Thursday, April 20, 2023

Sunak’s lose-lose situation

The Readout With Alex Wickham.

Hi, I'm Alex Wickham, a Bloomberg government reporter based in London. Here's today's Readout.

"Starship experienced a rapid unscheduled disassembly before stage separation." So said Elon Musk's SpaceX after its rocket launch this afternoon ended in a massive explosion.

SpaceX Starship test flight on April 20. Source: SpaceX

In Westminster, UK Deputy Prime Minister Dominic Raab is waiting to find out whether his political career will face a similarly rapid unscheduled disassembly.

This morning, Prime Minister Rishi Sunak received the independent report into allegations that Raab bullied officials. Several hours later, No. 10 still hasn't told us the findings, nor whether Sunak has decided to keep or fire Raab. 

While we wait, Kitty Donaldson has the essential deep dive on the civil war currently raging between ministers and civil servants.

The delay in Downing Street may suggest the evidence in the report is not clear cut. Raab might have been robust or abrasive to junior officials, but did his behavior amount to bullying or constitute a breach of the ministerial code? That's the decision Sunak is grappling with as you read this.

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Pressure from all sides

It's hard to see the call on whether to get rid of Raab as anything other than a lose-lose situation for Sunak.

Raab is his deputy and the second most senior member of the government. More than that, he has been one of Sunak's closest political allies and was among the first to endorse him for Conservative Party leader last summer.

While civil servants may have good reason not to like Raab, prime ministers do like him. Boris Johnson also made him deputy PM, and he has a reputation for being extremely loyal to his political superiors — a rare thing in recent Tory politics.

Dominic Raab departs 10, Downing Street on April 18. Photographer: Leon Neal/Getty Images

There is another dynamic that might not get much sympathy in the media or among the public, but is nonetheless an important consideration for Downing Street.

Some figures on the right of the Tory party, from backbenchers to ministers to even some No. 10 officials, believe Raab is essentially the victim of a stitch-up from civil servants who they see as either wet behind the ears or, that dreaded word, "woke."

That means Sunak is under pressure from some elements of his party not to bow to pressure to sack Raab. The reality, rightly or wrongly, is that Sunak losing his deputy over civil service complaints and media reports would be viewed by some Tories as a sign of weakness.

Still, the PM might consider that better than the storm that would be created by trying to keep him.

On day one in No. 10, Sunak pledged to run a government based on the principles of "integrity and accountability." Translation: I'm different to what came before.

Boris Johnson and Rishi Sunak. Photographer: 10 Downing Street

If the report does find evidence that Raab's behavior fell short of the high standards we'd expect from a minister, and then Sunak defies calls to sack him, it is hard to see how the PM could say he has kept that defining pledge.

The opposition Labour and Liberal Democrat parties would have a field day. My colleagues in the media would, too. That's not to mention the response from the civil service and the potential for the saga to rumble on for weeks.

That would drive a coach and horses through No. 10's narrative that their government is focused on competence and delivering for the public, rather than getting distracted by political scandals.

That would be the sort of setback that Sunak can't afford. It may be the key thing on his mind as he weighs up whether to wield the axe today.

Harrods focusing on the local shopper

Harrods is doing better than before the pandemic. That's what the luxury store's Managing Director Michael Ward says in this week's episode of the In the City podcast.

While mid-market labels are feeling the squeeze, super-brands like Chanel and Dior are thriving, Ward explains. "The great thing about the luxury industry is it's price insensitive," he says. "The rich get richer, and that's the world." 

You can listen to the full episode on Apple podcasts or on Spotify.

The Harrods luxury department store in London, UK. Photographer: Hollie Adams/Getty Images Europe

What you need to know tomorrow

Get ahead of the curve

Endgame nears for unionists. Northern Ireland's Democratic Unionist Party is under severe pressure over refusal to re-join government, according to our reporters.

Mixed messages. Britain's two main mortgage lenders have been calling house prices in opposing directions since the start of the year, reports Lucy White.

Threatening unity. Allies have criticised French President Emmanuel Macron's push to enlist China's help to sketch out parameters for possible talks between Russia and Ukraine.

Ads and chatbots. Tech firms should be wary of repeating the same mistakes with chatbots that they made with social media, writes Parmy Olson for Bloomberg Opinion. 

Pushing for higher volume. Elon Musk indicated Tesla will keep cutting prices to stoke demand even after markdowns early this year took a significant toll on profitability.

Egg-spensive. The price of a full English breakfast jumps to a new high as stubborn food price inflation makes life harder for British consumers. 

The big number 

9%
The amount that Deliveroo's orders have fallen by in the first quarter as customers look to save money by cutting back on meal deliveries.

TikTok algorithm pushes suicide to vulnerable kids

One key story, every weekday

The headquarters of ByteDance in Beijing  Photographer: Greg Baker/Getty Images

The superpopular app can serve up a stream of anxiety and despair to teens. TikTok says it's making improvements but now faces a flood of lawsuits after multiple deaths.

Read The Big Take

Please send thoughts, tips and feedback to readout@bloomberg.net. You can follow Alex on Twitter.

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