UK out of recession and back to stagnation

21 mins read

May 10, 2024 8:04 am CET

Good Friday morning. This is Stefan Boscia.

DRIVING THE DAY

TAKE YOUR WINS WHERE YOU CAN: Rishi Sunak and Jeremy Hunt will be on a victory lap this morning responding to the breaking news that Britain is no longer in a technical recession. The ONS announced just minutes ago that U.K. GDP grew by 0.6 percent in the first quarter of 2024, after two quarterly contractions. There’s good news for the economy and Keir Starmer is still facing spurts of criticism for letting Natalie Elphicke join Labour. Could this actually be a positive day for Sunak? Maybe — but there’s still plenty of time for it all to go balls up.

Morning media blitz: The prime minister will be at a PM Connect event in Oxfordshire, where he’ll speak to workers at a local factory. Sunak’s intro remarks will be pooled and he’ll then sit down for one-on-one interviews with TV economics editors. The chancellor, meanwhile, is about to start his morning media round to react to the GDP figures. He will be on Sky News at 7.35 a.m. and gets the coveted 8.10 a.m. Today slot.

There will be plenty of this: Expect to hear the pair constantly repeat that “the plan is working” and that the U.K. has “turned a corner” as they take credit for Britain’s improving economic indicators. It’s probably worth remembering that the overall economic picture is still quite dire for the U.K., as it is for most G7 countries, and the OECD expects very little growth over the next 18 months.

Labour’s response: Shadow Chancellor Rachel Reeves will return serve with a pooled clip, which is expected at around 9 a.m. Reeves is likely to repeat her recent claim that Sunak is “gaslighting” people. A Labour official tells Playbook the PM’s recent claims that the economy has “turned a corner” is “another reminder of how out of touch they are.”

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THE OLD ENEMY: Now Sunak will just be hoping the Bank of England starts to bring down interest rates soon, after it kept them on hold at 5.25 percent on Thursday. Former BoE Chief Economist Andy Haldane told the BBC’s Newscast he would have already voted to slash rates and warned the central bank risks being “six months too late.” It’s a view that would elicit a “hear, hear, hear” from many of Sunak’s MPs.

Can’t please some people: But we won’t be hearing that Tory grunt of approval from the chancellor. The Telegraph and Express splash on Hunt’s surprising calls for caution about the prospect of summer rate cuts. Bank of England Governor Andrew Bailey has hinted cuts could start in June, but Hunt is wary of rates being slashed too quickly,forcing inflation back up again. “What we want is sustainably low interest rates,” he said.

Nah, just do it: The Mail’s leader column, an indicator of mainstream Conservative Party opinion, had a very different view. The paper said the decision by the Bank’s monetary policy committee on Thursday to keep rates on hold was a “blow not only to families struggling with soaring mortgages, but also businesses which must borrow to grow.”

AWKWARD TIMING: One way Britain is trying to boost economic growth is by finding new streams of foreign investment in the Middle East — particularly Saudi Arabia. This will include a massive trade mission to Riyadh next week, which will be led by deputy PM Oliver Dowden and Investment Minister Dominic Johnson. However, the timing is awks. POLITICO trade reporter Sophie Inge points out the trip comes just days after new allegations that Saudi Arabia is allowing people to be killed as a part of land clearing exercises.

Wait, what? Ex-intelligence officer Rabih Alenezi told the BBC he was instructed to evict villagers standing in the way of the country’s efforts to create a new city and that one protester was killed. (The Saudi government and Neom management refused the BBC’s request for comment.) NGOs and campaigners told Sophie the trade mission should be called off in light of the allegations. Amnesty International said Dowden “must push for an independent investigation” into the killing of the protester. Read POLITICO’s full story here.

Take our money: Two of the City’s largest firms are putting pressure on the government to scrap proposals to clamp down on Chinese businesses. Bloomberg’s Alex Wickham, Katherine Griffiths and Harry Wilson report HSBC and Standard Chartered are lobbying ministers not to label China a threat under supposedly more transparent national security legislation. The designation would force many Chinese companies in Britain to adhere to strict reporting and registration rules.

