Global Public Affairs Newswire – 01 November 2024
Welcome to the latest instalment of FTI Consulting’s fortnightly Global Public Affairs Newswire. This week, we bring you the latest from the US Presidential Election where polling remains close ahead of election day.
Additionally, 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 the EU, UK, China, Mozambique, Brazil, Germany, South Africa, Spain, France and Colombia.
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.
National polling indicates a close race: With just a few days before the general election, polling remains extremely close between Vice President Kamala Harris and former President Donald Trump. Real Clear Polling’s average of national polling has Trump leading by 48.4% to 48.0% over Harris. This comes as the Conference Board recently found that confidence amongst consumers has increased as election day approaches, with its consumer confidence index jumping to 108.7 points in October, up from 99.2 in September.
Battleground state polling suggests Trump and Harris tied: Battleground state polling also remains extremely close. A new USA Today/Suffolk University poll found that Trump and Harris are nearly tied in the key battleground state of Wisconsin, at 48% to 47% respectively. A separate new USA Today/Suffolk University statewide poll in Michigan indicates Harris and Trump are tied 47% to 47%, mirroring a similar almost evenly divided Washington Post poll in the region. A new CNN poll also suggests the race is tied in Pennsylvania, both with 48% support.
Remaining travel schedules: Trump’s last rally of the week is expected to be in Salem, Virginia, on Saturday, while the Harris-Walz campaign is yet to announce campaign events for the weekend. Harris will be spending election night at Howard University in Washington, D.C., her alma mater, while Trump’s campaign has said he will have a watch party at a convention center in West Palm Beach, Florida.
Market updates
On 30 October, the European Commission officially enacted new import tariffs on Chinese-made electric vehicles (EVs), after publishing the regulation in the EU’s Official Journal. This decision follows a year-long investigation into alleged unfair state subsidies provided to Chinese EV manufacturers. The tariffs levied against individual companies vary, determined by the extent of perceived state support and the company’s cooperation level in the investigation. Specific rates are set as follows: BYD Group at 17%, Geely Group at 18.8%, SAIC Group at 35.3%, Tesla at 7.8%, other cooperating companies at 20.7%, and all other non-cooperating companies at 35.3%.
In response, China has launched an anti-subsidy investigation targeting European dairy and spirits exports, a strategic move intended to pressure EU member states to reconsider their support for the tariffs. Concurrently, both the EU and China are engaged in a negotiation aimed at reaching a settlement, potentially involving measures such as minimum pricing agreements or import volume caps for EVs. However, a clear timeline for a resolution has yet to be established, and the trade tensions may continue until both sides can agree on terms that address mutual concerns.
On Wednesday, the Chancellor of the Exchequer, Rachel Reeves, delivered the first Labour budget in 14 years, and the first ever by a female Chancellor.
From the despatch box in the House of Commons, Reeves set out the Government’s plans for taxation and spending in 2024-2025, providing the most concrete articulation yet of Labour’s economic philosophy. Framed as a plan to “restore economic stability” and “drive economic growth”, Reeves sought to project an image of a focused and competent government, pledging “responsible leadership in the national interest”.
Despite a pre-election manifesto pledge to only raise the UK’s tax burden by around £8bn, Reeves proceeded to raise taxes by a total of £40bn. The largest proportion of these tax rises will come from a £25bn rise in employers’ National Insurance contributions. This also included lowering the £9,100 threshold at which employers start paying national insurance on employees’ earnings to £5,000. Separately, the freeze on income tax thresholds until the end of 2028/29 (implemented by the previous Government in 2021) was reconfirmed. Capital gains tax was also increased from 10% to 18% (with the higher rate rising from 20% to 24%), alongside a series of other, smaller tax-raising measures.
While more esoteric, it was equally significant that Reeves announced, that the UK’s measure of debt will be recalculated to include public sector net financial liabilities (PSNFL). This is important for Labour’s plans as it enables the Government to borrow more for investment without missing its target for debt to be falling as a share of GDP by the fifth year of OBR forecasts. The additional fiscal headroom generated by this decision could allow for as much as £50bn in additional investment.
