As President Donald Trump prepares for an historic meeting with North Korean leader, Kim Jong-un in Singapore, he leaves behind the G7 summit in disarray after he withdrew his support for the joint communiqué. At the tense meeting in Quebec last week, leaders of the seven nations signed a statement agreeing their need for “free, fair and mutually beneficial trade” and the importance of fighting protectionism, in light of Trump’s steel and aluminium tariffs. However, at the subsequent news conference, Canadian Prime Minister Justin Trudeau reasserted his opposition to the US tariffs which consequently led to the President retracting his endorsement of the communiqué and issuing retaliatory tweets personally aimed at Trudeau and Canada’s own tariffs.
Tomorrow’s summit in Singapore, the first between a sitting US President and a North Korean leader, is expected to include discussions on the denuclearisation of the Korean peninsular in return for improving the nation’s economy, although there is no formal agenda. Even North Korea’s state media, which has played down the meeting, said the pair will discuss a “permanent and durable peace-keeping mechanism.”
Back in the UK, Prime Minister Theresa May is struggling to unite her party over a Brexit strategy, ten months before Britain is due to leave the European Union. The EU Withdrawal Bill repeals the 1972 European Communities Act, yet the Labour Party is urging the Tory back-benchers to defeat Mrs May in parliament by backing a proposal for Britain to stay in the EU’s single market and create a new customs union which could reduce border friction after Brexit. The votes in the Commons this week is seen by many as a test of Theresa May’s leadership.
Away from politics, Britain’s economy is on course to lag behind its international peers, according to a forecast from the Confederation of British Industry. The world’s fifth largest economy looks set to grow by only 1.4% this year, compared to 2.2% for the Eurozone and 2.8% for the US. Nevertheless, an interest rate rise in August now looks to be on the cards.
Retail sales recovered in May with the highest growth in four years. With two bank holidays and finer weather, like-for-like retail sales grew 2.8% year-on-year from a fall of 4.2% in April. However, the British Retail Consortium warned that the environment remains extremely challenging by historic standards and this was evidenced by House of Fraser announcing the closure of 31 stores and Poundworld appointing administrators.
Trading on the London Stock Exchange was delayed by an hour last Thursday due to a technical issue; the first major outage of its kind in seven years. On Friday, European markets experienced a broad sell-off as investors were spooked by the prospect of a tightening of financial conditions and political risk, resulting in the FTSE 100 Index falling for a third straight week. Yet the main index is currently only 2% lower than its all-time high and the FTSE 250 Index is reaching new highs.
