Brexit countdown, Egypt election, H&M woes
Josh de la Mare previews the big stories the FT is watching in the week ahead, including the start of the one-year countdown to Brexit day in 2019, the Egypt election which will see its president return to power, attempts by the EU and Turkey to improve relations, and results from H&M showing the fashion retailer’s problems.
Filmed by Rod Fitzgerald and Petros Gioumpasis. Produced by Josh de la Mare.
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Hello, and welcome to The Week Ahead from the Financial Times in London. Here are some of the big stories we'll be watching this week. It's just one year now until the UK officially leaves the EU. Egypt goes to the polls, as its president further the cements his power. Turkey and the EU meet to improve strained relations. And results from H&M will show a fashion retailer in trouble.
This week marks the one year countdown to Brexit day, the day the UK officially leaves the European Union, on March 29, 2019. European leaders have agreed to a transition deal which extend Britain's de facto membership until the end of 2020. But just how much progress has really been made in the talks on Brexit?
The talks have made some progress. Back in December, the UK and the EU agreed on how to settle outstanding bills, what to do with citizens of the two parties in each other's territories, and made some commitments of principle about the Irish border. This month, they agreed pretty much on a transition deal - what to do in the first year or two after Brexit next year. But there's still a lot of outstanding questions, partly because the UK hasn't quite resolved the contradictions between the things it wants. It wants to leave the single market and the customs union, but it still wants full market access, frictionless trade, and no physical border in Ireland. How to solve that still remains to be seen and negotiated for the rest of this year.
How is this going to play out? I think the UK will have to give up some of the things it aims to achieve through Brexit. It will, in the end, have to stay much closer to the EU than the government now says it will do, in effect, more of a soft Brexit.
No one expects any surprises from Egypt's presidential election this week. Abdel Fattah Al-Sisi, the president, is certain of an easy victory after strong contenders have been eliminated from the race. Civilian opposition leaders who called for a boycott of the poll now face possible prosecution. Supporters of the general term president credit him with restoring stability to Egypt. His critics charge that he is a dictator.
There really is no question about this election. It will return president Abdel Fattah Al-Sisi to power. President Si-Si is backed by the state. He is backed by big business. And he still has popular support. It is hard to say how much because there are no opinion polls here. But many people want stability. They are still traumatised by the upheavals which followed the 2011 revolution. So they are not really in the mood to dissent, or protest, or decry the lack of political freedom.
The challenge for him, of course, will be the economy. If prices continue to go up, if people are dissatisfied, cannot find jobs, then we might see the beginnings of protest, or the beginnings of some kind of public opposition.
Turkish president, Recep Tayyip Erdogan, travels to the Bulgarian city of Varna on Monday for a meeting with the EU's top officials. Ankara and Brussels are attempting to improve their strained relationship after a period of high tensions in recent years, especially in the wake of the violent coup attempt that shook Turkey in 2016.
This time last year, Turkey and the EU were busy trading insults. President Recep Tayyip Erdogan infamously accused Angela Merkel and the German government of using Nazi practises, which - as you can imagine - didn't go down very well. But in 2018, we've seen a real shift in tone, both in public and in private. Turkish officials now talk quite optimistically about the prospect for getting things they want from the European Union, such as visa-free travel for Turkish citizens to travel in Europe, and also an upgrade of the customs union.
But the EU officials and diplomats who I talked to say, not so fast. They remain deeply concerned about the human rights situation and the rule of law here in Turkey. And they say they really want to see concrete improvement on that front before any progress is made. So while the meeting in Varna will be seen, I think, as an important sign of re-engagement, we're unlikely to see any tangible results.
On Tuesday, we have the results for the first quarter of H&M, the world's second biggest fashion retailer. Its shares have fallen recently to their lowest level since 2005, after warnings from the company that revenue will be lower than expected.
We have a pretty good idea they're going to be bad. The company's already told us that its sales were flat for the quarter. The question really is going to be, how bad the results will be. Weather is going to be a factor. The entire sector's been hit by the very cold snap. But H&M is likely to be worse affected than most. It's not coping well with the pressures in the sector. Shares are down 44% over the past year.
We have two big problems for H&M. One is online - the shift to online retailing is affecting the company. Another is the intensity of competition. At the top end, it's got Zara. At the bottom end, it's got Primark. And it means a lot of clothes have been gathering dust on the rails, and they're not moving as fast as they should be.
And that's what the week ahead looks like from the Financial Times in London. Goodbye.