Recently in Politics
September’s Mixed signals: A month of referendums, proposals and state elections leaves the EU unsure of its friends
Iceland says No
On August 29, Iceland held a referendum on whether to resume European Union accession negotiations. With an 82.6% turnout, Icelanders voted 52.8% to 47.2% against resuming accession talks, indicating they wanted to keep Iceland’s status as a member of the European Economic Area but not become a full member of the European Union.
The vote was largely divided between citizens of the capital city, Reykjavik, and the rest of the island, which is inhabited mostly by farmers and fishermen. These rural groups formed the ‘no campaign’ to vote against accession, aiming to protect national sovereignty and the island’s fishing industry (which accounts for 15% of GDP and 40% of exports) from the EU Common Fisheries Policy.
Supporters of reopening talks, among them Prime Minister Kristrún Frostadóttir, argued that EU membership would offer an extra layer of security for a geographically isolated nation in the age of Trump and Putin. Brussels, for its part, was eager to welcome Iceland, drawn by its wealthy population and its strategic position in an increasingly contested Arctic.
With one of the highest per capita incomes in Europe, Iceland has little need for EU structural funds to build infrastructure or raise living standards. Meaning that membership would not have benefited its citizens in the way it might other EU candidates such as Moldova, Georgia, or Ukraine.
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Recently in Business
The Resignation That Became a Rally
A minister quits in protest because the Treasury won’t fund the armed forces properly. Six weeks later, he’s running the Treasury. That’s what happened when Prime Minister Andy Burnham, Britain’s seventh PM in ten years, named John Healey his Chancellor of the Exchequer – the same Healey who had resigned as defence secretary in June, telling colleagues the Treasury had been “unwilling” to find the money to keep the country safe.
Markets didn’t wait for a Budget speech to react. On the first trading day after the appointment, Babcock International rose 6.8%, QinetiQ gained 4.5%, and BAE Systems added 3.1% – well ahead of a European defence index up only about 1% that same day. In the same session, gilt yields hit fresh two-month highs and sterling gave up its early gains, as bond traders asked the question equity traders skipped: how does this actually get paid for?
It’s an unusually clean case of political conviction being read directly as a trading signal – one that cheered defence investors and unnerved bondholders in the very same afternoon.
Why the market reacted this way
The appointment wrong-footed Westminster; Healey hadn’t been seen as a serious contender for the Treasury, and putting a minister who’d just resigned over spending levels in charge of setting them was, on paper, an odd choice. Under Keir Starmer, Healey’s fight with the Treasury over defence money ended in his departure. Under Burnham, the same fight appears to have propelled him into the building he was arguing with.
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