Global Public Affairs Newswire – 28 June 2024
Welcome to the latest installment of FTI Consulting’s fortnightly Global Public Affairs Newswire.
This week, we bring you election updates from the US following the first Biden vs. Trump debate of this year’s campaign, and from the UK, where voters will head to the polls next Thursday, as well as updates from France and Spain.
Beyond this, we bring you our usual comprehensive market update, with analysis of the latest big public affairs developments across the world’s major markets. This week features updates covering developments in China, the EU, the UK, Brazil, the USA, Ireland, Colombia, Malaysia, and Germany.
Our global team are closely tracking the key votes and contests in this worldwide ‘Year of the Election’. In each edition of the Newswire, we look to dive into the upcoming implications, considerations, and opportunities for business.
Bad Night for Biden: On Thursday evening on CNN, President Joe Biden and former President Donald Trump went head-to-head in their first debate of the 2024 presidential election. Held in Atlanta, Georgia, the candidates promoted their economic, immigration, foreign, and healthcare policies but all substance discussed was overwhelmed by reaction to President Biden’s poor performance. He was immediately and heavily criticized by pundits, the opposition, and members of his own party. Thursday’s night’s debate will likely revive questions about the President’s age and ability to lead in the coming days. Biden’s campaign will no doubt try to redirect conversation by raising questions about the validity of some of President Trump’s claims and assertions during the debate.
Recent Polls Continue to Show Close Race: Polling continues to predict an extremely close race nationally. Real Clear Polling, which reports an average across major national polls, places Trump one percentage point ahead of Biden, at 46% to 45%. Also, of note: One poll released by Fox News showed President Biden leading President Trump in national polling for the first time; the same poll showed an 11-point swing amongst independent voters towards President Biden as he continues to poll historically weak with Black and Hispanic voters.
…But which path to 270 Electoral Votes?: With five months to go, most political observers believe the electoral map is becoming smaller: Michigan, Wisconsin, and Pennsylvania may be the only states ultimately decisive to the election. Accordingly, the campaigns are both looking for alternative paths to reaching 270 electoral votes outside of those three states, including investing in states lost in 2020. The Trump campaign announced it is expanding its field operations into several states President Trump lost in 2020, including Minnesota and Virginia. Similarly, the Biden campaign says it is “bullish” about winning North Carolina, a state Trump won in the last election.
Veep Stakes ‘24: President Trump’s team publicly have floated three possible finalists to join the Republican ticket: Senator Marco Rubio (FL); Senator JD Vance (OH); and Governor Doug Burgham (ND). Political observers believe that Trump’s eventual choice will be selected not to appease any region of voters, any wing of the Republican, or any specific constituency, but to underscore Trump’s own campaign themes.
As the 2024 UK General Election enters its final week, the UK faces considerable political uncertainty. Only one thing looks certain – that Keir Starmer’s Labour Party will win the election. The question which remains unanswered in Westminster is not whether Labour will win, but how large its majority in the House of Commons will be. Polls and model estimates produced using those polls vary wildly- all forecast a Labour majority government, but few can agree on the scale of Labour’s victory and on how many seats will be won by each of the opposition parties.
Estimates of Labour’s majority range from a majority of 100 seats to one as large as 250 seats. At the last election, the party won just 202 of the 650 seats up for election this yearthat make up the House of Commons. Having fought a relatively policy-light campaign, with an intentionally lean manifesto, Labour will now be preparing to enter government for the first time in 14 years and finalising which of its team of “shadow” ministers will be appointed to real ministerial roles.
Most of these Labour’s gains are set to come at the expense of the Conservatives, who have been in government since 2010 and were the largest party at the last four gGeneral eElections. The number of Conservatives likely to be elected also varies wildly from model to model, with the lower end of estimates sitting around 60, and the higher end around 150. With such a wide spread between estimates, perhaps the only thing which is certain on 5th July, other than a Labour government, is red faces at at least a few of Britain’s leading pollsters.