Reeves’s pledge to “invest, invest, invest”, facilitated by her relaxation of the fiscal rules, is important politically. For voters who had been primed by Starmer to expect bad news, it offers a glimpse of the future and signals the Government’s overarching commitment to rejuvenating public services. For Cabinet members forced to defend unpopular decisions, it is a promise that enduring “difficult decisions” now will enable them to deliver the mandate of change on which they were elected.
Between 22 and 24 October, China’s President Xi Jinping attended the 16th BRICS Summit and the first expanded “BRICS Plus” Dialogue held in Kazan, Russia. Russian President Vladimir Putin chaired the event, with heads of government from Brazil, Egypt, Ethiopia, India, Iran, South Africa, United Arab of Emirates, among others, being present.
Recognizing the transformation towards a more multipolar world, President Xi stressed the importance of strengthening multilateralism in constructing a more just world order, especially for emerging economies often referred to as the “Global South”. Raising the voice of the underrepresented countries, strengthening the multilateral trade system with the WTO at its core, reforming the Bretton Woods system and enhancing BRICS’s role in global financial systems, closing the digital gaps including on artificial intelligence among countries, and underpinning the UN 2030 Sustainable Development Goals agenda, among other topics, were emphasized by President Xi.
Among all topics, the call for an independent cross-border payment instrument, known as the BRICS PAY, gained particular traction, together with a joint digital currency project called mBridge, underpinned by blockchain technology and led by the Bank for International Settlements. Media and market analysts pointed out that the increasing concerns of being overly dependent on the existing systems are behind this drive to create an alternative financial architecture.
Mozambique’s recent election turmoil has escalated into significant unrest, impacting the investment landscape, and revealing the complex risks foreign businesses face in the Southern African market. Following the October 2024 elections, which saw the ruling Frelimo party claim victory with 71% of the vote, opposition groups, civil society, and foreign observers alleged widespread fraud. Venâncio Mondlane, the opposition leader who received 20% of the vote, has galvanised large-scale protests, calling for demonstrations and a week-long national strike starting 31st of October 2024. Tensions spiked following reports of police violence, with Human Rights Watch confirming at least 11 civilian deaths and dozens more injured, primarily due to the use of live ammunition.
The protests have rattled Mozambique’s investment climate, particularly for major ventures such as TotalEnergies’ $20 billion natural gas project, delayed since 2021 due to nearby insurgent activity in the resource-rich Cabo Delgado province. The current unrest now casts further uncertainty on the project, with both logistical and security challenges compounded by political instability.
For international businesses with interests in Mozambique, particularly in the natural resources and infrastructure sectors, the volatility necessitates a nuanced approach. Robust risk management, local partnerships, and support for socio-economic programs to address high youth unemployment may help build resilience. Furthermore, close monitoring of political developments is essential, adapting contingency plans for potential disruption. The Mozambican government’s strong reaction to protests, including forceful crowd control, coupled with Mondlane’s substantial popular support, suggests prolonged unrest is likely. Companies should continue to engage strategically, recognising both Mozambique’s economic potential and the socio-political volatility that can impact operations and investor confidence.
Nearly 34 million voters across 51 Brazilian municipalities, including 15 capitals, went to the polls on October 27 for the 2024 municipal election runoffs. While these local elections differ from the upcoming 2026 general elections, they serve as a barometer of strength for the country’s major parties and political forces. Official results for mayors and councilors elected in over 5,500 municipalities reinforced a trend that began in 2016, with conservative and center-right parties making gains at the municipal level.
Four center-right parties, led by the Social Democratic Party (PSD) and the Democratic Movement Party (MDB), won the most mayoral positions, and secured significant representation in municipal legislative chambers. Of Brazil’s 26 state capitals, left-wing parties claimed only 2 mayoral positions, in contrast to the center and right-wing parties, which won 24 positions.
