Tag: UK

  • A very close special election saw Reform UK win by six votes, resulting in a loss for Labour

    A very close special election saw Reform UK win by six votes, resulting in a loss for Labour

    Nigel Farage’s insurgent anti-immigration party, Reform U.K., scored a significant, if razor-thin, victory Friday in a parliamentary special election in the northwest of England. The result served notice that Mr. Farage, a populist fixture and close ally of President Trump, is again a rising force in British politics.

    Reform’s candidate, Sarah Pochin, won by just six votes over her Labour Party opponent, Karen Shore, in Runcorn and Helsby, seizing what had been a safe seat for Labour until the incumbent, Mike Amesbury, was forced to resign after being convicted of assault for punching one of his constituents.

    On a night of high drama, the outcome — the tightest in such an election in modern history — was so close that the vote had to be recounted, delaying the declaration of the result for hours.

    But the victory, by 12,645 votes to 12,639, was the start of what could be an impressive show of strength by Reform in mayoral and local council elections held Thursday across England.

    More than 1,600 municipal seats are up for grabs, and polls suggest that Reform could win at least 300 of them.

    If Reform’s gains are borne out as the ballots are counted throughout Friday, it would deliver a significant jolt to British politics, potentially accelerating the country’s shift toward a more polarized, multiparty system.

    For Prime Minister Keir Starmer, it would be a setback in his party’s first electoral test since Labour swept to power in July. The Conservatives, still licking their wounds after last summer’s stinging defeat, would find themselves even more vulnerable to a threat from Reform. And Mr. Farage could make a plausible case that Reform is emerging as a genuine rival to both major parties.

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    A polling station in Runcorn and Helsby, a parliamentary constituency that had long been considered a safe seat for the Labour Party. (Phil Noble/Reuters)

    By itself, the Runcorn defeat is a blow to Mr. Starmer. Labour won the seat in the last election with a margin of 15,400 votes. But Mr. Amesbury’s conviction, on top of broader frustration from voters with the government, gave Reform an opening. Ms. Pochin, a businesswoman who served in local government, will join Mr. Farage as one of five Reform lawmakers with seats in Parliament.

    Her single-digit victory margin in a special election was without precedent in modern British political history. The closest margin until now was in Berwick-upon-Tweed in 1973, when the Liberal Democrats won by 57 votes.

    “The people of Runcorn and Helsby have spoken,” Ms. Pochin said after the victory. “Enough is enough. Enough Tory failure. Enough Labour lies.” She was joined by Mr. Farage, who told reporters that “it’s a huge night for Reform.”

    Peter Kyle, a Labour cabinet minister, told the BBC that the result was “frustrating.” The circumstances of Mr. Amesbury’s resignation had made it a difficult election, he said, but he added that he understood “why a message like this would want to be sent.”

    On Thursday in Runcorn, an industrial town of 61,000 that hunkers on the River Mersey, west of Liverpool, the portents of a Reform victory were in the air. People on the main street said the party had capitalized on anti-incumbent fervor, fueled by dissatisfaction with the economy, as well as on tensions over immigration, to win support among voters with deep Labour roots.

    In recent years, immigration has become a fraught issue after a local hotel was converted to house migrants, some of whom cross the English Channel in small boats, seeking asylum.

    While the Labour government has announced plans to close the hotel, Reform kept a spotlight on it and tried to claim credit for pressuring the government to act.

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    The anti-immigrant Reform U.K. party, led by Nigel Farage, was hoping to emerge from Thursday’s elections as a genuine rival to Britain’s two major parties. (Oli Scarff/Agence France-Presse/Getty Images)

    Terry Osborne, 49, a business development manager, said Reform had tried to exploit the fact that some voters were not aware of the government’s role, and was playing to their pre-existing biases on immigration. “They’ll hear what they want to hear about immigration,” he said.

    Mohamed Alosta, 36, a business owner who described himself as a longtime Labour supporter, also criticized Reform’s handling of the hotel issue.

    But he said he would not vote for Labour this time because he was disenchanted by the politics of the major parties. Instead, he planned to vote for the Workers Party, a fringe party led by the left-wing firebrand, George Galloway.