If the Conservatives perform on the lower end of expectations, this introduces a new uncertainty- we know who will form Britain’s next government, but who will form its next official opposition? A particularly poor result for the Conservatives next week could see the title, and its accompanying privileges in Parliament, surrendered to Ed Davey’s Liberal Democrats, should they perform at the higher end of their estimates and win around 70 seats. While such an outcome remains unlikely, if it was to happen, this would be the first time since the inception of the office of Leader of the Opposition in 1807, other than during periods of national government, that the Conservatives have not held either the office of Prime Minister or that of Leader of the Opposition.
Should the Conservatives manage to salvage enough seats to remain the official opposition, it still remains unclear who will face Prime Minister Keir Starmer from across the House of Commons. Current Prime Minister Rishi Sunak is all but certain to resign as Leader of the Conservative Party following the resultin the event of defeat, and would likely be removed from office if he did not do so- Sunak has presided over a disastrous election campaign marked by serious unforced errors. It now looks uncertain whethereven looks to be an outside possibility that Sunak will even retain lose his own seat in the House of Commons- his traditionally safe North Yorkshire constituency of Richmond and Northallerton is forecast by some pollsters to vote Labour. This would be the first time that the Conservatives have lost this seat since 1910, a final humiliation for Sunak if this indeed happens.
Who will replace Sunak is also complicated by the election. Usually, leadership contenders would already be circling what remains of Sunak’s leadership, positioning themselves for the upcoming contest. This time around, many of them are focussed instead on keeping their own seats in Parliament, with several likely contenders such as Penny Mordaunt and Grant Shapps facing strong challenges from Labour. Deputy Prime Minister Oliver Dowden, who would likely step in as interim leader, is also vulnerable to a Liberal Democrat challenge, further complicating matters should he lose.
The true elephant in the room, and final wildcard of the election, is Nigel Farage’s Reform Party, which outflanks the Conservatives from the right of British politics. While Reform will likely only win a handful of seats and Farage may even be the party’s only elected MP, the challenger party is draining huge numbers of dissatisfied voters from the Conservatives. Farage has made no secret of his willingness to lead a Conservative-Reform merger, bringing his supporters back to the Conservatives for the next election. Accepting this deal would be a sign of desperation by the Conservatives, but the party’s prospects have never been worse, and as such it cannot be ruled out as a possibility.
The first round of legislative elections will take place on June 3030 June. Polling covers four main blocs (and other minor parties): Rassemblement National (RN, far-right), the Nouveau Front Populaire coalition (NFP, ranging from the far-left to centre-left), Renaissance (liberal centre, supporting Emmanuel Macron) and Les Républicains (LR, centre-right). The RN and NFP are currently ahead, with respectively 35.,6% and 28.,25% of voters. The presidential party polls at 19.,8%. LR is facing great difficulties, with less than 8% of voters, according to an average of major polls.
The system for the legislative elections follows a two-round system in 577 constituencies, each one electing a single member to the National Assembly. All candidates receiving a number of votes equal to 12.5% of registered voters make it to the second round. This means that, if as expected, there is a high turnout, we could see several instances where three candidates make the run-off. It is important to keep in mind that projections do not currently consider local specificities or polling, making it hard to predict parliamentary make up.
On Sunday, June 23 President Macron addressed an open letter to the nation in which he explained his reasoning behind the decision to dissolve the Assembly. He emphasised the election was the ‘only choice’ for democracy after his party’s crushing defeat in the European elections, and, appearing to concede his unpopularity, he drew attention away from himself, underlining the fact that this should not be a personality contest. He also presented the elections as a stark choice between his centrist bloc and far left and far right extremism. Macron’s relatively prominent role in the campaign is controversial in his own camp, as close allies fear his unpopularity could negatively impact Renaissance at the polls.
The campaign continues, with the RN and NFP coming under fire for allegedly ‘unfinanced’ campaign promises, and positioning themselves as “governing parties” for the day after the vote.
Given electoral mechanics, there will be many cases where three candidates (instead of the usual two), head for a run offrunoff. Historically, political consensus dictated that in a three-candidate race involving the far-right, the moderate candidate with the weaker score would withdraw from the race and endorse his moderate opponent, creating what the French call the “Republican Front” in a bid to keep the far-right out of power. This tradition, due to the extreme level of political polarisation, is now in jeopardy. The week after the first round will be crucial: much will depend on whether third-placed candidates withdraw to favour another better-placed candidate against the RN or NFP, and whether political parties and their leading figures explicitly give endorsements.
