Overseas Headlines- July 26, 2019

Date: July 26, 2019

United States:

U.S. Growth Slows to 2.1% as Trade Tensions Weigh on Businesses

“U.S. economic growth slowed in the second quarter by less than forecast as consumer spending topped estimates, though weaker business investment and exports underscored the risks spurring the Federal Reserve toward an interest-rate cut next week.  Gross domestic product expanded at a 2.1% percent annualized rate, according to Commerce Department data Friday that topped forecasts for 1.8%. That follows an unrevised 3.1% advance in first quarter and updated data showing growth last year was slower than previously reported. Consumer spending, the biggest part of the economy, increased 4.3%, while government spending climbed 5% and offered the biggest boost in a decade. Nonresidential investment fell 0.6% for the first drop since 2015 and residential decreased for a sixth straight period. The mixed report highlights how President Donald Trump — who’s repeatedly called for lower interest rates — is enjoying signs of a solid economy while his trade war with China weighs on the expansion and fuels uncertainty for global businesses. Revised data released Friday showed the economy missed Trump’s 3% growth goal in 2018, after previous data had showed it matching. Friday’s report showed fresh evidence that trade is weighing on the expansion as exports dropped 5.2% while imports rose just 0.1%. Overall growth on a year-over-year basis slowed to 2.3%, the weakest pace in two years.”




Vote Corbyn, Stop Brexit: How Labour Plans to Take On Johnson

“Top officials in Britain’s main opposition Labour Party are preparing a dramatic policy to campaign to reverse the 2016 Brexit vote and keep the U.K. inside the European Union, if a snap election is held in the months ahead. Labour’s manifesto for an election is being drafted already and is likely to promise another referendum on EU membership with the party campaigning for remain, people familiar with the matter said. The party plans a summer-long campaign against new Prime Minister Boris Johnson to capitalize on public fears over the impact the no-deal Brexit he’s threatening would have on jobs and state-run services such as health care. While it’s yet to be agreed by Labour’s ruling authorities, the pledge to remain would be rolled out if Johnson is forced into an emergency poll because he can’t get his Brexit plan through a deadlocked Parliament, said the people, who asked not to be named discussing confidential matters. Turning Labour into the anti-Brexit party would complete the polarization of U.K. politics and the fact it is on the cards highlights how unstable Britain’s political situation is. The prospect of an election — and then a second Brexit referendum — leaves businesses facing many more months or even years of uncertainty. Three years after the U.K. narrowly voted to leave the EU in a referendum, the country is no closer to reaching a negotiated divorce settlement that’s acceptable to both its own Parliament and the bloc. As time runs out before the Oct. 31 deadline for exiting the bloc, Johnson is hardening the government’s position and putting the country on a war footing for a no-deal rupture. The new prime minister has packed his cabinet and top team with leading pro-Brexit campaigners and fired moderate ministers who oppose leaving the bloc without an agreement, because they fear the economic damage that would follow. Yet with a majority in Parliament of just two, Johnson faces a huge battle to get any exit strategy he puts forward through a vote in the House of Commons. His predecessor Theresa May tried and failed three times to get her deal passed and was ultimately forced to resign.”




Hong Kong Protests Become a Global Problem

“Tensions between Hong Kong and the government in Beijing are increasingly spilling outside China’s borders. China’s foreign ministry this week accused the U.S. of being a “black hand” behind protests that have rocked Hong Kong since early June, while Secretary of State Michael Pompeo urged Beijing to “do the right thing.” An encounter at an Australian university between supporters and critics of the Hong Kong demonstrators ended with punches being thrown. With no end to the protests in sight — hundreds of people staged a sit-in at Asia’s busiest airport Friday — the dispute over Hong Kong’s future risks dragging in parties from all over the world. That could include diplomats, tourists, universities and multinational businesses caught up in the territory’s tinderbox political climate. For the Trump administration and the Communist Party in Beijing, the issue has become one of many flash points ranging from trade to technological dominance to corporate espionage. The debate over Hong Kong is getting more heated, just as U.S. negotiators prepare to restart trade talks next week in Shanghai. There are “signs of foreign forces behind the protests,” Foreign Ministry spokeswoman Hua Chunying told reporters Tuesday in Beijing. “I wonder if these U.S. officials can truthfully answer to the world the role the U.S. has played in recent events in Hong Kong.” ”



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