Political Fragmentation and Polarisation in France Could Frustrate Pursuit of Economic Reform

President Emmanuel Macron’s re-election prospects in the 2022 ballot remain strong. According to opinion surveys (from 1 March), he had a comfortable lead and is likely to secure a second mandate regardless of which candidate runs against him in a second round. Also helping his chances are pro-Russian sympathies of some far-right and far-left presidential candidates, which could easily cost them politically amid a context of the Russian invasion of the Ukraine.

But a scenario in which the incoming president has to contend with lower parliamentary support for his/her political agenda has become more likely as political fragmentation in the National Assembly has reached an elevated stage, while polarisation, reflected in rise of extreme political forces, has increased. This could constrain the next administration’s ability to deliver on structural reform and address outstanding credit challenges (France is rated by Scope AA/Stable).

France elections 2022: Potential political configuration and expected impact on reform momentum

Source: Scope Ratings GmbH.

High levels of political fragmentation

With nine different political groups, the National Assembly has reached some of its highest levels of political fragmentation in the history of the Fifth Republic. But while politics have become more polarised, tail risks related to major policy shifts have been reduced since gradual moderation of far-right and far-left positioning with regard to ‘Frexit’, which none of the major candidates today support, despite Eurosceptic inclinations.

France’s mainstream parties on the right and left were diminished by the launch of President Macron’s party at time of 2017 general elections but the initial dynamic behind Macron and his party has weakened over the run of his presidential term. These factors have increased the risk of the next French President having to form alliances or a coalition in response to a weaker standing in the National Assembly or ending up with an antagonistic National Assembly and governing only via co-habitation.

Broad similarities between the centre-right and mainstream right agendas

Although the centre-right and mainstream right agendas diverge in some areas, there are broad similarities, such as a deep attachment with pro-European policies, ambitious reform plans to support business-friendly conditions and pursuing a modernised but relatively significant social policy agenda. The moderate tone of their proposals in comparison with that of other extreme candidates could render the impact on reform momentum somewhat similar and increase their ability to secure political alliances.

Our view is that more moderate candidates are the most likely to either secure a standalone majority in the National Assembly or maintain a minimum level of reform momentum thanks to presumed abilities to build alliances with other political forces.

Download the report here.

Thomas Gillet is an Associate Director in Sovereign and Public Sector ratings at Scope Ratings GmbH. Thibault Vasse, Senior Analyst at Scope Ratings, contributed to writing this commentary.


Germany’s New Multi-party Government to Raise Investment but Maintain Fiscal Discipline

Without such reform, the government will find it difficult to fill a large public sector investment gap, which we estimate of around EUR 410bn, and maintain the long-run growth potential of Europe’s biggest economy.

Germany’s new government will place a stronger emphasis on increasing public and private sector investment to boost growth and meet environmental targets. Much rides on close collaboration between ministries controlled by the two smaller coalition partners, as well as the federal states, which have significant budgetary responsibilities.

Exploiting the available flexibility in fiscal spending rules is unlikely to be enough

Led by chancellor-in-waiting Olaf Scholz (Social Democratic Party, SPD), the coalition parties have agreed that Christian Lindner (Free Democratic Party, FDP) will be finance minister, with Robert Habeck (Greens) in charge of a new super-ministry responsible for economic affairs, energy and climate change. A new ministry for construction is also planned with a goal of increasing the housing stock 400,000 units per year.

Close collaboration between Lindner’s and Habeck’s ministries will prove crucial given the coalition’s commitment to fiscal discipline. However, to finance priorities outlined in the draft coalition agreement, exploiting the available flexibility in fiscal spending is unlikely to be enough.

Germany’s debt brake, which limits the central government’s structural deficit to 0.35% of GDP a year, allows for some budgetary flexibility. The deficit limit compares with pre-crisis structural surpluses in Germany since 2012, which the IMF estimates to have averaged just over 1% of potential output in the years before the Covid-19 pandemic.

