Merkel struggles to form a government, while Mugabe steps down from power.
The troubles started at the general election on September 24, when her center-right Christian Democratic Union (CDU) party won 32.9% of the vote. This was the largest share, but it was almost 9% down from the previous the 2013 election and, crucially, not enough to form a majority government. Since then, Merkel has tried to form a coalition administration with the Free Democrats and the Green Party, but talks collapsed on Sunday, largely over disagreement on her open-border immigration policy.
At the behest of German President Frank-Walter Steinmeier, the CDU is now courting the Social Democrats (SPD). Merkel has made clear she would prefer a fresh election to leading a minority government to break the political stalemate, announcing, “I’m afraid of nothing.” With political tensions still a feature across Europe and crucial Brexit talks looming, many will be hoping for a swift resolution to the deadlock.
Hammond’s balancing act
UK Chancellor Philip Hammond conjured up visions of a “prosperous and inclusive economy” as he attempted to woo voters in his third Budget. The removal of stamp duty for first-time buyers and £44 billion (US$58.6 billion) in total housing support, he said, heralded “the dream of home ownership…for all generations.” Additional funding for the National Health Service (NHS), infrastructure and transport were generally well received.
But figures released by the Office for Budget Responsibility (OBR) painted a sobering picture of the UK economy. The OBR slashed the UK’s 2017 growth forecast from 2% to 1.5%, and revised down growth for the next five years, attributing much of the blame to continuing low productivity (the output each worker produces per hour). The downgrades will complicate the chancellor’s target to reduce the UK’s deficit to 2% of gross domestic product (GDP) by 2021. Whether Hammond’s announcement of extra funding for research and development, artificial intelligence, and electric and driverless cars helps boost productivity is an open question.
Zimbabwe enters new era
After 37 years of rule, Robert Mugabe stepped down as president of Zimbabwe on Tuesday. Opinions on Mugabe vary from a hero who brought about independence from white-minority rule, to (more commonly) a despot who ruined the country to stay in power. Having ruled over an administration variously scarred by war, repression and political duplicity, Mugabe’s fall from grace was surprisingly swift and painless.
The sacking of Vice-President Emmerson Mnangagwa earlier this month, clearing the way for Mugabe’s wife, Grace to become President, proved a step too far for the country’s military. Mugabe was put under house arrest and on Thursday finally resigned after being granted immunity from prosecution. Mnangagwa – dubbed the “Crocodile” for his political wiliness – hailed a "new and unfolding democracy" and promised a growing economy, peace and jobs to cheering crowds in Harare.
Shares in Centrica, which owns British Gas, ran out of fuel this week. The utilities company announced a full-year earnings warning, which led to the company’s share price tumbling to an almost two-decade low. In the UK, the company lost 823,000 customer accounts in the four months to October following British Gas’ decision to increase electricity prices by 12.5%. Further bad news came from the North America division, which experienced “highly competitive market conditions and low price volatility.”
There was much better news for luxury carmaker Aston Martin, which has posted profits for four consecutive quarters for the first time since Ford sold it in 2008. Strong demand for the Aston Martin DB11 and the £525,000 (US$699,342) Vanquish Zagato helped boost sales by 84%. Chief Executive Andy Palmer was optimistic that the new DB11 Volante and Vantage models would further stimulate demand.
Despite the influence of Centrica, the FTSE 100 Index of the UK’s leading stocks was up 0.4% over the week to Thursday, as a fall in sterling helped UK exporters.
Opening up a poll to the public can come with risks. Just ask the UK’s Natural Environment Research Council, which last year asked the public to name its new polar research ship. The overwhelming favorite was the unforgettable Boaty McBoatface, but after much deliberation, credibility trumped popularity and the ship was renamed as the Sir David Attenborough, after the renowned naturalist.
Doncaster Council appears to have stuck with the democratic approach to naming its equipment, however. The South Yorkshire town opened up the debate to name its new salt-spreading vehicles to the public under the Twitter hashtag “DoncasterGrittingWorldCup” – and accepted the winning names. David Plowie and Gritsy Bitsy Teeny Weeny Yellow Anti-Slip Machiney join a fleet of other vehicles in the town that include Mr. Plow, The Subzero Hero, Gritney Spears, Brad Grit and Usain Salt.
Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks are enhanced in emerging markets countries.
Companies mentioned are for illustrative purposes only and are not intended to be a recommendation to buy or sell any security.
Indexes are unmanaged and are included for illustrative purposes only. You cannot invest directly in an index.