DOWN IN DOVER

STARMER GOES CLIFF WALKING: Keir Starmer will make use of today’s warm(ish) weather to visit Labour’s newest seaside constituency and outline his plan to stop small boat crossings. Starmer will vow to create a “hostile territory” for people smugglers by sicking a team of assorted spooks and coppers on their tail. He will also give a cast-iron guarantee to scrap the Rwanda scheme during the major set-piece speech in Dover. The announcement makes the front page of the Guardian and the Telegraph.

Got a new plan, Stan: Starmer says he will save £75 million in the first year of a Labour government by scrapping the Rwanda scheme and will instead use that cash to hire new specialist enforcement officers, investigators and intelligence agents as a part of a new “Border Security Command.” They will also create a “fast-track returns and enforcement unit,” filled with new Home Office caseworkers, to cut the asylum backlog.

More details: The plan would see the new border unit work across the U.K. and Europe in conjunction with MI5, Border Force, the National Crime Agency and several other bodies. Starmer will use the speech to hit out at the government for prioritizing “performative symbols” over “hard graft.” “We have to clear the backlog,” Starmer will say. “That is the path — the only path — to real deterrence. We have to restore integrity and rules to our asylum system.”

Closer to EU: The Times’ Matt Dathan revealed that Labour would also try to join the EU’s fingerprinting system if it wins the election. Labour officials say that joining Eurodac would help remove failed asylum seekers faster and go further than the U.K.’s recently signed deal with European border agency Frontex. Home Office officials dispute this claim.

Doing the rounds: Shadow Home Secretary Yvette Cooper will be out on the morning broadcast round to talk up the plan, which will include appearances on Today at 7.30 a.m. and Sky News at 8.30 a.m. Her opposite number James Cleverly said on Thursday night that Labour’s plan amounted to “an amnesty for illegal immigrants” and that it would not work without the Rwanda deterrent.

Endorsement list: The U.K.’s former borders watchdog David Neal, who was recently sacked, told the Guardian’s Jessica Elgot and Rajeev Syal that he backed Starmer’s plan. The U.K.’s former counter-terror police chief Neil Basu also supports the proposals, writing in the Telegraph that “there is no evidence whatsoever that the Rwanda scheme will stop the gangs.” It should be noted Basu advised Labour on the proposals — does he fancy his chances of heading up the Border Security Command if Starmer makes it to Downing Street?

HAPPY LABOUR FAMILY: It is expectedTory defector Natalie Elphicke will join Starmer for the announcement — it is after all her pet topic, and it’s in her constituency. However, Playbook could not get confirmation of this on Thursday night, after two days of internal Labour backlash at the decision to let a staunch right-winger join the party. A No. 10 aide said they were “licking their lips” at the potential photo opp of Starmer and Elphicke together in Dover.

Lettuce agree on that: Shadow Health Secretary Wes Streeting defended Starmer’s decision to accept Elphicke and said he had spoken to other Tory MPs about defecting to Labour. However, he told the Indy’s David Maddox that he would not accept every Tory MP who came knocking. “If Liz Truss were to want to cross the floor, and I don’t imagine she would, I would rather take the lettuce,” he said.

Don’t let her near it: Deputy Labour Leader Angela Rayner, meanwhile, has been busy assuring Labour MPs that Elphicke will not be given a “formal role” on housing policy, according to the Telegraph’s Ben Riley-Smith. Elphicke said one reason she quit the Tories was because they didn’t meet their housing targets, leading to speculation she would have an advisory role on the policy area.

Now read this: The Times’ Pat Maguire has some great insight into Starmer’s reasoning behind Elphicke’s defection to Labour. He writes that Starmer is laser-focused on showing natural Tories they are safe with his Labour Party and now has a mantra for this sort of stuff: “Forget what makes MPs uncomfortable. Be The Voter.”

And this: However, columnist and sexual harassment campaigner Kate Maltby says Starmer should take concerns about Elphicke more seriously. She writes in the i that his attempts to take the moral high ground on parliamentary standards are in tatters, after accepting Elphicke into the party. The MP was forced to apologize on Thursday for previously saying sexual misconduct allegations against her ex-husband were “false.”

