And so the duel in Westminster continues. Prime Minister David Cameron is, according to the outspoken Boris Johnson, ‘making the best of a bad job’. Hardly encouraging words for Dave as his draft EU draft deal comes under intense scrutiny. Elsewhere in this week’s news, Chinese companies continue their buying spree in foreign markets as ChemChina snaps up Syngenta for a cool $43bn.
EU debate or debacle?
Mr Cameron’s doing his best to get the ball rolling on this EU deal ahead of the European summit on 18-19th February. His draft claims it will deliver “substantial change” and Britain will be in a better and stronger position than it currently is. That may or may not be the case, but it’s not stopped a wave of Eurosceptics stating that none of the proposed changes come close to the fundamental changes promised to the public before the Conservatives were elected. Even his own backbenchers have dismissed the deal as ‘thin gruel which has been watered down even further’.
Negotiations over the following two weeks will be difficult, that we know. There have already been media reports that some member states are unhappy at the proposed deal, while the new concept of an “emergency brake” on in-work migrant benefits – which is supposed to reduce migration from the EU – has also caused disgruntlement.
ChemChina coughs up
Chinese companies appear to have been on something of a spending spree of late. Mainland companies have kicked off 2016 with a cross-border splurge; $22bn has been spent on foreign acquisitions in January alone. State-owned chemicals group, ChemChina, who only recently bought tyre maker Pirelli for $7.9bn, revealed the terms of its all-cash $43.8bn deal to buy Swiss agribusiness – and market-leading chemical producer for crops – Syngenta. If completed, it will be the largest ever outbound deal by a Chinese company.
So what’s driving China’s aggressive overseas expansion? In short, foreign assets are cheap relative to domestic ones and mainland companies may also be looking to reduce exposure to asset quality deterioration at home.
Overseas investment can be a very good thing, but not if you’re a member of Wentworth Golf Club with a chip on their shoulder. And rightly so; the club, which is the birthplace of the Ryder Club, was bought by Chinese conglomerate Reignwood in 2014. The owner has recently proposed a termination of all current members’ contracts, asking them to pay a one-off re-joining fee of £100,000. I’d be pretty tee’d off too.
Lift off way off
Thursday saw the Bank of England (BoE) release its latest forecasts in what was a very dovish report. Growing concerns around the state of the slowing global economy have seen stock markets selloff as investors move into the historically safer asset classes. Further uncertainty is likely to prevail in the short term as UK inflation is set to remain below 1% for the remainder of 2016. What does this mean for interest rates? Another year of rock-bottom levels for another year, at least.
While economic growth forecasts were reduced slightly, the UK is still expected to remain among the fastest-growing advanced economies. The weaker forecasts do suggest that there are tougher times ahead however, and Chancellor George Osborne will be mulling over how to stick to his deficit reduction plan in light of market news and lower growth forecasts.
And Finally…
The owner of a camera-friendly horse in Wales is claiming she deserves some recognition from a man who won a contest after taking a selfie with her animal. Neigh joke.
The man and his toddler son have been awarded first prize by Thomson Holidays in the company’s “Made me Smile” selfie competition which includes a holiday worth £2,000. The horse, apparently named Betty, won’t be invited along much to the annoyance of her rambling owner. The fiery character even told local news that she could have taken her own photo of her beloved Betty and won (had she known about the competition, of course).