Additional public sector investment could come through changes in how the debt brake is calculated, use of special purpose investment vehicles and/or a bigger role for the federal development bank, KfW. Recent tax estimates also indicate strong government tax revenue, providing more financial room for the new coalition than previously expected.

FDP commitment to fiscal discipline leaves much hinging on private-sector investment

However, with the FDP in charge of the finance ministry, much of the required extra investment will depend on policy changes to create the right incentives for the private sector, notably given SPD and Greens spending priorities: no cuts to pensions, a higher minimum wage of EUR 12/hour, an accelerated phasing out of coal production by 2030 and increased investment in renewables.

Latest economic data point to the urgency of reform. The German economy has grown more slowly than expected in the second half of 2021 due to supply-chain disruptions and a new wave of Covid-19 cases. Scope has lowered its projection for economic growth in 2021 to around 2.4%, while we expect 4.4% growth in 2022 before moderation towards a medium-term growth potential of around 1.1%.

With public sector investment likely remaining constrained, constructive policy reform will be essential to incentivising growth in private sector investments, particularly in digitisation and the environment, the latter if only to meet the government’s ambitious carbon-reduction targets.

Fundamental reform of Stability and Growth Pact less likely with Lindner as Finance Minister

The fiscal orthodoxy that Berlin is set to pursue will also hold ramifications at the European level amid pressure to loosen EU rules on budget deficits and borrowing. A finance ministry led by Mr Lindner will make fundamental reform of the European Union’s Stability and Growth Pact less likely.

For a look at all of today’s economic events, check out our economic calendar.

Eiko Sievert is a Director in Sovereign and Public Sector ratings at Scope Ratings GmbH.


Bulgaria: Breaking the Political Deadlock, Reforms Vital for Credit Outlook

The newly created anti-graft group ‘We Continue the Change’ (PP) is in the lead as final ballots are counted. The party’s victory could end the political deadlock after two rounds of inconclusive elections earlier this year. The election result reflects discontent with former Prime Minister Boyko Borisov’s GERB.

The challenge for Bulgarian lawmakers, in a government which looks likely to be led by PP, will be leading the country out of current dual political and pandemic crises.

The main task is forming a government with a clear mandate to enhance governance, strengthen the rule of law, tackle corruption and meet common EU objectives such as addressing environmental risk, improving digitisation and raising infrastructure investment. Ending Bulgaria’s political deadlock could also support achievement of a 1 January 2024 euro accession date if a new government is more committed to reform and improves longer-run economic planning.

The road to reinstituting confidence in Bulgaria’s public institutions

Curtailing political turbulence and rebuilding popular confidence in government will not be straightforward even assuming Borisov exits the political centre stage, given his domination of politics over more than a decade and the resistance of some political institutions to change. Recent political instability in Bulgaria serves as warning to other European countries about consequences of prolonged periods of one-man rule.

Critical factors to watch now are the longevity of any government that forms after these elections and its capacity to meet requirements of the EU’s Exchange Rate Mechanism II whilst, at the same time, easing prevailing social unrest sparked by the alleged corruption of the previous government.

The importance of moving on from the Borisov era after these elections and safeguarding rule of law are all the more relevant given Bulgaria’s reliance upon EU funding.

Toughened EU stance on the rule of law has been gamechanger within the region

The introduction of ‘rule of law conditionality’ in EU development funding has been a gamechanger, leading to the suspension of payments to member states where violations of the rule of law “affect or seriously risk affecting” management of European Union funding. The European Commission has postponed the approval of Hungary’s and Poland’s national recovery programmes.

Bulgaria’s recovery plan architected by the ex-Prime Minister was revised and approved by a caretaker government after significant delay, with lack of a permanent Bulgarian government to this stage holding back EU financing. Bulgaria submitted a Recovery and Resilience Plan requesting EUR 6.6bn in grant monies (10.8% of 2020 GDP) to Brussels in October, but this was several months after submissions of other central and eastern Europe (CEE) EU member states.

