Connect with us

Global Affairs

Election Fever

 4 min read / 

With the elections in Greece creating an air of uncertainty in the European markets, further antagonised by the European Central Bank’s implementation of Quantitative Easing, it has been interesting to analyse how the UK general election in May will affect the market. The disintegration of traditional British politics, portrayed by the rise of UKIP and increasing political apathy, has made the coming election the most unpredictable in decades.  With shares in two of the UK’s biggest energy providers falling after Labour announced a policy forcing companies to pass on the benefits of cheaper crude oil to customers, the UK stock market has already been influenced by the general election. On January 12th, both the SSE and Centrica led the main London index lower, losing 2.2 per cent and 0.9 per cent respectively. This was a result of Ed Miliband, Leader of the Labour party, pledging to give industry regulators the power to cut bills.

Although the two main parties remain in the lead, they both lack a majority; the Conservative party and the Labour party are struggling to gather 65 per cent of the vote. It is likely that the May election will see the end of the two-party system. The Eurosceptic, anti-immigration, UK Independence party (UKIP) has inflicted much damage on the main parties, especially the Conservatives. Likewise, the rise of the Scottish National party (SNP) and a burgeoning Green party has led to a fall in support for Labour. With an expected loss of half of the 57 seats it won in the 2010 general elections; it is questionable whether the Liberal Democrat party will maintain its position as what some consider the third main party.

Discussions surrounding the economy have always been the main drivers around the outcome of elections. Although the UK’s economic recovery and low unemployment since the previous general election has been impressive, many have not felt the benefits of the economic recovery, rather they have been more affected by the spending cuts. With this in mind, neither of the main parties anticipates an outright majority.  The Conservatives have already prepared for a possible second general election and there have been talks regarding which parties it could form a multi-party coalition with. Yet, to prevent UKIP from inflicting more damage, the Conservatives aim to avoid the subjects of Europe and immigration – UKIP’s driving topics – and focus instead on the economy. David Cameron will commit a future Conservative government to tax cut, thus gaining votes from those whole will gain the most – middle earners. However, Labour claims that the public is prepared to accept some tax rises to fund public services.

On the subject of economic policies, the attracting thing about Labour is that its economic plan for the 2015 general election is perfectly sensible. Although planning to borrow more than the Tories, there is nothing reckless in seeking to eliminate the current budget deficit by 2020 while reducing public debt. Taking a more realistic approach, the Tories will continue with cuts in public services; however, Labour’s policies cannot be seen as inferior. Ed Miliband has kept quiet what taxes will be raised and which areas of public spending will be cut further; nevertheless, by focusing on the current budget, Labour is keeping the option of using extremely low government borrowing costs for investment projects.

Usually businesses in the UK are accustomed to three possible outcomes, yet with the opinion polls suggesting that parties previously seen as irrelevant may hold the balance of power, these parties’ policies have to be scrutinised. For example, it is possible UKIP can force the Tories into a harder stance against immigration and the EU. The Greens have outlined the City of London would cease to be a major global financial centre and growth would no longer be an economic target. The SNP, dedicated to the break-up of the UK, also holds influence over decisions made by businesses.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Global Affairs

Breakfast Briefing: Space Race, Google in China and Zuckerberg

google china

Google to Open in Beijing

Alphabet announced that it will open an AI research facility in the Chinese capital yesterday.

Editor’s Remarks: Under CEO Sundar Pichai, Google has been recommitting itself to China after it had most of its services blocked in 2010 when it refused to censor search content. In recent months, the tech giant has been marketing its new TensorFlow AI tools to the Chinese market, which aligns with the state’s ambitions to become a world leader in AI by 2030. Google’s new facility will consist of a small number of AI researchers, supported by hundreds of Chinese engineers. Google expects to face stiff competition for talent given how local tech giants, Baidu and Tencent, are ramping up their own AI efforts.

Telegram Is Not for Sale

Telegram’s elusive founder, Pavel Durov, insists that his messaging service will remain non-profit.

Editor’s Remarks: Durov and his brother Nikolai founded VK, Russia’s answer to Facebook, before they were forced to sell their stakes to a Kremlin-friendly oligarch. The pair has since relocated and built Telegram, an encrypted messaging service that they insist will never be sold. A libertarian – having enabled Telegram users to even send messages that will self-destruct – Durov and his product have gained popularity among cryptocurrency enthusiasts. Durov himself is bullish about the prospects of cryptocurrencies and owns at least 2,000 bitcoins. Pundits, meanwhile, reckon that Telegram is worth in the region of $5bn.

