The fate of Boris Johnson in the face of the North Shropshire defeat


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December 18, 2021

Boris Johnson’s former chief of staff uses the symbol of a shopping trolley when he references the British prime minister in his briefings for subscribers on the online platform Substack.

Dominic Cummings uses the motif as a metaphor for Mr Johnson’s character and, in needing a push, susceptibility to manipulation or at least being steered around.

The literary device is all you need to know about Mr Cummings views, and in light of Mr Johnson’s political troubles, it is a slant that has gained currency in recent weeks.

Mr Johnson vowed to bounce back from the latest "political earthquake" as it was described last week, after a 34 per cent swing against the Conservatives in the North Shropshire by-election. The reverse ranked highly in the top 10 of largest by-election setbacks.

Newly elected Liberal Democrat MP Helen Morgan, bursts the "Boris' bubble" held by colleague Tim Farron, as she celebrates in Oswestry, Shropshire, following her victory in the North Shropshire by-election, December 17. PA via AP
Newly elected Liberal Democrat MP Helen Morgan, bursts the "Boris' bubble" held by colleague Tim Farron, as she celebrates in Oswestry, Shropshire, following her victory in the North Shropshire by-election, December 17. PA via AP

Given the party had successfully defended a similar seat two weeks ago, in the Bexley by-election, there is no doubt that the result was driven by the incessant spate of negative headlines exposing scandals and misbehaviour surrounding Mr Johnson.

It also lifted the veil on the danger for the prime minister in rising inflation and the malfunctioning economy in the UK.

Things are going badly wrong in the British economic model. Without a grip on the pressures that ordinary people are facing, there is a narrative that Mr Johnson is unlikely to reverse. Barring a grotesque single revelation, failure could seal his demise.

It is well known Mr Johnson likes to operate with a ring of chaos accompanying his projects.

The idea that his approach is too chaotic is a real danger for his reputation. If that mismanagement is soon seen to be fuelling the rising cost of living, shortages in the shops and a threat to jobs, voters will take the North Shropshire approach and “give him a kicking”.

Perhaps the shopping trolley should be seen through the lens of the goods it would normally carry, not Mr Cummings's extended play on the idea that Mr Johnson is prone to break down.

After the economic stimulus packages that followed the global financial crisis, inflation in the UK rose and, like now, tipped above 5 per cent.

The process saw the collapse of the Labour government to defeat in the 2010 election.

The Bank of England raised interest rates. It will have a big role to play in the future of the prime minister

Mr Johnson’s surprisingly strong election victory in the late 2019 election defied political gravity. It established a platform for political supremacy on the back of his promise to get Brexit done.

Inflation is the biggest single threat to his ambitions because it undermines any dividends that might come with Brexit.

Rising prices expose personal, family and society-wide vulnerabilities. A failure to slow and stop the bout of inflation would feed claims of a broken nation that might have lost control of its own events. This would cut to the heart of Mr Johnson’s manifesto to "take back control". A political collapse would be the logical outcome.

On the same day as the people of North Shropshire voted, the Bank of England raised interest rates. Policymakers took away the idea that inflation was transitory, or a phenomenon that was passing through the system and out the other side.

The increase in the rate was small. The action at a time when Omicron was triggering a renewed shutdown of the economy, and voters were at the polls, was an assertion of its own independence.

The Bank will have a substantial role to play in Mr Johnson’s fate. If it can pull back the inflation rate in good order the arguments about his chaotic style will run out of steam.

If the Bank is only moderately successful, Mr Johnson’s record will be in the crosshairs.

The levelling up agenda that was supposed to shift priorities to marginalised parts of the country is not in sync with a deflationary challenge.

Mr Johnson has turned Conservative orthodoxy on its head. Not only has there been tax increase in response to the pandemic spending, there has also been a welcoming of higher wages as an objective of economic management. Previous governments would have seen that as a dangerous fanning of expectations, which would have fuelled the loss of monetary control.

In government spending itself, Mr Johnson has said he was not a fan of austerity, the very political core of the Conservative government that came to power in 2010.

The voters of North Shropshire signalled that government services were not being improved enough to keep them onside. There was also frustration among farmers and others that post-Brexit trade was not proving a bonanza for them.

The government is likely to try to make more of a show on both those fronts, and push to show it can deliver.

Should these efforts fall short, and the context is a squeeze on living standards as the inflation battle drags on, there will be few options left for the British prime minister.

Even for a man who takes a bulldozer approach to politics those marshes of unhappiness could become too strong to traverse.

Results:

6.30pm: Handicap (Turf) | US$175,000 2,410m | Winner: Bin Battuta, Christophe Soumillon (jockey), Saeed bin Suroor (trainer)

7.05pm: UAE 1000 Guineas Trial Conditions (Dirt) | $100,000 1,400m | Winner: Al Hayette, Fabrice Veron, Ismail Mohammed

7.40pm: Handicap (T) $145,000 1,000m | Winner: Faatinah, Jim Crowley, David Hayes

8.15pm: Dubawi Stakes Group 3 (D) $200,000 1,200m | Winner: Raven’s Corner, Richard Mullen, Satish Seemar

8.50pm: Singspiel Stakes Group 3 (T) $200,000 1,800m | Winner: Dream Castle, Christophe Soumillon, Saeed bin Suroor

9.25pm: Handicap (T) $175,000 1,400m​​​ | Winner: Another Batt, Connor Beasley, George Scott

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Yahya Al Ghassani's bio

Date of birth: April 18, 1998

Playing position: Winger

Clubs: 2015-2017 – Al Ahli Dubai; March-June 2018 – Paris FC; August – Al Wahda

Updated: December 28, 2021, 3:29 PM