In a significant turn of events from the recent European elections, Spanish Prime Minister Pedro Sánchez has solidified his position as a leading figure among European socialists. While the People’s Party (PP) garnered the most votes in Spain and secured the largest representation in the European Parliament with 22 seats, it is Sánchez’s rise that has captured widespread attention.
Despite the PSOE (Spanish Socialist Party) coming in second with 20 seats, Sánchez has emerged as the foremost leader of social democracy in Europe. His strengthened position is attributed to leading the largest socialist national delegation at the European Parliament, as well as being EU’s socialist prime minister with the highest popular backing. This influence is likely to enhance his bargaining power within the European socialists (S&D) and potentially secure Spain a prominent role in the future European Commission.
Notably, Teresa Ribera, the PSOE’s lead candidate and current Vice-President and Minister for Ecological Transition, is poised to take on a significant role as the next Green Deal Commissioner in the EU. Ribera’s potential to spearhead the European Green Deal, possibly with a vice-presidential rank, underscores her ambitions in driving climate policy forward. However, her vision may face challenges given the European Commission’s shifting focus towards industrial competitiveness over environmental commitments.
Sánchez’s leadership within the Spanish centre-left has been further reinforced by the underperformance of Sumar, PSOE’s coalition partner in Spain, which only secured three seats. Additionally, the decline in representation of the Catalan independentists (Junts), from three to one MEP, strengthens Sánchez’s negotiating power in forming a socialist government in Catalonia.
While the PP’s strategy to frame the European elections as a referendum on Sánchez fell short of expectations, with fewer seats than some polls predicted, Sánchez’s victories on both national and European stages have marked a significant political milestone. This shift highlights his growing influence and sets the stage for his continued leadership within the European social democratic landscape.
Market updates
The governor of the People’s Bank of China (PBOC), Pan Gongsheng, elaborated on China’s monetary policy stance and the evolution of its future framework at the 15th Lujiazui Forum, a key platform that hosts the discussion of important topics in the financial industry.
Acknowledging the weak domestic demand as the bottleneck of credit extension, Governor Pan reiterated a supportive policy and vowed to enhance monetary policy transmission instead of simply expanding the credit supply. With fostering a mild reflation without triggering aggressive monetary easing as the priority, the governor hinted that the pressures on banks’ profitability and the concerns of RMB currency stability are the two primary constraints on easing and that the PBOC will unlikely cut its policy rate anytime soon until the Fed rate cut now projected in September.
In laying out China’s future monetary framework, the governor downplayed quantity-based indicators such as total social financing and M2 growth, and instead put a greater focus on interest rates. Suggesting a policy transition from quantity-focused to price-based, Governor Pan promoted short-term open market operational rates, such as the 7-day reverse repo rate, as the primary policy rate for China. He mentioned that the PBOC might consider gradually phasing out the Medium-term Lending Facility loans, a quantity-based money extension tool first introduced in 2014.
On the controversial trading of central government bonds, Governor Pan affirmed that it would become a regular tool for open market operation and base money expansion and that it should not be construed as US-style quantitative easing. The governor also solidified the role of different re-lending programs for targeted easing, a distinct structural monetary policy tool that accounts for 15% of the central bank’s assets, currently having more than RMB 7 trillion outstanding.
The European Council meeting on 27-28 June 2024 focused on key issues, with an emphasis on Ukraine and the Middle East.
On Ukraine, the European Council reiterates its unwavering support for Ukraine’s sovereignty and condemned Russia’s escalated attacks. It calls for increased military aid, including air defence systems and ammunition. The Council acknowledges the European Peace Facility’s assistance measures and urges further reinforcement and acceleration of military support initiatives. It supports redirecting revenues from immobilized Russian assets towards Ukraine’s defence and reconstruction, aiming to raise around EUR 50 billion. The Council emphasizes the importance of bilateral security agreements and supports Ukraine’s reform and reconstruction efforts, particularly in the energy sector. It condemns the unlawful deportation of Ukrainian civilians and supports initiatives to return children to their families. The Council backs sanctions against Russia and stresses the importance of holding Russia accountable for war crimes.