Additionally, the consolidation of the so called “Big Center” and the rise of center-right parties have been linked to a decline in far-right influence in major municipal races. Despite some strong results for Jair Bolsonaro’s right-wing Liberal Party, candidates backed by the former president performed below expectations in the runoffs. Although Bolsonaro remains a significant electoral force, political analysts note that the conservative movement started by Bolsonaro in Brazil has outgrown him and began to constitute a new far-right.
Given that Bolsonaro was declared ineligible until 2030 by the Superior Electoral Court on charges of abuse of power and attempts to interfere in the 2022 elections, other conservative leaders are gaining prominence. Notably, São Paulo’s State Governor Tarcísio de Freitas is expected to take on a leading role in the 2026 presidential race and has already began to distance himself from Bolsonaro, as he tries to position himself as a moderate candidate. Meanwhile, analysts suggest the left has emerged weakened from these municipal elections, losing ground even in northeastern strongholds traditionally led by the ruling Workers’ Party. As a result, President Lula and the left will likely face considerable challenges not only in rebuilding popular support, but also in renewing their position, reputation, proposals and representatives before the 2026 presidential elections in order to stay relevant.
Automotive giant Volkswagen, a cornerstone of German manufacturing and partially owned by the German federal state Lower Saxony, announced on October 28 the possibility of closing plants and implementing further cost-cutting measures due to disappointing profits and stagnant electric vehicle sales. This announcement reflects a broader slowdown, as rising production costs and competition, particularly from Chinese automakers, put pressure on Germany’s automotive industry. In response, Lower Saxony’s Minister President and member of Volkswagen’s supervisory board, Stephan Weil (SPD), expressed strong opposition to potential closures, emphasizing that while restructuring is necessary, plant closures and a diversion from the production of electronic vehicles should be off the table.
Chancellor Olaf Scholz (SPD) addressed these economic pressures by proposing a pact with the industry, aiming to include very concrete measures to strengthen Germany’s position as a manufacturing hub. Scholz’ proposal seeks to shore up industry confidence amid calls from business leaders for increased government support. The pressure on Volkswagen and the broader industry signals a critical juncture for Germany as an industry location and emphasizes the need for government actions.
The U.S. Embassy recently hosted the 14th U.S.-South Africa Annual Bilateral Forum (ABF). The forum shows a comprehensive partnership anchored by mutual support for democracy, security, economic growth, and sustainable development, aligning with South Africa’s National Development Plan and the U.S. Strategy for Sub-Saharan Africa.
The bilateral forum explored several issues of mutual interest, including trade, job creation, growth of the ICT sector, and health and security. Of greater interest for South Africa over the past few months has been the renewal and continued inclusion in the African Growth and Opportunity Act (AGOA). Using the bilateral forum, both countries are set to continue leveraging AGOA to enhance trade and investment, with a renewed focus on sectors like ICT and aligning with the African Continental Free Trade Area (AfCFTA). Strengthening digital infrastructure and technology exports will streamline trade and create new jobs.
The commitment to conservation and climate change adaptation, coupled with the Just Energy Transition Partnership (JET-P), also took centre stage at the forum, looking at opportunities to address shared environmental concerns and strengthen environmental protection initiatives. On the JET-P front, there was a greater emphasis on decarbonization; the ABF’s focus on JET-P is timely for addressing South Africa’s energy needs and climate goals. The focus on renewables and nuclear cooperation offers dual benefits: cleaner energy and more significant opportunities for economic development in energy-intensive sectors. Looking ahead, the forum also highlighted the potential impact of the U.S. and South Africa’s consecutive G20 presidencies, which offer a unique and significant opportunity to set agendas on shared global challenges, such as sustainable development, health, and digital transformation, benefiting both Africa and the Global South.
The forum underscores South Africa’s role as a strategic gateway for companies seeking to expand across Sub-Saharan Africa, with opportunities amplified by AGOA’s preferential access and the AfCFTA’s regional integration potential.
