil’, effectively an addition to a legal document, rather than adjustments to the Withdrawal Act; many opposing MPs and the confidence and supply partner the DUP are looking for a legally binding commitment for the UK to be able to exit the Irish backstop unilaterally. 


A meaningful Christmas?


There is talk that if PM May gets some reasonable concessions from Brussels over the next two days she might try and squeeze in the ‘meaningful vote’ before Christmas. If May is unable to secure sufficient concessions, she will struggle to progress her proposal and in such circumstances Parliament could take greater control of the process, as we have said for some time, which might lead to a ‘softer’ Brexit. It also raises the prospect of a 2nd referendum. Overall, the outcome of last night’s vote does not resolve the issue that the PM has sufficient support to pass her Brexit proposal in Parliament as it stands. She faces a year’s grace now before she could face another formal leadership vote, but with 117 of her own MPs opposing her (and her reported promise to not seek to remain as PM after the next election) she now faces the important task of trying to bring more of her party onside. If she does not, she remains vulnerable.


Today’s Economic Calendar


12.45 EC ECB Rate Decision
13.30 EC ECB Draghi speaks
13.30 US Initial Claims