The Daily Update - G20 / UK data / Merkel

At the G20 summit over the weekend the UK’s new Prime Minister Theresa May made her debut on the international stage where she has to begin to take on the task of implementing the UK’s vote to leave the European Union. As well as Brexit, she also has had to try to smooth relationships with the Chinese and Japanese governments which have become somewhat strained since the vote. On top of all this she will have to try to convince the G20 leaders that the UK has not turned its back on their core values of free trade and globalization. Not that all this has had any effect on UK data recently; after last week’s very good Manufacturing and Construction data which put Sterling very much on the front foot; this morning’s record UK services PMI figure of 52.9 from July’s 7-year low of 47.4 saw sterling again being driven higher. This was the biggest monthly gain since records began 20 years ago.

Interestingly, as Theresa May begins her premiership fighting for her voice to be heard at the G20 summit, German Chancellor Angela Merkel looks to have problems closer to home. According to exit polls Merkel’s Christian Democrat party was beaten into third place by the anti-immigrant and anti-Islam Alternative for Germany (AfD) party in her home state of Mecklenburg-Vorpommern. In the shock defeat the AfD party looks to have taken nearly 22% of the vote behind the centre left Social Democrats (SPD) with the Christian Democrat’s taking 19%.

The AfD co-leader, Frauke Petry, was quick to plunge the knife in Merkel over the result saying "This is a slap in the face for Merkel - not only in Berlin but also in her home state," adding "The voters made a clear statement against Merkel's disastrous immigration policies. This put her in her place." France’s far-right National Front party leader was also quick to jump on the bandwagon, tweeting "What was impossible yesterday has become possible: the patriots of AfD sweep up the party of Ms Merkel. All my congratulations!”

This all comes after figures were released last week showing that Angela Merkel’s popularity has fallen to its lowest level in more than 5 years. According to a poll taken at the end of last week, 45% of German’s are satisfied with her work, down from 67% a year ago. When asked what was the main cause of this drop in popularity, her open-door policies on refugees were given.