TODAY IN WESTMINSTER

GO BACK TO SCHOOL: Truancy in schools is up by one-fifth on Fridays, according to Education Secretary Gillian Keegan. She wrote in today’s Times that it was her “top priority” to boost attendance as new figures will today show absenteeism is higher than pre-Covid. Her comments splash the Times.

AT BURSTING POINT: The Guardian’s Vikram Dodd and Rajeev Syal report that the government will try to ease prison overcrowding by using police cells to house inmates. The policy is being called Operation Safeguard and a government spokesperson said it was “not an unprecedented measure.”

SCOOP — MINISTER DEFIES GOVERNMENT: Health Minister Andrea Leadsom is opposing government proposals to water down bans on MPs facing sexual misconduct allegations from parliament. She told POLITICO’s Rosa Prince: “I am concerned that the motion coming before the House today is more than fair to the accused, however does nothing to protect the alleged victim.”

Looking back: Leadsom said when she was leader of the Commons, “we had envisaged a sort of ‘parliamentary ASBO,’ that would apply for the duration of the independent investigation … this would enable them to serve their constituents in parliament and keep the alleged victim safe —this was fair for both the accuser and the accused.”

NOT WORTH THE SAVINGS: The Ministry of Defence discount service has withdrawn its offering of promo codes for Temu, after reports the mega-cheap e-commerce site has links to the Chinese state and “specialises in data theft.” The Sun’s Martina Bet has the story.

NO CHANTS ALLOWED: A government-commissioned review by crossbench peer John Woodcock will say protest buffer zones should be introduced near defense manufacturing and energy sites, the Financial Times’ Lucy Fisher and Sylvia Pfeifer report. The former Labour MP told the paper “our national security depends on a viable defence sector” and that “exposure to criminal sabotage is causing enormous damage.”

ONE LAST JOB: POLITICO’s Andrew McDonald has a profile piece out on new Scottish First Minister John Swinney — a man who has been dragged back from the verge of retirement to lead an SNP in crisis. Read that one here.

CANDIDATE CORNER: Former Chair of the Palestine Solidarity Campaign Kamel Hawwash will stand as a Reliance Party candidate in Birmingham Selly Oak, challenging Labour Friends of Israel Chair Steve McCabe. The Independent’s Archie Mitchell has the story here.

SLAPP THAT: Nadhim Zahawi’s lawyer is at risk of being sanctioned for trying to stop public criticism of the Tory MP, the FT’s Anna Gross and Jim Pickard write. The lawyer has been referred to a tribunal for his attempts to stop tax expert Dan Neidle releasing details of a row between the pair through a strategic lawsuit against public participation (aka a SLAPP).

INFO ON DISINFO: UnHerd’s Archie Earle has found out that the British government no longer funds the Global Disinformation Index. Earle has got hold of a letter from Foreign Secretary David Cameron confirming the move. Cameron maintained the Foreign Office would still commit to opposing disinformation.

WESTMINSTER INSIDER: POLITICO’S Aggie Chambre has a new Westminster Insider podcast out on how to run a successful party leadership campaign — just for those Tories still dreaming of ousting Sunak. Interviewees for the pod include former Deputy PM Michael Heseltine, ex-Cabinet Minister Nadine Dorries and Liz Truss’ ex-director of political comms Adam Jones.

Punch drunk: Jones takes us inside Liz Truss’ “fizz with Liz” soirees and spoke about when she tried to emulate Maggie Thatcher by taking a picture in a tank. He also spoke about her difficulties in pivoting from the leadership campaign to actually being prime minister. “She became increasingly confident as the hustings went on in terms of her performance,” he told the podcast. “She got slightly punch drunk on, sort of, love from Tory members.”

TIME’S UP, JOHNNY: Veterans Minister Johnny Mercer today must hand in his application to withhold information from an inquiry on alleged war crimes. The MP is refusing to name those who gave him information about allegations of extrajudicial killings by the British special forces. Playbook’s own Sam Blewett wrote a handy explainer of the whole story just a few days ago.

