Every week we bring you the world’s biggest travel, business, and currency stories. This week: The UK election and reactions, future of Brexit, Canadian jobs, airlines, and Bank of Canada.
UK Election Results
The UK election last night resulted in the ruling Conservative Party, led by Theresa May, losing their majority in the House of Commons. With 318 seats, May’s party still has the lion’s share of MPs, followed by Labour at 261, the SNP (Scottish National Party) with 35, Liberal Democrats with 12, and Democratic Unionist Party with 10. The Conservatives lost 12 seats, the SNP lost 21, while Labour added 29, and the Lib Dems added 4. The UK Independence Party (UKIP) lost its only seat.
Conservative Government
The Conservatives will form a minority government banking on support from the Democratic Unionist Party (based in Northern Ireland). The possibility of a coalition government still exists.
Brexit
May had hoped that the election would strengthen her party’s position prior to the upcoming Brexit negotiations. Instead both her and her party are in a much weaker position. They will have to rely on other parties to avoid a vote of non-confidence which would trigger another election. This likely means that the hard line Brexit position the Conservatives staked out will have to be abandoned in favour of a softer approach.
Democratic Unionist Party
The Democratic Unionist Party who won 10 seats but just 1.5% of the total popular vote is now the key to power. Without their support the Conservatives will find governing near impossible. The party favours remaining part of the UK (in contrast to the Republican Sinn Fein who won 7 seats) but also wants to remain part of the EU single market in order to retain close ties to the Republic of Ireland.
Pound and Stock Market React
In afternoon trading in the UK the pound fell 1.7% against the USD and 1.4% against the EUR. The FTSE 100 meanwhile rose 0.8%, seemingly unphased by the election so far. A lower pound typically boosts the FTSE 100 as many British companies have large foreign operations and the lower the pound the greater the value of foreign assets when converted back into GBP. Despite the FTSE 100 resilience, some companies were hit hard. Most UK banks fell by around 2% while housebuilders and some retail companies also fell.
Canada adds jobs
Canada’s economy smashed predictions by adding 77,000 full time jobs in May, but this was offset by a loss of 22,000 part time positions. Economists had predicted an increase of just 15,000 jobs. Over the last year Canada has added 317,000 jobs, the largest since 2013. Despite the strong numbers the unemployment rate increased to 6.6% as 78,000 people entered the job market. 47,000 new jobs were created in Ontario, BC, and Quebec along with large gains in HealthCare and Manufacturing.
Hudson Bay Cuts jobs
While Canada’s economy overall may be adding jobs, the Hudson’s Bay Company recently announced that it would be cutting about 2,000 jobs as part of a plan to save $350 million.
Westjet Ads
Westjet has launched a new ad campaign lampooning airlines that overbook flights and claiming that it does not do so. The company has always maintained a no overbooking policy, but the new campaign was launched after a string of high profile incidents in both the US and Canada with United Airlines and Air Canada.
Bank of Canada
The Bank of Canada has expressed concern about the high level of household debt held by Canadians and the red-hot housing market. The issues are closely linked with many Canadians taking out huge mortgages to afford overpriced homes. The Bank also expressed concern about the risk of cyber attacks on Canadian institutions. Still, the Governor of the Bank of Canada, Stephen Poloz, insists that the financial system is “resilient”.
Air Transat
Despite advertising flights as ‘direct’ some Air Transat flights have been making undisclosed pit stops to refuel. While the company insists that direct does not mean ‘non-stop’ many passengers feel misled. Air Transat outsources many of its flights to Mexico to Flair Air whose aging fleet must stop to refuel on the long journey even under ideal conditions.
Sources: CBC, BBC, Financial Post
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