On 29 October, the Council of Ministers approved the Bill on Corporate Reporting on Sustainability, to be submitted to Parliament. This draft adapts Spanish regulations to the Corporate Sustainability Reporting Directive (CSRD), which introduces the concept of dual materiality. This means that companies must report not only on the impact of environmental, social and governance (ESG) factors on their finances, but also on how their activities affect these areas. The information to be included covers greenhouse gas emissions, resource consumption, labour conditions, human rights, diversity, inclusion, and governance structure, among other aspects.
These regulations are not only an obligation but could also be seen as an opportunity. The information obtained through CSRD compliance can be key to improving strategic decisions, optimising operations and reducing costs, as well as strengthening consumer and investor confidence through transparency and social responsibility. Ultimately, regulatory compliance and sustainable practices could not only benefit the environment, but also profitability and corporate responsibility.
In Spain, the regulation will affect some 5,500 companies, including large companies, business groups and listed small and medium-sized enterprises. The entry into force will be gradual: from 2025, large public interest companies and dominant entities of these groups with more than 500 employees will have to submit their sustainability reports for the fiscal year 2024. In 2026, other large companies will join with reporting for the fiscal year 2025, and in 2027 it will be the turn of listed SMEs for 2026. Unlisted SMEs are exempt, although they are encouraged to report voluntarily, while subsidiaries of third country companies with revenues of more than €150 million in the EU will have to comply from 1 January 2028.
The Bill now awaits its parliamentary processing, which will lead to its final approval. Although the current parliamentary arithmetic is complicated, the Bill is expected to be go through smoothly, as Spain has already fallen behind the deadline set by the European Commission for the CSRD’s transposition—6 July 2024—and some of the obligations included in the text are to be fulfilled already by 2025.
The last two weeks in France have been characterised by intense parliamentary debates on the 2025 Budget Bill and the 2025 Social Security Bill. The Budget Bill represents the first major test for Prime Minister Michel Barnier, whose government lacks both a majority and a stable coalition. Barnier is committed to drastically reducing the French deficit, currently estimated at 6.1% for 2024, to under 5% in 2025, and reaffirmed so in France’s medium-term budgetary and structural plan, submitted to the European Commission on 23 October. He plans to achieve this by generating €20 billion in revenues and reducing spending by €40 billion.
However, the draft Budget Bill was significantly altered by MPs in the National Assembly’s Finance Committee, which ultimately rejected it. When presented to the National Assembly’s MPs in public session on 21 October, the bill was again submerged by amendments. This has significantly delayed the parliamentary agenda, as MPs were supposed to vote on the first part of the budget, which pertains to revenues, on 29 October. Debates on the remaining 1,500 amendments will restart on 5 November, in parallel to the discussions on the second part of the budget, which pertains to spending. In the meantime, MPs will debate the 2025 Social Security Bill.
Given that the Budget Bill will likely fail to pass the lower house, with both the left-wing New Popular Front and the far-right National Rally declaring they would vote against it, Prime Minister Michel Barnier sought and was granted the authority to use the special constitutional powers granted by Article 49.3 of the Constitution in case negotiations with parliamentarians fail. This article allows the prime minister, “after deliberation by the Council of Ministers”, to force a bill through the National Assembly with no vote. The only alternative to prevent the bill from passing is then to overthrow the government. When the prime minister triggers this procedure, MPs have the option of tabling a motion of no confidence within 24 hours. If a majority vote is obtained, the law is rejected and the government collapses.
The Petro Administration has announced its support for a legislative initiative seeking to increase fiscal decentralization in Colombia. The bill, which began its final discussions on October 22, would mean significant modifications on how resources are distributed to municipalities, departments and districts.
In particular, the bill expects to reform the General System of Participations (SGP), a division which currently accounts for 25.7% of the Colombian National Budget. If the bill is approved, this percentage would increase to a minimum of 46.5% annually, effectively doubling the resources allocated to local territorial entities.
