The golden rule of Boris Johnson’s Conservatives is that an otherwise disparate party is at its most happy when it’s talking about Brexit and its consequences.
At times of stress, it’s the trump card the PM routinely reaches for. Given the stage of the country, expect it to feature heavily during the party conference.
As the prime minister heads to Manchester in what would conventionally be an extraordinarily troublesome backdrop – fuel shortages, supply line disruption, containers mounting up at ports, food shortages for months, lack of medicines in pharmacies culling pigs where they live rather than in slaughter houses due to a lack of labour meaning they become pet food not pork – he will seek to turn this to his advantage.
Mr Johnson wants to boil this down into an argument over migration he believes he can win – the Tories will continue to control numbers coming in from overseas in the hope competition drives up wages, Labour would let in more workers from abroad to fill the vacancies, undercutting domestic workers.
It is a bold gambit, not without its risks. No matter the argument doesn’t fix the problems at hand or fill empty shelves. No matter that his government has had to increase visa numbers and relax conditions to entice migrant labour twice in a fortnight. No matter that Labour is not actually proposing a return to free movement or unlimited migration, though he is helped by their line being inconsistent. No matter that some economists would argue constraining labour supply when inflation is rising could lead to a stagnant economy.
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The argument over the involvement of Brexit will be nuanced, and he won’t say the shortages are a consequence of it. Instead he will make clear Brexit allowed the ending of free movement which stops overseas low-wage migration being part of the solution under his government.
Mr Johnson believes he has found a politically-winning dividing line up to a 2023 or 2024 election, so expect to hear variations of it from the conference podium and fringe events through the week. If he can show by the time of the next election wages have risen, he believes voters will thank him.
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The prime minister’s business secretary gave a foretaste of the argument in a pre-conference interview with Conservative Home.
Kwasi Kwarteng put the supply line crisis, flashing amber and red in different sectors in the briefings for minister, down to a “transition” as the UK “rejects a low-wage high immigration economic model”.
He goes on: “You’re quite right to say people are resisting that, particularly employers that were benefiting from an influx of labour that could keep wages low,” in remarks that will leave many industry associations reeling.
And what if the shortages cause disruption? “All you can do, other than take various emergency measures, is tough it out,” said Mr Kwarteng.
Faced with a crisis, this prime minister loves nothing more than to try and “tough it out”, so expect little backing down at conference, but if Christmas retail is disrupted in the way some predict, it could still be a choppy autumn for the Conservatives. But first he wants to use the extraordinary platform which Manchester affords.
The prime minister is entering Tory conference in as strong a position as any Conservative leader since David Cameron in October 2015. The Conservatives are eight percentage points of Labour in YouGov’s latest poll. The party enjoys huge leads in everyone over 50, with three times as many over-65s voting Tory as Labour. Almost nobody who voted Tory in 2019 says they will vote Labour now (at 2% this figure is within the margin of error of zero) with four times as many voters deserting to Richard Tice’s right-wing Reform party.
That does not mean that Mr Johnson is in an unassailable position. Slowly Sir Keir’s ratings have been catching up with Mr Johnson’s in the YouGov tracker. Some 52% said they disapprove of the government compared to 26% approving. It would not take much volatility for ‘red wall’ MPs, elected because Labour got the worst defeat since 1935 in the 2019 general election, to start to wobble. Politics can spiral.
Image: Sir Keir Starmer is slowly gaining on the PM in polls
This is not happening yet, and almost certainly will not happen in the confines of the Manchester Conference Centre. Tory MPs I’ve spoken are asking little more than that the prime minister empathises with cost of living pressures in his speech. Mr Johnson’s reshuffle confirmed he rules his party now, beholden to no one, hearing little meaningful dissent and happy to promote potential future rivals who can all compete to succeed.
So expect Manchester to be an Instagram beauty pageant, of Rishi Sunak’s diffident one-liners pitted against Liz Truss intoning to the ideologically faithful, all beautifully presented in picture form. Try and spot the work being put into the brands of people who consider themselves contenders to the Johnson throne while also waiting for Michael Gove to hit the dancefloor again.
With the lobbyists cooing complements and the faithful cheering, the Tory party conference is a long way from the real world. Mr Johnson will want to enjoy it.
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A growing demand for US dollar-tied crypto stablecoins could help push down the interest rate, says US Federal Reserve Governor Stephen Miran.
The Donald Trump-appointed Miran told the BCVC summit in New York on Friday that the dollar-pegged crypto tokens could be “putting downward pressure” on the neutral rate, or r-star, that doesn’t stimulate or impede the economy.
If the neutral rate drops, then the central bank would also react by dropping its interest rate, he said.
The total current market cap of all stablecoins sits at $310.7 million according to CoinGecko data, and Miran suggested that Fed research found the market could grow to up to $3 trillion in value in the next five years.
Stephen Miran speaking at a conference in New York on Friday. Source: BCVC
“My thesis is that stablecoins are already increasing demand for US Treasury bills and other dollar-denominated liquid assets by purchasers outside the United States and that this demand will continue growing,” Miran said.
“Stablecoins may become a multitrillion-dollar elephant in the room for central bankers.”
Organizations, including the International Monetary Fund, have warned that stablecoins pose a threat to traditional financial assets and services, as they could potentially compete for customers. US banking groups have also urged Congress to tighten oversight of stablecoins with yield, arguing they could attract would-be bank users.
During his speech, Miran praised the GENIUS Act for setting out clear guidelines and consumer protections, as he indicated that the regulatory framework will play a key role in spurring broader adoption of stablecoins.
“While I tend to view new regulations skeptically, I’m greatly encouraged by the GENIUS Act. This regulatory apparatus for stablecoins establishes a level of legitimacy and accountability congruent with holding traditional dollar assets,” he said, adding:
“For the purposes of monetary policy, the most important aspect of the GENIUS Act is that it requires U.S.-domiciled issuers to maintain reserves backed on at least a one-to-one basis in safe and liquid US dollar–denominated assets.”
The crypto market could soon see some much-needed relief after the US Senate reached an agreement on a three-part budget deal to end the government shutdown, Politico reports.
Pending legislation to fund the US government has more than enough support to pass the 60-vote threshold, Politico reported on Sunday, citing two people familiar with the matter.
It was Republican Senate Majority Leader John Thune’s 15th attempt to win Democratic support for a House-approved bill, putting the record 40-day government shutdown within reach of being lifted.
An official vote is still needed to finalize the agreement.
Ongoing uncertainty over when the US government would reopen has been a key factor holding back Bitcoin (BTC) and the broader crypto market from mounting a rebound.
Bitcoin initially rallied to a new high of $126,080 six days into the government shutdown on Oct. 6, but has since fallen over 17% to $104,370, CoinGecko data shows.
Bitcoin’s fall over the past month saw it drop by double-digit percentage points on Oct. 10 after US President Donald Trump’s announcement of 100% tariffs on China sent shockwaves throughout the markets.
Bitcoin’s change in price since Oct. 1. Source: CoinGecko
Bitcoin rallied 266% after last government shutdown lifted
The last US government shutdown occurred between late December 2018 and late January the following year in Trump’s first term.
After it ended on Jan. 25, 2019, Bitcoin rose over 265% from $3,550 to $13,000 over the next five months.
Prediction markets back shutdown to end this week
Bettors on prediction market Polymarket are backing that the government shutdown will be lifted on Thursday, with the market showing a 54% chance it will happen between Tuesday and Friday.