On Middle-East, the European Council condemns terrorist attacks by Hamas on Israel and supports Israel’s right to self-defence, urging compliance with international law. It welcomes the UN ceasefire resolution and calls for humanitarian aid to Gaza. The Council condemns violence by Israeli settlers in the West Bank and urges Israel to halt illegal settlements. It calls for an end to military operations in Rafah, emphasizes the need for humanitarian aid, and reaffirms commitment to a two-state solution.
On Security and Defence, the Council discusses enhancing Europe’s defence readiness and supporting the defence industry. It welcomes the European Investment Bank’s Security and Defence Action Plan and calls for progress on the European Defence Industry Programme (EDIP).
On Competitiveness, the Council reviews progress on enhancing the EU’s competitiveness and economic resilience, focusing on the Capital Markets Union and the Single Market.
The Council also addressed other topics such as migration, calls for a strategic approach to the Black Sea, supports Moldova against Russian destabilization, and expresses concerns about Georgia’s political developments. It condemns hybrid threats and calls for a united EU response.
Finally, the Council adopted the Strategic Agenda for 2024-2029 and outlined a roadmap for internal reforms to strengthen EU sovereignty and prepare for future enlargements. It emphasized the need for policy reviews on values, policies, budget, and governance by mid-2025.
With under a week to go until the UK goes to the polls, political headlines continue to be dominated by an ongoing scandal over politicians and party officials, as well as the police officers assigned to protect them, abusing insider information to place bets on the election.
Exactly how many officials and election candidates are under investigation is not yet clear, but media reports suggest that at least two Conservative party officials, two Conservative candidates, a Labour candidate, and six police officers are under investigation. While the UK’s gambling regulator, the Gambling Commission, has said it will not confirm the names of those facing investigation, the BBC’s Newsnight programme claimed that the number of candidates and officials being investigated could be as many as fifteen.
Following mounting pressure during the week, Prime Minister and Conservative Leader Rishi Sunak has withdrawn his support for the two Conservative candidates under investigation, telling a BBC audience that he is “incredibly angry” about the allegations, and “if anyone is found to have broken the rules, not only should they face the full consequences of the law, I will make sure that they are booted out of the Conservative Party.” The scandal has been particularly bruising for Sunak and his standing within his party, as one of the Prime Minister’s closest political aides, his Parliamentary Private Secretary Craig Williams, was the first candidate to be implicated in the scandal.
Leader of the Labour Party Sir Keir Starmer has also withdrawn his support for a Labour candidate under investigation for placing a bet on his own election, and criticised Sunak for not taking action more quickly against those placed under investigation. Starmer told broadcasters on Wednesday that “I made very clear that if any of my candidates were being investigated in relation to the Gambling Commission, I’d remove them straight away, which is what I’ve done. That’s in a sharp contrast to Rishi Sunak, who took days and days and days before he took action.”
In a campaign dominated not by debates over policy but by questions of integrity and values, the scandal is perhaps a fitting capstone. The Conservatives, who have governed since 2010 and won the last General Election in December 2019 by a landslide, have been dogged by scandal after scandal since 2020, and have seen their support decline sharply as a result. Labour, who have been the primary beneficiary of Conservative woes, have by contrast had a relative gaffe-free and scandal-free campaign and look likely to be rewarded with a considerable majority in the House of Commons.
A report by the Energy Research Company (EPE) and the Ministry of Mines and Energy (MME) shows that Brazil has reduced its reliance on oil and natural gas over the past decade. Oil’s share in the energy matrix dropped from 39.2% to 35.1%, and natural gas from 13.5% to 9.6%. This shift reflects a rising proportion of alternative sources like solar, wind, and biomass, bolstering Brazil’s emergence as a global leader in energy transition.
These achievements, however, coincide with growing tensions between the government and environmental groups over the expansion of national oil production. President Luis Inácio Lula da Silva and Petrobras’ president, Magda Chambriard, have recently emphasized plans to invest in offshore oil production in the Equatorial Margin, which could increase national reserves by 37%, as a way of financing the energy transition and ensuring the country’s energy security. These comments were widely criticized by environmental agencies citing risks to the environment near the Brazilian coast and the Amazon rainforest.