WAYVE OF THE FUTURE: POLITICO’S tech reporter Tom Bristow goes into the backroom lobbying efforts by self-driving carmaker Wayve — the recent recipient of Europe’s largest-ever AI funding deal. The firm, which just raised $1 billion from its backers, ran a successful lobbying effort to get self-driving laws on the U.K. statute book. Read the piece here.

HOUSE OF COMMONS: Not sitting.

HOUSE OF LORDS: Sits from 10 a.m. with the third reading of the Employment and Trade Union Rights (Dismissal and Re-engagement) Bill (led by Labour peer Anthony Woody) … the third reading of the Alternative Investment Fund Designation Bill (led by Conservative peer Rosalind Altmann) … the third reading of the Artificial Intelligence (Regulation) Bill (led by Conservative peer Christopher Holmes) … the second reading of the Pet Abduction Bill (led by Conservative peer Guy Black) … the second reading of the Building Societies Act 1986 (Amendment) Bill (led by Labour peer Roy Kennedy) … the second reading of the Zoological Society of London (leases) Bill (led by Conservative peer Alexander Randall) … and the second reading of the Commercial Organizations and Public Authorities Duty (Human Rights and Environment) Bill (led by Crossbench peer Margaret Young).

BEYOND THE M25

INDY REF RULES: New SNP Leader and Scottish First Minister John Swinney has said that winning a majority at the general election is still the mandate for another independence referendum, the BBC reports.

NOT WHILE WE’RE EATING: Liberal Democrat Leader Ed Davey has convened a “sewage summit” with council leaders across the U.K. in a bid to tackle spills across the country.

EUROVISION INTERRUPTED: Israel’s contestant Eden Golan made it through to the final of the Eurovision Song Contest amid a backdrop of protests in the host city of Malmö, Sweden, which forced Golan to stay confined to her hotel room when not performing.

RAFAH CONCERNS GROW: Reuters reports that Israel bombarded parts of Rafah this morning after cease-fire talks with Hamas ended with no deal. “If we must, we shall fight with our fingernails,” Israeli Prime Minister Benjamin Netanyahu said. “But we have much more than our fingernails.” The U.N. has said over 80,000 people have fled Rafah since Monday.

TRUMP ON TRIAL: The former president’s defense attorney Susan Necheles questioned Stormy Daniels on whether she sought publicity in an effort to profit from her story of having sex with Donald Trump, my POLITICO Nightly newsletter colleagues report. “No one would ever want to publicly say that,” Daniels said. “I wanted to defend myself.”

Still gagged: A new bid by Trump to be partially released from the gag order in the hush money case fell flat Thursday.

**A message from TikTok: Yesterday, TikTok started to automatically label AI-generated content (AIGC) when it's uploaded from certain other platforms. To do this, we've partnered with the Coalition for Content Provenance and Authenticity (C2PA) and become the first video sharing platform to implement their "Content Credentials" technology. Content Credentials attach "metadata" to content, which we can use to instantly recognise and label AIGC. We already label AIGC made with TikTok AI effects, and have required creators to label realistic AIGC for over a year. We also built a first-of-its-kind tool to make this easy for them to do. In February, we were a founding signatory to the cross-industry Tech Accord to Combat Deceptive Use of AI in 2024 Elections at the Munich Security Conference. We'll also be launching videos to raise awareness around the potential for misleading AI and explain how labels can help, which we developed in consultation with WITNESS.**

MEDIA ROUND

Chancellor Jeremy Hunt broadcast round: Sky News (7.35 a.m.) … LBC (7.50 a.m.) … Today (8.10 a.m.) … GMB (8.35 a.m.) … Times Radio (8.45 a.m.).

Shadow Home Secretary Yvette Cooper broadcast round: GMB (6.45 a.m) … 5 Live (7.05 a.m.) … Today (7.30 a.m.) … Times Radio (7.50 a.m.) … GB News (8.05 a.m.) … Sky News (8.30 a.m.) … LBC (8.50 a.m.).

