“Trump and the Mexican Wall Plan…..”

Trump and the Mexican Wall Plan

On Tuesday President Donald Trump has threatened to bring the US government to the brink of a shutdown if needed in order to put pressure on Congress to fund the border wall that was on the 2016 political agenda. Democratic lawmakers have objected to his plans to construct the wall on the US Mexican Border. Trump called them “obstructionists” and said it was time for the US to crack down on illegal immigration. Trump has asked for $1.6 billion to begin construction of the wall with Congress under pressure to pass some kind of spending bill to keep the government open after 30 September. The funding would add to the deficit while at the same time Republicans are trying to figure out how to pay for tax cuts. There is also the legislation to raise the federal government’s debt limit between late September and mid-October to avoid a default. During his speech Trump also repeated his call for a tax cut. While he provided no details of the legislation he urged congressional Democrats to support it. Most of the Senate Democrats stated that they will refuse to support any tax legislation that provides a tax cut to the highest earners.

Trump and his strategy on Afghanistan

 Late on Monday Trump who has elected in part on his vow to wind down America’s foreign wars has announced an open-ended commitment to fight the war in Afghanistan. His strategy is to add more troops, put pressure on Pakistan and diplomatic outreach to the Taliban. These are tactics his predecessors have used without success to get out of the war. Trump and his advisors are thinking that this strategy will work this time as the government of Afghanistan is losing control of wide areas of the country whilst Islamic State and Taliban forces are on the move. Furthermore no deadlines will be set. As Trump said, “A core pillar of our new strategy is a shift from a time-based approach to one based on conditions.”

UK and Brexit

The government in the UK was expected to publish a series of papers in the past two weeks as demonstration of progress. The documents lay out the government’s position on topics ranging from data protection to judicial cooperation. Five papers were to be published this week starting Monday according to the Department for Exiting the European Union with the rest of the negotiations due to start on 29 August. The EU has been steady on its position that details of the separation must first be sorted out, while the UK insists that it wants to hold trade and divorce talks in tandem. According to Brexit secretary David Davis “Britain is putting forward imaginative and creative solutions to build a deep and special partnership with our closest neighbours and allies.” On Monday Britain was expected to publish papers on “goods on the market” and “confidentiality of documents”.

UK and the Economy

The British economy has struggled to keep its momentum due to factors amongst which are a stagnation of the business sector, no addition in the growth rate from trade and UK consumer spending barely grew in the second quarter. Growth in the first six months of the year was at its worst since 2012. Household expenditure has increased by 0.1 percent which is the weakest since 2014, a sign that support from consumers is diminishing. This reinforces the view that the economy is growing at a slower pace than other recent years. Part of this is attributed to the depreciation of the sterling since the Brexit vote which has boosted inflation and reduced the spending power. Confidence has also been tainted as the deal with the European Union is still unclear. A report from the Office of the National Statistics showed that exports and imports rose 0.7 percent in the second quarter while government spending increased by 0.7 percent as the main driver for growth. Services which is the largest sector of the economy has picked up ending the quarter with the fastest growth in 10 months.

Germany

For the first time since 2011 the German economy is set to exceed 2 percent arising from increased momentum in manufacturing and services according to IHS Markit. The Purchasing Manager’s index for both the manufacturing and services sectors rose to 55.7 in August from 54.7 in July. The economy has expanded 0.6 percent in the second quarter and an upwardly revised 0.7 percent in the previous three months. Private consumption has benefitted from record-low employment and robust orders.

France

Manufacturing in France unexpectedly expanded at the fastest pace since 2011 showing a recovery in europe’s largest economy. A Purchasing Manager’s Index for the industry rose from 54.9 in July to 55.8 in August according to IHS Markit. The French economy is enjoying the strongest continuous expansion since 2011 after the election, where Emanuel Macron was elected as president, has bolstered sentiment.

EURO – Area Factors and the Economy

‘Made in the Euro Area’ goods are in high demand positively impacting the economy and creating jobs with the growth in prices accelerating. According to IHS Markit a Purchasing Managers’ index for manufacturing rose to 57.4 in August from 56.6 in July. The momentum for services has unexpectedly cooled down to a seven-month low. The economy of the 19 nation states has gathered momentum as more nations joined in the recovery with unemployment steadily declining and business confidence at its highest. Although below the European Central Bank target inflation will eventually pick up. IHS Markit added that export orders are surging at the fastest pace in more than six years however, services have grown at the slowest pace since January. In September policy makers shall start a discussion about the future path of monetary stimulus as new projections will be published. Mario Draghi the president of the ECB gave his first speech after the summer break in Germany on Wednesday before going to the Federal Reserve annual symposium in Jackson Hole, Wyoming.

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