Critics argue that Brazil’s pursuit of becoming a major oil producer while aspiring to be an environmental leader is contradictory. They point out that between 2018 and 2022, subsidies for fossil fuels totaled R$334.6 billion, far surpassing the R$60.1 billion allocated to renewable sources, as reported by the Institute for Socio-Economic Studies (Inesc). Additionally, the Ministry of Mines and Energy has recently stated its goal to elevate Brazil to the world’s fourth-largest oil producer by 2029, with Petrobras planning a $7.5 billion investment in exploration by 2028. As Brazil prepares to host COP30 in 2025, this dual approach risks undermining the country’s ambitions to be a prominent player in the global energy transition toward sustainability.
Lawmakers in the U.S. House of Representatives and the U.S. Senate continue to work on Fiscal Year 2025 spending legislation, although there is no possibility that any of these bills are completed and signed into law before Congress breaks next month for the five-week summer recess. There is little else on the legislative calendar, which serves as an indicator of what is to come for the rest of the summer as lawmakers increasingly turn their attention to the campaign trail. Meanwhile, the Biden Administration had a busy week last week, issuing another executive order on immigration and making commitments to push back on Chinese trade policies following last week’s G7 Summit.
On Tuesday, President Biden signed an executive order extending parole to thousands of undocumented immigrants and updating the work visa process for Deferred Action for Childhood Arrivals (DACA) recipients. The move closely follows a prior executive order aimed at securing the southern border and is meant to appeal to key voters in battleground states. President Biden joined with other world leaders in attendance at the annual G7 summit last week, and on Thursday evening will participate in the first of at least two televised debates against his campaign rival and former president, Donald Trump.
For more information, please contact the U.S. GA team at [email protected].
Ireland’s Minister for Finance, Michael McGrath has been nominated as the country’s candidate for EU Commissioner. Mairead McGuinness, the former Fine Gael MEP who took over from Phil Hogan when he resigned from the position in 2020, was not re-nominated due to an agreement between Ireland’s coalition government parties that the candidate would be chosen by Fianna Fáil.
McGrath, a member of parliament for Fianna Fáil since 2007, took over the position of Minister for Finance from Paschal Donohoe in a government reshuffle in December 2022. As Minister for Finance, he represented Ireland at Eurogroup meetings alongside Eurogroup President, Paschal Donohoe, and at ECOFIN. He also served as a governor on international bodies on behalf of Ireland including the EIB, the IMF and the World Bank. He previously served as Minister for Public Expenditure and Reform from June 2020 to December 2022. Given his background and experience, the Irish government has told media the hope is he will be appointed to a portfolio “in the economics space”.
He has immediately been replaced as Minister for Finance by Fianna Fáil’s Jack Chambers. Chambers was first elected as a member of parliament in 2016 and last week was appointed Deputy Leader of Fianna Fáil. Chambers is now faced with the task of delivering the current government’s final national budget this Autumn before the next general election, due to take place by March 2025.
The Colombian Congress finished its second legislative session on June 20th. Despite the fracture of the government coalition, the Petro Administration had one main accomplishment with the approval of the pension system reform, triggering transformation within the social security model. However there are several challenges to this success.
On one hand, although approved, the pension reform bill could be declared unconstitutional due to potential procedural flaws, as it was not fully debated in the House of Representatives.
On the other hand, President has not yet fulfilled his other key legislative promises. The educational reform and the healthcare reform were shelved, needing to be reintroduced to Congress in the next session. There is also the labor reform, still in progress, having completed only one of its four debates.
With Congress-members already discussing the 2026 presidential elections, the Government expects significant challenges in securing legislative success, potentially necessitating a conciliatory tone and negotiation of its key proposals to achieve progress.
The 2024-2025 legislative session, to be inaugurated in July 2024, represents one of the last opportunities for the Government to establish a legacy in Congress. Government will need to prioritize effectively and re-organize its party’s alliances and structure, including its relation to businesses and multinationals, as actors with capacity to channel investment into economic reactivation.
Following the end of the government’s 25-year blanket subsidy on diesel, Finance Minister II Amir Hamzah Azizan highlighted the positive impacts of Putrajaya’s new diesel rationalization in recent session of the Dewan Rakyat, the lower house of Parliament.