Comparatively moderate absorption of EU financing an economic challenge

Bulgaria’s absorption rate of EU financing remains among the lowest of CEE at 60% over a 2014-20 EU budgetary period. Developing the institutional capacity needed for more efficient spending of EU funding is vital to boosting Bulgaria’s growth potential to more than a current 2.75% a year. A next government has other important challenges to confront as well, not least the Covid-19 public health crisis.

Such challenges elevate pressure upon political leaders to seek consensus after the opportunity presented by these elections and negotiate a working government. Political stability will be decisive for both the country’s sovereign rating outlook (for which the rating agency I represent evaluates Bulgaria with a BBB+ investment-grade rating) and sustained economic recovery out of this crisis.

For a look at all of today’s economic events, check out our economic calendar.

Levon Kameryan is Senior Analyst in Sovereign and Public Sector ratings at Scope Ratings GmbH and the new lead sovereign analyst for Bulgaria.


Trump Readies Launch of Social Media Platform via SPAC

Former U.S. President Donald Trump is launching his own social media platform in an attempt to resist censorship and fight back against Big Tech.

Trump calls the new app TRUTH Social and said in a press release he is building it to “stand up to the tyranny of Big Tech.” The former president was banned from popular social media platforms in the wake of the riots on Capitol Hill in early 2021, leaving him unable to connect with his nearly 90 million followers on Twitter.



Truth Social is launching in true Trump style. The Trump Media & Technology Group will combine with Digital World Acquisition Corp. (DWAC), a blank check company, to go public in a deal that values the Trump media company at $875 million initially. The media entity’s growth plans will be funded by a war chest of $293 million in cash.

Shares of blank check company Digital World Acquisition Corp soared nearly 400% on the development to $52, giving the Miami-based SPAC a valuation of approximately $2 billion. Meanwhile, shares of Twitter were down about 1% while Facebook’s stock was basically flat.

SPAC deals have caught on like wildfire over the past year amid demand from startups and investors alike. Startups like these types of deals because they allow them to provide a future outlook on performance, while IPO disclosures are limited to the past.

Trump Takes Aim at Big Tech

During his presidency, Trump tweeted on a near daily basis before getting silenced. Since then, he has been seeking out an alternative and engaging in talks with various companies, reports indicate. Now Trump is taking direct aim at social media giants such as Facebook and Twitter “to create a rival to the liberal media consortium and fight back against the Big Tech companies of Silicon Valley,” according to the announcement.

Trump is often asked why nobody will stand up to Big Tech and has taken it upon himself to do so, stating,

“I’m excited to soon begin sharing my thoughts on TRUTH Social and to fight back against Big Tech.”

Trump Media & Technology Group will be behind the launch of TRUTH Social, which is currently available for pre-order in Apple’s App Store. The app will also be available in beta format on an invitation-only basis starting next month.  The new social media app is expected to make its debut to the public in Q1 2022.

“There Will be Things That People Can’t Get,” at Christmas, White House Warns

The supply crisis, driven in part by the global COVID-19 pandemic, not only threatens to dampen U.S. spending at a critical time, it also poses a political risk for U.S. President Joe Biden.

The latest Reuters/Ipsos poll shows the economy continues to be the most important issue to Democrats and Republicans alike.

The White House has been trying to tackle inflation-inducing supply bottlenecks of everything from meat to semiconductors, and formed a task force in June that meets weekly and named a “bottleneck” czar to push private sector companies to ease snarls.

Biden himself plans to meet with senior officials on Wednesday to discuss efforts to relieve transportation bottlenecks before delivering a speech on the topic.

Supply chain woes are weighing on retail and transportation companies, which recently issued a series of downbeat earnings outlooks. Meanwhile, the Federal Reserve last month predicted a 2021 inflation rate of 4.2%, well above its 2% target.

American consumers, unused to empty store shelves, may need to be flexible and patient, White House officials said.

“There will be things that people can’t get,” a senior White House official told Reuters, when asked about holiday shopping.

“At the same time, a lot of these goods are hopefully substitutable by other things … I don’t think there’s any real reason to be panicked, but we all feel the frustration and there’s a certain need for patience to help get through a relatively short period of time.”