Also on the Today program: ONS Director of Economic Statistics Liz McKeown (7.09 a.m.).

Also on Nick Ferrari at Breakfast: Former U.K. Independent Chief Inspector of Borders and Immigration John Vine (7.05 a.m.) … Exiled Crown Prince of Iran Reza Pahlavi (8.20 a.m.).

Also on Times Radio Breakfast: Former Conservative Education Secretary Nicky Morgan and former First Minister of Scotland Jack McConnell (9 a.m.).

Also on LBC News: Liberal Democrat MP Sarah Olney (7.40 a.m.) … Liz McKeown (7.50 a.m.).

TODAY’S FRONT PAGES

POLITICO UK: UK woos Saudi cash as ‘lethal force’ row engulfs Neom mega-city.

Daily Express: Who’ll win the tug of war over interest rates?

Daily Mail: Worst whooping cough outbreak outbreak in forty years.

Daily Mirror: Whooping cough warning.

Daily Star: We want to see big pictures of Uranus.

Financial Times: Anglo’s investors in South Africa open to sweetened takeover offer.

i: Boris and I saved thousands from Covid — but we won’t talk again.

Metro: Five babies die as cough bug strikes.

The Daily Telegraph: Hunt urges banks not to rush rate cuts.

The Guardian: ‘Fear and trepidation’ as 100,000 people flee Rafah bombardment.

The Independent: More Tory MPs want to defect says Labour as panic grips party.

The Times: Truancy up by a fifth on Fridays.

TODAY’S NEWS MAG

The Economist: What companies can expect if Labour wins Britain’s election.

THANK POD IT’S FRIDAY

Westminster Insider: Aggie Chambre talks us through how to prepare a secret Conservative leadership campaign.

Power Play: The former Speaker of the U.S. House of Representatives, Kevin McCarthy, says Vladimir Putin’s war in Ukraine is similar to Hitler’s aggression in the 1930s.

EU Confidential: This week on EU Confidential, the team explores who votes for the European far right — and why.

Plus 6 of the other best political podcasts to listen to this weekend:

Lord Speaker’s Corner: Lord Speaker John McFall interviews crossbench peer and former Independent Reviewer of Terrorism Legislation David Anderson about terrorists, corruption, and how his father predicted a great acting career for Tony Blair.

Women with Balls: The Spectator’s Katy Balls speaks with Scottish Conservative MP Lisa Cameron, who speaks about the need for increased investment into mental health provision, her defection from the SNP, and why Scottish independence is a failed experiment.

The Rest is Money: Minister of State for Investment Dominic Johnson speaks to host Robert Peston about Brexit’s impact on the economy.

The Political Party: Conservative MP Tim Loughton discusses his deportation from Djibouti with host Matt Forde.

Leading: Rest is Politics hosts Rory Stewart and Alastair Campbell are joined by former U.S. House Speaker Nancy Pelosi.

Inside Whitehall: Hosts Jonathan Gullis and James Starkie are joined by former leader of Stoke on Trent City Council Abi Brown.

**It’s the final countdown to POLITICO’s Energy & Climate UK Summit on May 16. Check out the exciting program, meet the speakers and register for online attendance – all now on the summit’s website. See you next week!**

LONDON CALLING

WESTMINSTER WEATHER: The House of Commons is empty because everyone is off enjoying the heat, or something like that. You could cope with highs of 24C, lows of 11C with an iced beverage …

But you’ll have to wait: Iced coffees arrive in PCH in the first week of June, Bethany was told (whilst sipping sweltering coffee). The countdown begins.

FORGET YOUR FRIDAY PLANS: QPR’s Loftus Road Stadium will host a massive clash tonight as the men’s lobby football team celebrates its 50th birthday. An all-star team of current and ex-MPs will be led by the likes of Ed Balls, David Miliband, Sadiq Khan and Andy Burnham. The lobby will be represented by a host of past greats like Paddy Hennessy, George Pascoe-Watson and James Slack, along with current lobby journos like George Parker.