Mr Amir Hamzah emphasized that the program has showed promising results since first coming into effect on 10 June, sharing that commercial diesel sales have gone up by 4 million liters a day. Concomitantly, he noted a 40% decrease in diesel sales near the border to Thailand, reinforcing the government’s findings that the fuel was being smuggled into Malaysia’s northern neighbour due to the former blanket subsidy.
The finance minister also disclosed that the government’s renewed efforts to halt the movement of bootlegged subsidized diesel since January have seen authorities seizing 5.1 million liters valued at nearly MYR12 million. Additionally, related assets and equipment worth MYR46 million were confiscated, while 275 individuals were arrested.
In response to criticisms by opposition MPs that the government’s diesel rationalization – which does not apply to the Bornean states of Sabah and Sarawak – is ‘half baked’, Mr Amir Hamzah urged fellow lawmakers to not politicize the issue and emphasized the importance of evidence-based arguments.
While economist have lauded Putrajaya’s efforts to end blanket diesel subsidies to save USD852 million annually, many low-income individuals in Peninsular Malaysia who receive MYR200 a month under the new diesel rationalization program say it isn’t enough to offset the financial toll of purchasing diesel at the new market price. The fuel has been sold at a commercial rate of MYR3.35 per liter (USD0.71) since 10 June in Peninsular Malaysia, while it continues to be sold at the subsidized price of MYR2.15 per liter (USD0.46) in Sabah and Sarawak.
From 19-23 June, German Federal Minister for Economic Affairs and Climate Action, Robert Habeck (Green Party), undertook a five-day diplomatic mission to South Korea and China, accompanied by a prominent German business delegation. The trip aimed to address the currently tense trade dynamics between Europe and China, with a particular focus on economic tariffs on Chinese exports to the EU.
In China, Habeck engaged in high-level discussions with government officials, specifically addressing tariffs on Chinese battery electric vehicles. Throughout his trip, Habeck balanced support for EU tariffs with opposition from Germany’s car industry, advocating for open markets. He emphasized that China’s subsidies required EU action, portraying himself as a frustrated trading partner rather than a supplicant, a stance that was well-received at home. Additionally, Habeck mentioned geopolitical concerns, criticizing China’s support for Russia amidst the Ukraine conflict, thus underscoring Germany’s strategic security interests.
Prior to his visit to China, Habeck’s trip to South Korea from 19-21 June conveyed a clear message to German businesses to diversify their dependencies from China to other burgeoning Asian markets. His meetings with South Korean Prime Minister Han Duck-soo emphasized mutual interests in liberalized markets and economic diversification, potentially strengthening bilateral ties. Overall, in contrast to Federal Chancellor Olaf Scholz’s trip to China in April 2024, Habeck more smoothly navigated the complexities of Asian economic relations while advancing European interests, making his diplomatic efforts a relative media success. However, his influence remains limited compared to more prominent international leaders.
Expert Analysis |
The EU has voted, What’s Next?
Our Electoral Pulse team have been following the elections for more than six months and their work didn’t end with the recent elections.
Follow along as we continue the Electoral Pulse through the various negotiations and decisions.
Listen to our latest episode of the Electoral Pulse podcast here >>
Mexico post-election webinar
On Thursday, June 20, our Latin America experts, Leopoldo Gómez, Pablo Zárate and Damián Martínez Tagüeña held a virtual briefing to discuss the implications for businesses during the political transition following the election of Claudia Sheinbaum as the new president of Mexico, and the outlook for the ensuing six-year administration.
Irish Local and European Election Overview
With counts complete and all seats now filled, the final picture of the Irish local and European elections has emerged.
Our FTI Ireland team provide an overview of the local and European election results, the key takeaways, and a look ahead at what is on the Irish political agenda over the next number of months.
Sector insights into the UK General Election
With a week to go until polling day, our UK Public Affairs team continue to share short electoral insights to help understand the General Election 2024 campaign.
Our experts take a look at some of the key policies listed in the Labour and Conservative party manifestos.
Watch Business and Taxation. Financial Services and Healthcare and Life Sciences >>
Watch Tech, Defense and Foreign Policy and Environment and Energy >>
Upcoming Conferences, Elections and Webinars
- 04 July: General Election (United Kingdom)
- 15 July: Legislative Election (Syria)
- 28 July: General Election (Rwanda)
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