    In addition to the special election, voters were electing council members in 24 municipalities in parts of England, as well as six regional mayors: in Cambridgeshire and Peterborough; Doncaster; North Tyneside; the West of England; Hull and East Yorkshire; and Greater Lincolnshire.

    In the first of the mayoral results, Labour won in North Tyneside, the West of England and Doncaster, with Reform performing strongly and coming second in all three regions. In Greater Lincolnshire, Reform’s candidate, Andrea Jenkyns, a former Conservative lawmaker, was victorious, winning 42 percent of the vote.

    Much of what these local officials do is centered around mundane work like overseeing trash collection or planning. But the elections function as a referendum on the governing party, which racked up a whopping parliamentary majority last year but did so with a thin 34 percent of the national vote.

    Since then, Labour’s shallow support has been sapped by unpopular economic decisions like curbing payments to retirees that had helped them cope with fuel costs, hiking payroll taxes on businesses and changing inheritance tax rules for farmers.

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    A protest against changes to inheritance tax rules for land ownership for farmers, in front of the London Eye in March. (Henry Nicholls/Agence France-Presse/Getty Images)

    “They almost appear to have set out to offend every group,” said Robert Hayward, a Conservative member of the House of Lords and polling expert.

    With the next general election years away, there is no threat to Mr. Starmer’s position. But a bad result could increase pressure on the architect of Labour’s austere economic policies, Rachel Reeves, the chancellor of the Exchequer.

    Labour’s struggles are not translating into dividends for the Conservatives. The party is bracing for a major loss of seats because the last time this set of local council seats was contested, in 2021, it did unusually well. Voters rewarded Boris Johnson, who was then prime minister, for a speedy rollout of coronavirus vaccines.

  • Can American monopoly regulations curb the power of Silicon Valley?

    Can American monopoly regulations curb the power of Silicon Valley?

    The European Union fined Apple and Meta hundreds of millions of dollars last week.

    The European Commission has fined Apple €500m (£429m) and Meta €200m for breaking rules on fair competition and user choice, in the first penalties issued under one of the EU’s landmark internet laws.

    The fines under the EU Digital Markets Act (DMA), which is intended to ensure fair business practices by tech companies, are likely to provide another flashpoint with Donald Trump’s administration, which has fiercely attacked Europe’s internet regulation.

    The Trump administration was indeed quick to rebuke the fines: a national security council spokesperson told Politico that the EU’s moves were a “novel form of economic extortion” that “will not be tolerated by the United States”.

    Interesting, too, is that while the penalties are no small amount of money, their impact likely pales in comparison to the scrutiny the tech companies are facing in the US. Though the EU boasts more robust consumer protections when it comes to tech, the cases against these companies on their home turf, where they have enjoyed great latitude in the past, threaten their core corporate structure, which has been key to integrating their products with one another and creating the walled gardens that have earned them hundreds of billions of dollars.

    Before Donald Trump ascended to the US presidency a second time, I would have predicted that little regulation of tech giants would emerge from his administration and that if there were any authority that would provide a check on Silicon Valley’s humongous and still growing influence, it would be Europe. That is not the regulatory landscape we find ourselves in, though. The US Department of Justice is engaged in serious pursuit of nearly every major American tech company for alleged monopolistic conduct. The bureau has filed suits against Apple, Amazon, Meta and Google within the past two years. Meta’s trial began two weeks ago and threatens to unwind its acquisitions of Instagram and WhatsApp.

    Most severe – Google faces the consequences of losing two major antitrust cases in quick succession. The US has petitioned a judge to force the nearly $2tn company to divest one of its crown jewels, Chrome, the most popular web browser in the world.

    The US wields the sharper sword here since the tech giants are headquartered there. Unlike the EU’s fines, the antitrust cases in the US threaten the corporate organization of the tech giants, which, if altered, would redirect the profits and change consumers’ experiences with their products. These massively profitable businesses have rolled over far larger fines like speed bumps – recall when the US Federal Trade Commission fined Facebook $5bn for privacy violations, which Mark Zuckerberg mentioned during a few subsequent earnings calls and then never again. Facebook continued operating largely as it did before. The EU fined Google fined €4.3bn in 2018 over Android’s preference for Google search. Apple was fined €1.8 just last year over music streaming payments.