However, this proposal also involves a risk of institutional restructuring. Ministers of Finance and Interior have indicated that the reform must undergo modifications, as it is currently “fiscally unsustainable”. Hence, in the following weeks, it will be complemented by assigning new responsibilities to regional entities, thereby relieving some of the central government’s obligations.
Some experts have raised concerns about the potential consequences of this reform. Former Ministers of Finance noted in a letter that the lack of clear redistribution of responsibilities could increase inflexible spending, making it challenging to meet fiscal targets, such as the debt anchor of 55% of GDP, which could rise to 71% in coming years.
The discussion about the future of centralism in Colombia and the effects of granting greater powers to territorial entities is particularly relevant in a context of low budget execution (54.2%) and a 30% decline in tax revenue as of September, intensifying concerns about fiscal sustainability and macroeconomic stability.
Expert Analysis |
Webcast – Carried Interest Tax: What the
Budget Changes Mean for Private Equity
We are pleased to invite you to our webcast on Wednesday 13th November which will explore the taxation of carried interest following the UK’s Autumn Budget announcement on Wednesday.
Our expert panel will provide a comprehensive overview of the tax changes announced and the practical implications for private equity firms. This discussion will be led by Lewin Higgins-Green (carried interest tax expert) together with Edward Bridges (Strategic Communications Global Head of M&A) and Josh Cameron (private equity expert in our Public Affairs team).
Launch of FTI Consulting Brussels Defence
& Aerospace practice
On 17th October, our FTI Consulting Brussels team proudly launched the Defence & Aerospace practice alongside EU officials, representatives of the defence industry as well as other FTI Consulting experts from France, Germany, Spain, and the UK.
To celebrate this milestone, we hosted a “Navigating the Future of European Defence” panel event which focused on the upcoming political cycle and new prospects for Defence. Among the main topics, attendees could listen and exchange views on a future ambitious budget, the arrival of the first Commissioner for Defence and Space, and the cooperation between the EU and NATO, but also explore opportunities for the defence industry.
Autumn Budget 2024 – Reeves rolls the dice
Yesterday’s Budget was ambitious in scope and ambitious in sums. The Prime Minister trailed it as giving “a sense of how we intend to do business” and as “our first opportunity to define the way in which we will approach the economy”. But ultimately its real test is whether it will generate economic growth.
FTI Consulting’s Public Affairs team examine the strategy behind the Budget, its key features and what it means about the future of the economy.
Insights from Strasbourg Plenary
Our FTI Consulting Brussels experts are regularly present in Strasbourg for in-person engagements which enable them to provide live insights, connect with policy makers and help clients navigate Strasbourg.
What were the main takeaways from the second October Strasbourg plenary? Check out the top policy highlights from our team who were on the ground last week!
Open Banking Expo 2024
Exciting developments are on the horizon for the data economy! FTI Consulting Director Marija Ivoninaite spoke at the Open Banking Expo 2024 where she presented the growing opportunities in open finance in the EU.
With new regulations like the Financial Data Access Framework and the Digital Information and Smart Data Bill, both consumers and businesses stand to benefit from increased data access, innovation, and more personalised financial services.
Q3 2024 Provider-Payer Dispute Data Update
As Medicare’s Open Enrollment period begins and Election Day approaches, both presidential candidates are presenting their plans to address key health policy issues, including Medicaid and the future of the Affordable Care Act (ACA).
For nearly three years, FTI Consulting has been closely monitoring disputes between payers and providers through publicly reported news coverage and paid and earned media. Take a look at their findings here.
Upcoming Conferences, Elections and Webinars
- November 05: Presidential Election (US)
- November 05: General Election (Puerto Rico)
- November 10: General Election (Mauritius)
- November 12: General Election (Palau)
- November 14: Parliamentary Election (Sri Lanka)
- November 24: Parliamentary Election (Guinea-Bissau)
- November 27: General Election (Namibia)
- November 30: Parliamentary Election (Iceland)
- December 01: Parliamentary Election (Romania)
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