Inflation is biting wages. Labor Department data shows that Americans made 0.9% less per hour on average in August than they did one year prior.

The White House argues inflation is a sign that their decision to provide historic support to small businesses and households, through $1.9 trillion in COVID-19 relief funding, worked.

U.S. consumer demand stayed strong, outpacing global rivals, and the Biden administration expects the overall economy to grow at 7.1%, as inflation reaches its highest levels since the 1980s.

“We recognize that it has pinched families who are trying to get back to some semblance of normalcy as we move into the later stages of the pandemic,” said a second senior White House official.


In August, the White House tapped John Porcari, a veteran transportation official who served in the Obama administration as a new “envoy” to the nation’s ports, but he’s known as the bottleneck czar.

Porcari told Reuters the administration has worked to make sure various parts of the supply chain, such as ports and intermodal facilities, where freight is transferred from one form of transport to another, are in steady communication.

Now it is focused on getting ports and other transportation hubs to operate on a 24-hour schedule, taking advantage of off-peak hours to move more goods in the pipeline. California ports in Long Beach and Los Angeles have agreed to extended hours, and there are more to follow, he said in an interview Monday.

“We need to make better use of that off-peak capacity and that really is the current focus,” Porcari said.

The administration is also seeking to restore inactive rail yards for extra container capacity and create “pop-up” rail yards to increase capacity.

“It’s important to remember that the goods movement system is a private sector driven system,” he said. “There’s problems in every single part of that system. And, and they tend to compound each other.

“While the pandemic was an enormously disruptive force. I think it also laid bare what was an underlying reality, which was the system was strained before the pandemic.”


Republican strategists are seizing on possible Christmas shortages to bash Biden’s policies as inflationary, and thwart his attempt to push a multi-trillion dollar spending package through Congress in coming weeks.

A recent op-ed by Steve Cortes, a one-time advisor to former President Donald Trump, dubbed the upcoming holiday season “Biden’s Blue Christmas,” continuing in a long tradition of conservatives criticizing Democrats over celebrations around the Christian holiday.

Trump, considered the front-runner Republican candidate for president in 2024, blasted it out in a mass email through his political action committee, Save America.

Seth Weathers, a Republican strategist who ran Trump’s Georgia campaign in 2016 said they see local impact. “People here in Georgia are paying twice as much for items than they paid a year ago and they are blaming Biden. He’s in charge.”

A Quinnipiac poll released last week showed Biden is losing the public’s trust on the economy, with only 29% of public thinking the U.S. economy is in “good” or “excellent” condition, compared with 35% in April.

“President Biden could use a holiday season win,” Quinnipiac polling analyst Tim Malloy said. “A slowdown of holiday season deliveries and the financial strain that comes with it would be coal in the stocking for the Administration at the close of the first year in office.”

For a look at all of today’s economic events, check out our economic calendar.

(Reporting By Jarrett Renshaw and Trevor Hunnicutt; Editing by Heather Timmons, Richard Pullin and Aurora Ellis)

China Presses U.S. to Cancel Tariffs in Test of Bilateral Engagement

The virtual talks between U.S. Trade Representative Katherine Tai and China’s Vice Premier Liu He followed Tai’s announcement on Monday that she would seek “frank” talks and hold China to its commitments under a ‘Phase 1’ trade deal negotiated by former President Donald Trump.

“The Chinese side negotiated over the cancellation of tariffs and sanctions, and clarified its position on China’s economic development model and industrial policies,” China’s Xinhua state news agency said after the talks, held on Friday Washington time.

Tai intended to use the call, the second between the two, to test whether bilateral engagement can address U.S. complaints about Beijing’s trade and subsidy practices, a USTR official said.

“Ambassador Tai and Vice Premier Liu reviewed implementation of the U.S.-China Economic and Trade Agreement and agreed that the two sides would consult on certain outstanding issues,” USTR said in a statement.

Xinhua said the two sides “expressed their core concerns and agreed to resolve each other’s reasonable concerns through consultation.”

