BM Political Highlights

Top 3 Political Stories This Month

1. The battle for leadership of the Conservative party and of the country is proving to be a bitter affair but Truss will emerge victorious
2. Mario Draghi has resigned, leaving the goal wide open for the far-right Giorgia Meloni to take up the gauntlet
3. Joe Biden has finally found his footing and policy direction – and just in time for the Midterms

BlondeMoney View

1. It was once the Labour Party that held the reputation of a party divided, fraught with infighting and toxicity; now that reputation seems more befitting of the Conservatives. Liz Truss and Rishi Sunak, the final two candidates for leader, are battling it out in a playing field that seems to have no rules. Direct personal attacks, constant policy criticism and some damaging leaks: you’d be forgiven for assuming the two come from entirely different parties. Rishi Sunak believes that help for energy bills should include cutting VAT amongst the potential for handouts, Liz Truss nothing more than suspending green levies. Tax cuts after inflation is “gripped” cries the former, immediate tax cuts shouts the latter. Criticism has focused on the candidates’ tendencies to focus on populist rhetoric and culture war topics rather than the urgent need to react to the cost of living crisis. The UK is currently in an unstable and precarious position which will undermine GBP until the candidate we expect to win, Liz Truss, steers a clearer path ahead. She will have difficult economic times ahead but she will at least have a 71 seat working majority and have vanquished her internal opponent.
2. The UK is not the only country facing an imminent leadership change: Italy’s Mario Draghi resigned on July 21st following a period of political backstabbing from within his broad-ranging coalition. He decided he could no longer govern without the support of all parties within the coalition and, after failing to secure such unanimous support in the confidence vote, the next phase of Italian politics was set in motion. Polls have been predicting a right-wing government for a considerable length of time. Italians go to the ballot box on the 25th September, but without a viable left-wing coalition since Carlo Calenda’s bemusing decision to extract himself from such an alliance. Calenda leads the Action party and had been courted by the centre-left Democratic Party (PD), but decided to back out of a deal after the PD also tried to join up with more left-wing parties. While the centre-left is in disarray, the right is united, leaving the future of governance with Fratelli d’Italia’s Giorgia Meloni as Prime Minister alongside Silvio Berlusconi’s Forza italia and Matteo Salvini’s La Lega. Eurosceptic, nationalistic and populist, Italy’s next government will undermine the reliable and respectable reputation Mario Draghi’s premiership briefly provided. Italian bonds should come under more pressure.
3. Joe Biden has, after a painful eternity, finally managed to pass a bill that he can claim is a genuine breakthrough. The Inflation Reduction Act includes a 15% minimum corporate tax rate for companies earning over $1 billion and $430 billion of spending to reduce carbon emissions and lower costs of health insurance and insulin. What is most notable is that Joe Manchin, the Democrat notoriously resistant to the Biden administration’s and wider Democrats’ policy vision, has played a key role in the negotiations and stood by Biden’s side at the signing of the bill, guaranteeing Americans help in the tough economic situation ahead. Meanwhile, ex-President Donald Trump’s Mar-A-Lago home was raided by the FBI on August 8th due to the retention of classified documents. The process has stirred up anger amongst Trump supporters, who claim that the raid was politically motivated and even that the FBI should be defunded. Whilst inflation remains high and Trump’s hold on American politics remains steadfast – as Liz Cheney’s loss of her Wyoming congressional seat demonstrates – evidence of having a genuine impact in power will be a boost for the Democrats as the midterms approach.

BlondeMoney Probabilities

1. UK Prime Minister: Labour still leads against the Conservatives by roughly 8 points in the polls and, although Liz Truss is currently polling well against Keir Starmer, her honeymoon won’t last long with the cost of living crisis set to intensify over the winter.
2. Midterm Elections: Biden’s net approval rating has begun to improve, reversing the long downward trend he had been on. The recent success in passing the Inflation Reduction Act will be a much-needed boost for the Democrats, whose previously disillusioned supporters may now turn out in the hope that the Biden Administration might be able to have a positive impact after all. A win for the Democrats remains unlikely given the economic hill to climb but a clean sweep for the Republicans will also prove a challenge.