    A Chrome-less Google, on the other hand, would make for a less personalized experience of using the internet, I think, perhaps even for my fellow Safari users. YouTube and Google search could draw on less of your history. No other company serves ads in so many corners of the web, so the ads that follow you around would become quite different.

  • How Brexit, a decision that hurt the economy, was similar to Trump’s taxes on imports.

    How Brexit, a decision that hurt the economy, was similar to Trump’s taxes on imports.

    Britain has watched President Trump’s tariffs with a mix of shock, fascination and queasy recognition. The country, after all, embarked on a similar experiment in economic isolationism when it voted to leave the European Union in 2016. Nearly nine years after the Brexit referendum, it is still reckoning with the costs.

    The lessons of that experience are suddenly relevant again as Mr. Trump uses a similar playbook to erect walls around the United States. Critics once described Brexit as the greatest act of economic self-harm by a Western country in the post-World War II era. It may now be getting a run for its money across the Atlantic.

    Even Mr. Trump’s abrupt reversal last week of some of his tariffs, in the face of a bond-market revolt, recalled Britain, where Liz Truss, a short-lived prime minister, was forced to retreat from radical tax cuts that frightened the markets. Her misbegotten experiment was the culmination of a cycle of extreme policies set off by Britain’s decision to forsake the world’s largest trading bloc.

    “In a way, some of the worst legacies of Brexit are still ahead,” said Mark Malloch Brown, a British diplomat who served as deputy secretary-general of the United Nations. Britain, he said, now faces a hard choice between rebuilding trade ties with Europe or preserving them with Mr. Trump’s America.

    “The fundamental issue remains the breach with our biggest trading partner,” Mr. Malloch Brown said, adding, “If the U.K. ends up in the arms of Europe because neither of them can work with the U.S. anymore, that’s only half a victory.”

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    Trucks waiting to enter the British port of Dover in December 2020. Credit…Andrew Testa for The New York Times

    Mr. Trump was a full-throated champion of Brexit in 2016, drawing explicit parallels between it and the political movement he was marshaling. He initially imposed lower tariffs on Britain than the European Union, which some cast as a reward for Britain’s decision to leave.

    Brexit’s drag on the British economy is no longer much debated, though its effects have been at times hard to disentangle from subsequent shocks delivered by the coronavirus pandemic, the war in Ukraine and, now, Mr. Trump’s tariffs.

    The government’s Office of Budget Responsibility estimates that Britain’s overall trade volume is about 15 percent lower than it would have been had it remained in the European Union. Long-term productivity is 4 percent lower than it would have been because of trade barriers with Europe.

    Productivity was lagging even before Brexit, but the rupture with Europe compounded the problem by sowing uncertainty, which chilled private investment. The years between the referendum and Britain’s formal departure at the end of January 2020 were paralyzed by debate over the terms of its exit.

    By the middle of 2022, investment in Britain was 11 percent lower than it would have been without Brexit, based on a model by John Springford, who used a basket of comparable economies to stand in for a non-Brexit Britain. Trade in goods was 7 percent lower and gross domestic product 5.5 percent lower, according to Mr. Springford, a fellow at the Center for European Reform, a think tank in London.

    Mr. Trump has kicked off even more volatility by imposing, redoubling and then pausing various tariffs. His actions, of course, affect dozens of countries, most dramatically the United States and China. Already, there are predictions of recession and a new bout of inflation.

    Brexit and its aftermath had multiple second-order effects, both economic and political. Ms. Truss’s plan for debt-funded tax cuts, which were driven by a desire to jump-start Britain’s torpid economy, instead triggered a sell-off of British government bonds as investors recoiled from her proposals.

    A similar sell-off of American bonds began last week, with far-reaching implications for the United States. Rising bond yields put pressure on governments because it means they must pay more to borrow funds. Sell-offs are also destabilizing because they signal deeper anxiety about a country’s creditworthiness.

