This Week:

Israelis woke on October 7th, Simchat Torah and Shemenj Atzeret, two Jewish festivals, to attacks from Hamas militants. The fortified ‘smart border’ fence between Israel and the Gaza Strip had been breached by bulldozers with explosives and fighters who flew over using motorised gliders, in what has been described as a major Israeli intelligence failure.

• At least 700 people are reported killed (including 260 massacred at a music festival) and 1,590 wounded in Israel after Hamas launched its biggest attack in years, while retaliatory air strikes on Gaza have killed 232 and wounded around 1,600 according to medics. Hamas are also reported to have taken many hostages, including some relatively senior Israeli military figures.
• Prime Minister Netanyahu has announced Israel is at war, and that Hamas, the rulers of Gaza, would ‘pay an unprecedented price’.
• It is unclear what further action will come but Israel had as of Monday mobilised tens of thousands of reservists in preparation for some form of action.

UK Economics

1. UK chancellor Jeremy Hunt ruled out imminent tax cuts until public sector spending has been brought under control. He also announced a £1bn plan to reduce civil service personnel by up to 63,000.
2. UK house prices have fallen for the sixth consecutive month in September, according to mortgage provider Halifax. High interest rates are reducing demand in the property market from Britons struggling in the current cost of living crisis.
3. Metro bank, the UK’s first challenger bank, on Sunday struck a deal that raised £325mn in new funding to secure its future, after reports suggested it was facing trouble meeting regulatory capital requirements. It remains in talks to sell on up to £3bn of its residential mortgage portfolio to give it additional liquidity, as it fights to maintain its increasingly costly high street branch model.

World Economics

1. Market panic has led to selloffs in stockmarkets and higher yields in bonds. The S&P 500 fell by 5% in September, while American 10 year bond yields neared 4.9%, the highest since 2007. This phenomenon is happening worldwide, with UK gilts higher now than after last year’s problematic mini-budget.
2. Evergrande Group resumed trading on Tuesday after it was suspended last week amid reports of the arrest of Hui Ka Yan, its founder. Although its share price jumped 40%, the company is still at risk of liquidation with all its debt.
3. The eurozone’s annual inflation rate fell from 5.2% in August to 4.3% in September. It is predicted that the ECB will keep high interest rates so that inflation reaches 2% by 2025.
4. Sam Bankman-Fried was trialled over the collapse of FTX, the world’s third biggest cryptocurrency exchange. He has pleaded not guilty to defrauding investors and money-laundering.
5. Jamie Miller, CFO of EY since January, resigned in June after plans for an EY consulting business break off were thwarted by US audit teams, who said it would be too weak as a standalone firm. However, her resignation was only reported this week.

UK Politics

1. The Conservative party annual conference took place last week, where on Wednesday, Rishi Sunak cancelled the northern leg of HS2 from Birmingham to Manchester, claiming it would save £36bn to be spent on alternative road and rail schemes. He also introduced the “advanced British standard”, replacing A-Levels and T-Levels with a single qualification, including some form of English and Maths all the way through the course. Sunak also announced plans for a gradual ban on smoking, raising the legal smoking age by a year every year until smoking was illegal for all.
2. On Thursday, Labour defeated the SNP in the Hamilton and Rutherford West Constituency in Scotland, with a 20.4% swing from the SNP to Labour, and a majority of 9,446 votes. A by-election took place after the successful recall petition removing Margaret Ferrier from office, who had received a sentence of 270 hours community service for ‘culpable and reckless conduct’, having travelled to Westminster while positive for COVID in 2020. No party other than the SNP or Labour recevived the 5% vote share needed to be refunded their deposit
3. Sir Keir Starmer announced a plan to invest £1.1bn to fund voluntary overtime shifts in the NHS and provide 2mn extra appointments in the first year of Labour government.

World Politics

1. US Speaker of the House of Representatives Kevin McCarthy was toppled in a no-confidence vote last Monday night, by 216-210, after the republican struck a funding deal with Senate Democrats to avoid a government shutdown. It is the first time ever that a House of Representatives Speaker has lost a no-confidence vote, and was ironically via an amendment to regular procedure that Mr McCarthy had agreed to in order to take his post.
2. Narges Mohammadi, an Iranian human rights activist who is currently serving a 10-year jail term in Tehran, was awarded the 2023 Nobel Peace Prize to honour her fight against the oppression of women in Iran, and the ‘tremendous personal cost’ that this brought. 
3. Moscow’s court last week sentenced anti-war journalist Marina Osyannikova in absentia to 8.5 years in jail. Having protested live on air on state TV news, she was found guilty of ‘spreading knowingly false information’ about Russian armed forces. Her whereabouts are currently unknown, but in a statement before the verdict she made clear ‘of course, I do not admit my guilt’.
4. Top US and Turkish diplomats have held telephone talks after US forces operating in Syria shot down an armed Turkish drone. Washington states that the drone came too close to its ground forces in Syria, while Turkey asserted that it was merely lost on an operation. The US works with Kurdish forces in Syria, but Turkey views them as separatists and terrorists. This was the first incident of this kind between the two NATO allies.
5. A toxic election campaign reaped rewards for the populist far right and conservative movements in Germany – in both Bavaria and Hesse’s regional elections, the governing left-wing led national coalition had each of its 3 parties slip by a couple of percentage points. Commentators claimed that the result was a clear indicator that many voters feel that Olaf Scholz’s coalition has not guided Germany through the multiple crises of recent years in an acceptable manner.

Written by Zihan Tian and Angus McIntyre