“Both sides agree to continue communicating with an equal approach and mutual respect, and to create the conditions for the healthy development of economic and trade relations between the two countries and the recovery of the world economy,” it said.


In a briefing ahead of the call, a senior USTR official said Tai would give Liu an assessment of China’s performance in implementing the Phase 1 deal, including promised purchases of U.S. goods that are falling short of targets.

Asked about the shortfalls, China’s ambassador to the United States, Qin Gang, told China’s Phoenix TV in an interview on Friday that Beijing had always kept its promises in state-to-state relations, the embassy said in a summary released Saturday.

He said Beijing had sincerely and steadily implemented the agreement, despite serious challenges posed by the coronavirus pandemic, including what he called “tangible steps” on intellectual property protections and opening the financial sector.

He faulted Washington for acting at the same time to impose barriers and restrictions on Chinese firms in the United States.

Tai would raise concerns about China’s “non-market” economic practices, the U.S. official said.

“We recognize that Beijing is increasingly explicit that it is doubling down on its authoritarian state-centric approach and is resistant to addressing our structural concerns,” the official said, adding that consequently, Washington would focus on improving U.S. competitiveness, diversifying markets and “limiting the impact of Beijing’s harmful practices.”

The Phase 1 deal in January eased a long running tariff war between the world’s two largest economies. It focused largely on China’s promise to boost purchases of U.S. farm and manufactured goods, energy and services by $200 billion over two years, along with increased protections for copyright, trademarks and other forms of intellectual property.

The Trump administration envisioned a Phase 2 negotiation to follow to tackle more difficult issues such as subsidies to state enterprises and China’s strategic industrial policies.

The official said Tai’s future engagement with China would depend on “how China responds to tonight’s call” and declined to discuss possible next steps, but added that Tai would not seek Phase 2 negotiations.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by David Lawder, Michael Martina and Andrea Shalal in Washington and Engen Tham in Shanghai; Editing by Rosalba O’Brien and William Mallard)

German Energy Companies Respond to Close National Election

Agreeing a new coalition could take months, however, and will likely involve the smaller Greens and liberal Free Democrats (FDP).

Following are reactions from some of Germany’s largest companies:


“What we need now least of all is party-political calculation. The goal must be to form a government capable of acting as quickly as possible that combines the various competencies … The election campaign is over, the parties must now show in the coalition negotiations that they are serious about the energy transition. This includes more honesty in the debate: The transformation will involve painful restrictions and, at least initially, will also cost jobs.”


“The upcoming coalition negotiations must focus on a modern climate and economic policy. After all, we in Germany have not only set ourselves a very ambitious goal of climate neutrality for 2045, but can also trigger an enormous economic stimulus program with the energy turnaround … On the road to climate neutrality, a new German government will be judged by whether our energy supply is simultaneously secure, affordable and clean. To achieve this, we need more room for innovation and investment in the future.”


“Germany needs stability and a clear course. We have a decade of great change ahead of us. We need speed in order to lay the right tracks for a climate-neutral industry, to modernise our infrastructure and to massively push digitalisation. To achieve this we need a unified, powerful government that acts now.”


“A new government must clear the path for a speedy expansion of renewable energy and the expansion and repurposing of energy grids…Any incoming coalition must pursue the scaling up of a hydrogen economy.”

For a look at all of today’s economic events, check out our economic calendar.

(Compiled by Christoph Steitz, Tom Kaeckenhoff and Vera Eckert, editing by Tomasz Janowski)

Trump, the Polls, and that Glimmer of Hope

The Mood

COVID-19 has left the Presidential Election up in the air, with many having now written off Trump’s chances of a 2nd term.

Trump may have hoped for a 2nd term and, as some put it, a political dynasty to extend beyond his watch.

We can expect the debate to last longer than Trump’s political career. The big question mark will be whether Trump would have won a 2nd term had the U.S not succumbed to COVID-19.

It wasn’t just COVID-19 that has left Trump trailing in the polls, however.

Civil unrest and the administration’s foreign policy are just two examples of how Trump isolated and disjointed the U.S.

