BUSINESS WITH PERSONALITY SHHH… THE EAR TRACK MAINTENANCE PODS THAT HELP TRANSFORMING OUR YOU CUT OUT RAILWAYS FOR LESS P14 THE NOISE P17 THURSDAY 5 SEPTEMBER 2019 ISSUE 3,450 CITYAM.COM FREE RECESSION LOOMS BRITAIN’S CRUCIAL SERVICES SECTOR NEARS STAGNATION, RAISING PROSPECT OF THE ECONOMY GOING BACKWARDS HARRY ROBERTSON Later in the day, Bank of England Westminster weighs on confidence and which indicates expansion, from 51.4 in the problems. However, he said a no-deal governor Mark Carney told MPs the econ- business investment. GDP shrank by 0.2 July. Economists had been expecting a Brexit would have a less severe impact @henrygrobertson omy was running at “close to zero”. per cent in the second quarter and teeters score of 51. than previously expected due to increas- THE LIKELIHOOD that Britain is sliding “The UK economy is softer than I would on the edge of a contraction in the third Services sector weakness “raises the ingly thorough preparations. into a recession rose yesterday as new have expected a few months ago,” Carney quarter as MPs continue to grapple with likelihood that the UK economy is slipping “Brexit, whatever form it takes, will rep- figures showed growth in the country’s said, adding that the global slowdown Brexit. A contraction in the third quarter into recession”, IHS Markit chief econo- resent a real adjustment to the economy dominant service sector grinding to halt. was dragging on GDP. would tip the UK into technical recession. mist Chris Williamson said. for a period of time,” he said. “Relative in- Private sector output fell last month, Also yesterday, Swiss banking giant UBS Weak data from services, which make up He said activity in the sector “almost comes will be lower than they otherwise according to a closely-watched gauge blamed the US-China trade war as it cut about 80 per cent of the UK economy, stalled” as “Brexit-related worries esca- were, there’ll be a terms-of-trade shock.” from data firm IHS Markit, dragged down its global growth outlook to 2.5 per cent scuppered analysts’ hopes that the sector lated, curbing spending by both busi- Incoming European Central Bank (ECB) by manufacturing production hitting a in the coming quarters, falling from a would counteract weakness elsewhere. nesses and consumers”. chief Christine Lagarde, meanwhile, seven-year low. Near-stagnation in the previous estimate of 3.2 per cent. IHS Markit’s respected services Carney warned MPs at his regular called on Eurozone governments to services sector heightened fears yester- The British economy has been rocked in purch asing managers’ index (PMI) fell to appearance before the Treasury Select prop up their own growth through day morning. recent months as political stalemate in 50.6 in August, barely above the 50 mark Committee that Brexit would exacerbate fiscal stimulus. ... as the chaos in the Commons rumbles on with an election held at a red light CATHERINE NEILAN extend Article 50 if there is no short of the 434 votes required. election in the near future, but deal agreed with the EU by mid- Corbyn is refusing to back an the government’s next move @CatNeilan October passed at the second election until the bill – now sitting remained unclear overnight. OPPOSITION MPs refused to grant reading – a vital stage of Commons in the House of Lords – passes into Some commentators Boris Johnson a mid-October voting. Johnson claimed this legislation. suggested there may be General Election late last night as “would scupper any serious Brexit-backing peers in the alternative legislative routes parliament’s Brexit stalemate negotiations” before the UK’s Upper House are attempting to to triggering a ballot before the continued. planned departure on 31 October, talk the bill out until Friday, which delaying bill has been placed on Labour abstained from a vote on and therefore he had “no choice” would mean the bill would fail to the statute book. whether to have a national poll, but to go to the polls. gain consent before the planned Johnson said Labour is claiming they believed the Johnson won the vote by 298 to prorogation of parliament next “running scared” of an government would use it to deliver 56, but under the Fixed Term week – leading to some Lords election, while Corbyn a no-deal Brexit, a fear echoed by Parliaments Act he needed a two- bringing their sleeping bags to accused the new Prime the Lib Dems and the SNP. thirds majority of the whole house parliament. Minister of playing a Earlier in the day, a bill to to trigger a ballot – falling well MPs on all sides still expect an “disingenuous game”. FTSE 100▲ 7,311.26 +43.07 FTSE 250▲ 19,619.11 +154.97 DOW▲ 26,355.47 +237.45 NASDAQ▲ 7,976.88 +102.72 £/$▲ 1.224 +0.016 £/€▲ 1.110 +0.001 €/$▲ 1.103 +0.007 02 NEWS THURSDAY 