    In Britain’s case, fears of a credit crisis forced Ms. Truss to shelve the tax cuts, and she soon lost her job. While that calmed the markets, it left a residue of doubt among investors about Britain. Mortgage rates remained elevated for months, reflecting what one analyst unkindly labeled a “moron premium.”

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    Liz Truss resigned from her post as prime minister of Britain in October 2022.Credit…Daniel Leal/Agence France-Presse — Getty Images

    This skittishness among investors has constrained Britain’s chancellor of the Exchequer, Rachel Reeves, from taking bolder measures to recharge the economy. Prime Minister Keir Starmer last week ruled out relaxing the government’s self-imposed fiscal constraints, citing the blowback to Ms. Truss’s free-market experiment.

    “I would argue that the reason we have such a small-c conservative chancellor is due to the experience we had with Truss,” Mr. Malloch Brown said. “It is directly related to not wanting to prompt the Truss effect again.”

    Unlike Britain, the United States still has the world’s default currency in the dollar, and until last week, Treasuries remained a haven for investors. But economists predict that both will be subjected to greater pressure under Mr. Trump.

    “Confidence has been shaken, the bond vigilantes are more alert,” said Richard Portes, a professor of economics at London Business School. “People are now much more sensitive to policy inconsistency and policy irresponsibility.”

    Brexit also diminished Britain’s influence on the diplomatic stage, something it has only recently begun to recoup with Mr. Starmer’s efforts to act as a bridge between Europe and the United States.

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    President Trump greeting Prime Minister Keir Starmer of Britain in February outside the White House.Credit…Haiyun Jiang for The New York Times

    Mr. Trump’s retreat from America’s role as a security umbrella for NATO has driven Britain closer to Europe. But Britons still wrestle with the legacy of Brexit. A defense pact with the European Union, for instance, is being held up by France’s demand that Britain make concessions on fishing rights — an old chestnut from Brexit negotiations.

    The longest-lasting effect of Brexit, analysts say, may have been on politics. The years of bitter debate divided and radicalized the Conservative Party, which governed from 2010 to 2024 with a patchwork of policies on immigration and trade that reflected the unwieldy coalition behind Brexit.

    Some Brexiteers pushed a vision of Britain as a low-tax, lightly regulated, free-trading nation — Singapore-on-Thames, in their catchphrase. Others wanted a stronger state role in the economy to protect workers in the left-behind hinterland from open borders and the ravages of the global economy.

    These contradictions resulted in policies that often seemed at odds with the message of Brexit. Britain, for example, experienced a record surge of net migration in the years after it left the European Union. The difference was that more of these immigrants were from South Asia and Africa, and fewer from Central and Southern Europe.

    Brexit’s backers sold the project as a magic bullet that would solve the problems caused by a globalizing economy — not unlike Mr. Trump’s claims that tariffs would be a boon to the public purse and a remedy for the inequities of global trade. In neither case, experts said, does such a panacea exist.

    “The truth is, Brexit did not correct any of the problems caused by deindustrialization,” said Tony Travers, a professor of politics at the London School of Economics. “If anything, Brexit made them worse.”

    Frustrations over the economy and immigration were among the reasons that voters swept out the Conservatives in favor of Mr. Starmer’s Labour Party last year. But his government has kept grappling with these issues, as well as with the bruised aftermath of Britain’s divorce from Europe.

    Mr. Trump’s MAGA coalition has some of the same ideological fault lines as the Brexiteers, pitting economic nationalists like Stephen K. Bannon against globalists like Elon Musk. That has led analysts to wonder if post-Trump politics in the United States will look a lot like post-Brexit politics in Britain.

    “Brexit caused profound damage to the Conservative Party,” Professor Travers said. “It has been rendered unelectable because it is riven by factions. Will the Republican Party be similarly factionalized after Trump?”

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    A countdown clock displayed on 10 Downing Street showed the moment the United Kingdom left the European Union at the end of January 2020.Credit…Mary Turner for The New York Times