With Canada, China, Mexico, the EU, and even the UK falling foul of U.S foreign policy, many will be hoping of a Trump defeat.

We’re 3-months away from the 3rd November and there’s a lot that has to change for Trump to claw back his way into contention.

The Latest Polls

So, according to the latest FT’s interactive Calculator and polling data, which are as at 29th July 2020, there has been a shift in the numbers.

The FT has Democratic challenger Biden with 308 Electoral College votes, which remains unchanged from 22nd July.

In fact, Biden has held onto the 308 since falling back from 318 as at the end of June.

It’s been a different story for the U.S President, however.

The latest numbers show Trump with 128 Electoral College votes, which is down from 132 as at 22nd July.

Looking more closely at the numbers, there is some cause for optimism for the blues.

Joe Biden has seen the number of solid votes rise from 188 to 190, with leaning votes falling by 2 to 118.

For U.S President Trump, his projected Electoral College vote count has fallen from 132 to 128.

Leaning votes stand at 51, with solid votes at 77. That’s quite a shift from 22nd July. Leaning votes and solid votes had stood at 17 and 115 respectively just over a week ago.

Also positive for Biden is the rise in the number of toss-up votes, which have increased from 98 to 102.

If we look at the key U.S states that tend to be election barometers:

Missouri continues to lean in favor of Trump and the Republicans, with Kansas City now also leaning in Trump’s favor. A week ago, Kansas City had been a solid Republican state. Sending in Federal agents looks to have caused the shift.

For Biden, Illinois, New Mexico, and Oregon are solid blues, with Michigan, New Hampshire, and Pennsylvania also blue.

The Road Ahead

With the first of 3 Presidential Election debates not due until 29th September, that may favor the U.S President.

Trump and the administration have just under 2-months to prepare to defend the Administration.

U.S equities have held their ground, largely thanks to the FED. By contrast, however, the economy is in a shambles, with unemployment sky-high.

The latest U.S COVID stimulus package also doesn’t like it’s going to do the trick and support the unemployed. A sizeable cut in unemployment benefit is not only going to rile voters but also weigh on consumer spending.

That’s a double negative for a U.S President that had promised to reunite the Republican Party and make America great again.

As the effects of the COVID-19 pandemic continue to hit the U.S economy further, Republicans have also begun to distance themselves from the President.

The failure to deliver a swift stimulus package to the House was a reflection of the party’s recent fragmentation.

Trump needs a united party front and a widely available vaccine to shift the polls in his favor.

If the latest news on the vaccine is anything to go by, a vaccine may not be available until mid-2021.

That means one full winter season, where the U.S could even succumb to a 3rd wave of the pandemic. Such an outcome would almost certainly be curtains for the U.S President.

Not even a postponement of the U.S Election would save Trump.

The Glimmer of Hope

For the die-hard Republicans, there may be a glimmer of hope, however…

Republicans have a tendency to be more loyal than Democrats. You don’t have to go too far back in history to see examples of Democrats flipping at the last minute.

Hillary Clinton was set for a comfortable win back in 2016.

Then consider Trump’s in-party support that remains exceptionally high compared to other Presidential candidates going for a 2nd term. This is the case even with the latest news of some turning their back on their leader.

When you then factor in Trump’s sheer desire to win at all costs, some may still give him a reasonable chance to swing the polls in his favor.

One last thing to consider is the COVID-19 pandemic and what actual impact it will have on Election Day.

Trump may quietly be hoping for the pandemic to remain a concern on Election Day. With Republicans considered to be more loyal, they are more likely to vote at any cost.

A low turnout on Election Day must therefore also favor Trump and a 2nd term.

All in all, it makes for an interesting few months ahead.

Assuming that China, Russia, and other anti-Trump nations don’t rig the elections, it’s still anyone’s race.

The Trump – Putin Helsinki Show

While Trump was credited to the ‘Art of the Deal’ along with journalist Tony Schwartz, references to which have left the global financial markets in sometimes bewilderment, some of the negotiation tactics seem to be more akin to Sun Tzu’s The Art of War than the Art of the Deal. The U.S President appearing to have finally decided that The Art of War may ultimately be a better reference point as he goes about his business alienating allies while embracing the enemy.