Spotted … at the U.S. Ambassador’s Regents Park residence Winfield House for a private jazz gig by trumpeter Wynton Marsalis: U.S. Ambassador Jane Hartley … Conservative peer Ed Vaizey …Sky’s Mhari Aurora and her trumpeter husband Jay Phelps, who performed with Marsalis and teenager Wren Clark … Journalists Emily Maitlis, Jon Sopel, Tania Bryer, Lydia Slater and Antonello Guerrera …Sky News executive David Rhodes … The Gates Foundation’s Joe Cerrell … Marsalis’ violinist wife Nicola Benedetti … Double bassist Chi-Chi Nwanoku … theater producer Nick Allott … actress Bianca Jagger … River Cafe owner Ruth Rogers … Sauce entrepreneur Levi Roots … and the U.S. Embassy’s Cynthia R Harvey, Sarah-Jane Mayhew, Ryan Maskell, Matthew Palmer, Lucy Tomlinson, Pam de Volder, Rodney Ford, Sam Salk and Kelly DuBois.

Spotted … at Royal Holloway’s alumni drinks in parliament … SpAd Alice Hopkin … Shearwater Global’s Sarah-Jane Sewell … parliamentary staffers Lydia Castellano, Lewis Virgo, Dan Atherton, Josh Funnell and Max Darby … Total Politics’ Jordan Eagle … incoming Coalition for Global Prosperity communications manager Sophie Malby … HoC’s George Wright … MODs Herbie Tylesdale … CCHQ’s Charles O’Hanlon … journalist Simone Hanna … former Labour Friends of Israel Events Officer Tom Webster … Head of Parliamentary Support to Opposition Whips Hanna Gunnerhed Burt … Malaria No More’s Lydia Paynter … Local government adviser Kofi Frimpong.

TRANSATLANTIC SCHMOOZING: A delegation of Democrat strategists and advisers rubbed shoulders with some of Labour’s most promising parliamentary candidates on Thursday night as part of an initiative by the Progressive Policy Institute. Anneliese Dodds took a shot at Donald Trump during a dinner organised by the PPI’s Claire Ainsley as the Labour chair talked about “big — or should I say bigly — chaos” in the Republican Party.

BUZZ OFF: Chaos hit Strangers last night — and this time it wasn’t the fault of elected officials. Sky’s Darren McCaffrey texts in to say swarms of flies hounded the crowds of politicos trying to enjoy the sunshine, with deodorant cans produced as weapons and hands wafted until MPs, staffers and hacks gave up and went inside.

CROSSING THE FLOOR: The Sun’s Joe Davies has left his role as the Sun’s health reporter to work as Shadow Health Secretary Wes Streeting’s press officer.

ANOTHER STRING TO HER BOW: PoliticsHome’s Nadine Batchelor-Hunt has launched an acting career and will star as Mrs Waterbury in a production of “The Railway Children” in Stratford upon Avon later this year, all while remaining a hack.

WRITING PLAYBOOK PM: Emilio Casalicchio.

WRITING PLAYBOOK MONDAY MORNING: Stefan Boscia.

HAPPY BIRTHDAY TO: Tooting MP Rosena Allin-Khan … Commons European scrutiny committee Chairman Bill Cash … Liverpool West Derby MP Ian Byrne … Labour peer Anna Healy … Writer Jon Ronson … speechwriter Abigail Martin.

Celebrating over the weekend: Former Newsnight presenter Jeremy Paxman … Rushcliffe MP Ruth Edwards … High Court Chancellor Julian Flaux … Crossbench peer Narendra Patel … SNP MSP Bob Doris … Political betting expert Mike Smithson … Parliamentary staffer Josephine Amos … Prime Minister Rishi Sunak turns 44 … Tory peer Mark Lancaster … SNP DEFRA Spokesperson at Westminster Patricia Gibson … Former Hartlepool MP Mike Hill … Labour peer Helena Kennedy … Labour peer Tom Sawyer turns 80 … Tory peer and last governor of Hong Kong Chris Patten.

PLAYBOOK COULDN’T HAPPEN WITHOUT: My editors Zoya Sheftalovich and Alex Spence, reporter Bethany Dawson and producer Dato Parulava.

London Playbook