Japanese Space Startup Raises $90m

Ispace Inc raised $90m from Japan’s largest corporates in a bid to reach orbit by 2019. 

Editor’s Remarks: Ispace is backed by Japan Airlines, Tokyo Broadcasting System Holdings and also government-backed Innovation Network Corp. of Japan. The company plans to sell advertising space on its spacecraft, which will then feature prominently in distributed images. However, Ispace also envisages the use of rovers that will offer a “projection mapping service”, which will essentially produce a tiny billboard on the surface of the moon. This is the latest announcement in what is rapidly shaping up to be a wider commercialisation of space exploration. Elsewhere, SpaceX and Blue Origin are developing reusable rockets, while Planetary Resources intends to mine asteroids.

Roy Moore Loses Alabama

Moore, who was backed by Trump, narrowly lost to Doug Jones, a largely unknown Democrat.

Editor’s Remarks: Moore’s election efforts appeared to have succumbed to allegations of child abuse that were made against him last week. Newcomer Jones won 49.9% of the vote against Moore’s 48.4% in deeply conservative Alabama, marking the Democrats’ first Senate victory in the state since 1992. Moore is a household name in Alabama but the accusations recently levelled against him have ruined his once impeccable reputation. Reluctant to concede defeat in his home state, Moore has said that Alabama must “wait on God and let the process play out”. Meanwhile, Democrats are jubilant that they have managed to reduce the Republican majority in the Senate to 51-49, which could impact Trump’s tax reform.

Zuckerberg Backs VR Firm

Dreamscape Immersive, a virtual reality (VR) company, is backed by 21st Century Fox, Warner Bros. and Mark Zuckerberg.

Editor’s Remarks: Dreamscape is developing new VR arcades for shopping centres and has just closed a $30m Series B funding round – 50% more than planned. Among its initial backers were Steven Spielberg, 21st Century Fox and Warner Bros. The company has now added to that impressive list the likes of Mark Zuckerberg and Nickelodeon. Dreamscape is capitalising on Hollywood’s interest in VR, which the film industry reckons will draw in greater numbers of viewers and provide an opportunity to raise margins. Dreamscape intends to open seven VR centres in locations across North America and the UK.

Keep reading |  4 min read

Asia

Google to Open Artificial Intelligence Centre in China

 2 min read / 

Google AI China

Google will be opening its first artificial intelligence (AI) research centre in China, despite many of its services being blocked there.

Fei-Fei Li, Chief Scientist of Google Cloud, said:

“I believe AI and its benefits have no borders. Whether a breakthrough occurs in Silicon Valley, Beijing or anywhere else, it has the potential to make everyone’s life better for the entire world. As an AI first company, this is an important part of our collective mission. And we want to work with the best AI talent, wherever that talent is, to achieve it.”

The research centre will focus on basic AI research, and will consist of a team in Beijing, who will be supported by Google China’s engineering teams.

Google’s search engine and its Gmail are banned in China. However, the country has 730 million internet users, making the market too large to ignore.

Google is not the only tech giant facing restrictions in China. Facebook is also banned, while Apple’ App Store has been subject to censorship. In order to comply with government requests, Apple removed many popular messaging and virtual private network (VPN) apps from its App Store in China earlier on this year.

China has recently announced plans to develop artificial intelligence, and wants to catch up with the US. However, human rights groups are concerned by China’s use of artificial intelligence to monitor its own citizens.

Keep reading |  2 min read

Europe

Europe Warns Trump on Tax

Europe Trump

Finance ministers from Europe’s largest economies have said that Trump’s tax plans breach global agreements.

Europe’s leading finance ministers, including UK chancellor Philip Hammond, penned a letter to the White House in which they raised the possibility of retaliation if the Republicans push on with their tax reforms. Europe is worried that Trump’s “America First” doctrine will undermine global trade patterns and escalate ongoing tensions between the US and its key allies. With the UK looking to its closest ally for support post-Brexit, it is unlikely that Hammond’s latest move will sweeten any future US-UK trade deal. Meanwhile, Trump is unlikely to care about shaking up current trading arrangements, given that he ran for office on the platform of making the US more competitive.

Keep reading |  1 min read

Trending