“If you know your enemies and know yourself, you will not be imperilled in a hundred battles; If you do not know your enemies nor yourself, you will be imperilled in every single battle,” is perhaps one of the more famous quotes, though Trump may have taken this from the Godfather Part II, where Michael Corleone said “My father taught me many things here – he taught me in this room. He taught me – keep your friends close but your enemies closer.”

So, with the Helsinki mission complete, there has been plenty of noise since and, while Trump may look to refer to Sun Tzu or heaven forbid, Michael Corleone, the rest of the U.S administration, the Senate and U.S allies may have an altogether different take on Monday’s events.

It didn’t take long for House Speaker Paul Ryan to give his views, stating that the U.S must be focused on holding Russia accountable and putting an end to its vile attacks on democracy, adding that the President must appreciate that Russia is not an ally and remains hostile to the most basic values and ideals of the U.S.

From the press conference, there were a number of key takeaways that included:

  • A common intent by both to improve Russia – U.S relations and develop a reasonable degree of trust.
  • Trump failed to vilify Putin for Russia’s meddling in the 2016 presidential election, with both Trump and Putin agreeing that there had been no collusion in the election.
  • The Russian President said that a working group of U.S and Russian businessmen will be put together.
  • On Syria, there was clearly some discussion as had been anticipated, though no details were shared, Trump merely stating that the two nations could save hundreds of thousands of lives in the country, while Putin aired his concerns over the number of refugees that had been displaced.

Clearly, the failure to address Russia’s meddling in the presidential election was the most troublesome, particularly when the investigative team, led by Robert Mueller, has just indicted 12 Russians on evidence of election meddling. Putin was kind enough to offer the investigating team with access to Moscow to clear any wrongdoing, though we can expect this to be staged if Mueller even decides to follow Trump down a very slippery slope.

On Syria, one shudders to think what had been discussed, particularly when considering Trump’s single desire to bring down the Iranian regime and at any cost. Time will tell, but if there is anyone more versed in the Art of War, it is probably the former KGB agent than U.S property mogul turned leader of the free world.

So all in all, while the U.S President alienates the EU and China and NATO members, he has to date, befriended Vladimir Putin and Kim Jong-un, both of whom have, by various preceding Presidents of the United States, been referred to as public enemy number 1.

The Dollar retreat reflected the market’s view on the press conference and NATO members and the EU may well be wondering what’s next, perhaps Sun Tzu’s quotes need to be heeded by both and anyone else who has been on the receiving end of Trump’s Art of the Deal. As for China, well no doubt Chinese Premier Li is aware of ancient Chinese military strategist Sun Tzu and his works.

US President Trump Tells UK PM May to Sue the EU

UK Prime Minister, Theresa May, has revealed on BBC interview that US president Donald Trump advised her to sue the EU. May added: “What the president also said at that press conference was ‘Don’t walk away. Don’t walk away from the negotiations. Then you’re stuck.”‘

President Trump has spent the last days in Europe where he attended a NATO meeting before traveling to the UK. He left Brussels with the commitment of NATO members to meet their agreed 2% spending target. Reports from the meeting suggested that he threatened to pull the US out of NATO if this wasn’t agreed which led to a knee-jerk selloff in markets at around 08:55 GMT yesterday.

He conducted an interview with the Sun newspaper in the UK where he is reported to have said that May’s plan for a softer Brexit “will probably kill” any future trade deal with the US. He said that PM May ignored his advice for a hard Brexit and that Boris Johnson would make a great PM.

GBPUSD has sold off since the comments were reported, falling to a low of 1.31641 but finished the week higher at 1.3236. The Brexit White Paper released on Thursday created little movement in markets. Next week will be important for GBP with economic data being released which will impact the BOE August rate decision, a key driver of direction in the currency.

The American President will travel to Helsinki, Finland to meet the Russian President Vladimir Putin on Monday.