This week has seen some unprecedented legal actions being taken to rein in the "powers of the executive" across both sides of the Atlantic.
On this side of the pond, the UK Supreme Court ruled unanimously that the decision to suspend Parliament was "unlawful". In a damning indictment of the Prime Minister, leaders of the opposition parties even called for Boris Johnson to resign. The ruling forced Johnson to cut short his visit to the UN General Assembly in New York to face the backlash at home. While Jeremy Corbyn and others may applaud the court's decisions now, given the policies touted at the Labour Party Conference this week, such as establishing a state-funded generic drug manufacturer and the nationalisation of the utilities and railways, he may find those very same courts opposed to his proposals. This should provide investors with a degree of reassurance that the courts will act in the best interest of free markets and fair competition.
Meanwhile in the US, after toying with the idea of impeachment for some time, the leader of the Democrats and the House of Representatives, Nancy Pelosi, deemed the alleged whistle-blower complaints significant enough to "start proceedings of impeachment". In doing so, Trump has become the fourth US president to face impeachment proceedings. Pelosi said the House would look into the claims that Donald Trump pressed Ukraine’s President to investigate the local business activities of the son of former Vice President, Joe Biden, one of the leading Democratic presidential contenders. Trump is being accused of betraying his oath of office and US national security by seeking a foreign power’s help in the 2020 election.
The President has previously decried Democrats attempts to boot him out of office as a "witch hunt". The Mueller investigation into Russian interference in the 2016 presidential elections found no "smoking gun", resulting in no charges being pressed. Similarly, this time, Trump said the transcript showed that there was no “quid pro quo”. However, opponents say that Trump's recent actions are proof of an impeachable offence. Unfortunately for investors, propositions for fiscal stimulus, including infrastructure spending, may find difficulty getting any attention or bipartisan support considering these fractious proceedings are likely to last a long time and create even greater divisions. This is unhelpful for investors, particularly given the deterioration seen in US economic data over the past few months.
Given the more extreme views of a smaller part of the electorate that these leaders represent, they appear to be operating close to the legal boundaries of their authority. The opposition parties seem keen to ensure that the judiciary becomes the arbitrator between the ever-expanding gap of political views between parties, with mixed financial implications.
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