5 SEPTEMBER 2019 CITYAM.COM ILL WIND ‘Erratic, powerful and slow-moving’ Hurricane Dorian meanders towards US shoreline after devastating the Bahamas THE CITY VIEW Spending spree puts Tories’ record at risk ESS than a year has passed since Theresa May danced on stage at the Tory party conference and told party activists Lthat the era of austerity was officially over. The announcement was not received well by the Treasury at the time, where Philip Hammond was still trying to eliminate the government’s annual deficit. To give credit to the former chancellor, Hammond was just about able to tread the line between targeted budget hikes for areas such as the NHS and a determination to consolidate the public finances. Brexit has done funny things to the UK’s political map, however, and Hammond now finds himself ousted from both the government and the party. His successor, once a deficit hawk who proposed bringing a debt ceiling into law, yesterday US PRESIDENT Donald Trump yesterday described Hurricane Dorian as “erratic, powerful and slow-moving” as it bore down on unveiled a huge £13.8bn increase in spending for the next Florida. The hurricane, which killed several people and destroyed an estimated 13,000 properties in the Bahamas, is due to make landfall in the US today. The governors of US states in its path urged residents to leave their homes “immediately”. financial year while suggesting the government’s fiscal rules would be relaxed. The fiscal framework should “meet the economic priorities of today not of a decade ago,” Sajid Javid said, portentously. Javid’s spending spree, the most profligate in 15 years, will see budget hikes across Whitehall – not a single department will experience a real-terms cut, the chancellor boasted. The Aussie migrant law may Institute for Fiscal Studies (IFS) said the spending round will reverse two-thirds of the day-to-day Whitehall budget reductions achieved since 2010. His announcement was classic election fare, but reminds us of the dangers of playing politics with the come to UK after review public purse. Yesterday’s splurge “is a risky move for the chancellor,” the IFS AUGUST GRAHAM tion but said Brexit will give the UK a having a job offer and being paid prop- “once in a lifetime opportunity.” erly for it. In Australia, immigrants are wonks concluded. Javid was able to stay narrowly within the @AugustGraham Treasury’s rules only because the Office for Budget Potential immigrants to the UK are not required to have a job. THE GOVERNMENT’s migration advis- currently assessed based on where There, most points can be won on Responsibility was not given the opportunity to update its ers have been asked to consider they come from. The dual system age, with 25 to 32 being the preferred growth outlook (scheduled for publication alongside the next whether Australia’s points’ based sys- allows all people from the EU to come range. Other important measures are Budget). The global economic environment is bleak, with the UK tem could work in Britain, as the UK to Britain – based on freedom of move- good English and education. looks for post-Brexit arrangements. ment – while migrants from outside Patel suggested the UK could opt for possibly in recession, and it is unlikely to support Javid’s plans. Home secretary Priti Patel has writ- the EU are allowed in only if they are a system that gives points for educa- Despite strong progress in recent years, the Conservatives have ten to the Migration Advisory Commit- deemed highly skilled. tion, language, work experience, and still not eliminated the deficit, with borrowing coming in above tee, asking it to look into the The system should be replaced by one willingness to take on key jobs in £23bn last year. Moreover, it is on the rise. An excellent note Australian system and others like it. which judges everyone on their skills, certain regions. “The British public have been ending free movement, Patel said. The committee has been asked to from Investec’s Philip Shaw calculated that borrowing will clear that they want an immi- Non-EU migrants are already given look into which characteristics should rebound to £42bn in 2019-20 if the current trend continues. It gration system that takes points based on attributes such as be prioritised, and what can be learned would be a great shame if the Tories let go of the purse strings back control of our borders English language proficiency and from Australia and elsewhere. while welcoming aspira- the salary attached to their job The letter follows comments from just as they were about to achieve the fiscal ambition on which tional and hard-working offer, however the system is Prime Minister Boris Johnson that they stood during each of the last three general elections.