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An anti-Brexit demonstrator hold placards opposite the Houses of Parliament, in London, Britain, November 13, 2018.

Simon Dawson | Reuters

Moody’s warned on Friday it might further cut its rating on Britain’s sovereign debt, saying Brexit had eroded the country’s ability to tackle the challenge of its high levels of borrowing.

“It would be optimistic to assume that the previously cohesive, predictable approach to legislation and policymaking in the UK will return once Brexit is no longer a contentious issue, however that is achieved,” the ratings agency said.

Britain’s lawmakers have been wrangling over the country’s exit from the European Union for more than three years.

Prime Minister Boris Johnson has called a Dec. 12 election in an attempt to break the deadlock.

Moody’s said the “increasing inertia and, at times, paralysis that has characterized the Brexit-era policymaking process” showed how the UK’s institutional framework had diminished.

The decline in institutional strength appeared to be structural in nature, it said, and was likely to continue after Brexit, given what it said were deep divisions within society and the country’s political landscape.

It also said the government, after taking steps to reduce Britain’s budget deficit between 2010 and 2015, had been increasingly willing to “move the goalposts” on fiscal targets in recent years.

“Successive governments have announced large, permanent increases in public expenditures, most notably a large increase in spending on the National Health Service (NHS), outside the normal calendar for fiscal policy changes and without detailed policy plans,” it said.

Both of the main political parties have promised big spending increases ahead of next month’s election.

Moody’s said the risk was that Britain’s 1.8 trillion pounds of public debt – more than 80% of annual economic output – would begin to rise.

“In the current political climate, Moody’s sees no meaningful pressure for debt-reducing fiscal policies,” it said.

Moody’s, which stripped the country of its AAA rating in 2013, well before the 2016 Brexit referendum, and downgraded it again in 2017, said on Friday it was affirming its Aa2 rating on Britain’s sovereign debt.

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Asia markets November 22: US-China trade, currencies, oil

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Stocks in Asia were set to trade higher at the open on Friday following days of declines this week amid U.S.-China trade confusion.

Futures pointed to a higher open for Japanese shares. The Nikkei futures contract in Chicago was at 23,065 while its counterpart in Osaka was at 23,100. That compared against the Nikkei 225’s last close at 23,038.58.

Meanwhile, shares in Australia rose in early trade as the S&P/ASX 200 gained about 0.5%.

Shares of Westpac declined more than 1% after Goldman Sachs cut its price target for the stock by 10%, according to Reuters. The lender’s stock has slipped in the past few days. Australia’s anti money-laundering and terrorism financing regulator filed for civil penalty orders against the firm, alleging its “oversight of the banking and designated services provided through its corresponding banking relationships was deficient.”

Markets have had a rocky trading week amid mixed headlines on U.S.-China trade.

The Wall Street Journal reported Thursday that Chinese Vice Premier Liu He, during a phone call thought to have been made late last week, had invited U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing to sit down for further talks.

It was not clear whether U.S. negotiators had accepted Liu’s invitation. However, the Journal’s report said that U.S. trade officials were willing to meet with their Chinese counterparts. Meanwhile, the South China Morning Post said both countries are on the “doorstep” of reaching a deal, citing a source close to the Trump administration.

The matter has been further complicated by U.S. legislation on Hong Kong, which has been rocked by months of protests. The U.S. House of Representatives passed a bill on Wednesday intended to support protesters in Hong Kong. It prompted Beijing to accuse the U.S. of interfering in domestic affairs. U.S. President Donald Trump has yet to sign the bill.

“China has called on the President to veto the bill but with unanimous Senate and House support, its highly unlikely that he will do so,” Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in an overnight note.

“They have threatened forceful measures if the bill is signed so expect to tensions to escalate when that happens,” Lien said.

Overnight on Wall Street, stocks stateside posed a three day-losing streak. The Dow Jones Industrial Average shed 54.8 points to close at 27,766.29 while the S&P 500 dipped 0.16% end its trading day at 3,103.54. Nasdaq Composite declined 0.2% to close at 8,506.21. Thursday marked the third straight day of losses for the Dow — its longest losing streak since August. The S&P 500 posted its first three-day slide since September.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.958 after dipping to levels below 97.8 earlier.

The Japanese yen traded at 108.59 per dollar after strengthening from levels above 108.9 seen earlier in the trading week. The Australian dollar changed hands at $0.6787 after declining from highs around $0.681 yesterday.

— CNBC’s Fred Imbert contributed to this report.

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Hong Kong district elections may be ‘barometer’ for public sentiment

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Hong Kong Chief Executive Carrie Lam speaking at a press conference in Hong Kong on October 4, 2019 where she announced that an emergency law will be invoked and face masks by protesters will be banned.

Mohd Rasfan | AFP | Getty Images

More than 4.13 million voters in Hong Kong will head to the polls on Sunday as the city holds its district council election. It will be the first governmental polls since the city’s social unrest began in June.

District councils are lower level government bodies looking after local matters — such as bus routes and recreation facilities. They have a four-year term, and one council is in charge of each of Hong Kong’s 18 districts.

With the ongoing anti-government protest that has dragged on for more than five months, political considerations may come across more important than local agendas when voters cast their ballot on Nov. 24.

“The election will be the barometer to reflect the social sentiment and also whether people support the government or the protesters, or they are tired of the violence,” said Bruce Lui, Senior Lecturer at the Department of Journalism, Hong Kong Baptist University.

Pro-democracy supporters hold their phone’s flashlight in a rally to show support for students at The Hong Kong Poytechnic University on November 19, 2019 in Hong Kong, China.

Anthony Kwan | Getty Images

Lui expects some voters to show sympathy toward protesters or be reluctant to stand with the police due to accusations of officers using excessive force when tackling protesters.

He predicts the pro-democracy camp might win over some of their opponents’ seats — though they may not be able to break the current pro-Beijing dominance in the councils. However, protests could intensify if the status quo remains.

Others may disagree.

“A couple of months ago, I may expect the opposition candidates to win big,” says Lau Siu-kai, vice chairman at the China Association of Hong Kong and Macao Studies, a Beijing-based think tank. “But now, I think the margin of victory will be smaller, and it will be getting smaller and smaller if the escalation of the violence continues.”

Hong Kong’s election hierarchy

Since Hong Kong returned to China from Britain in 1997, the international financial hub has been operating under the “one country, two systems” principle. It gives Hong Kong self-governing power and various freedoms, including limited election rights. Hong Kong citizens also enjoy a higher degree of autonomy than citizens of mainland China.

Under the current electoral system, only 94% of the district council seats and half of the seats at the legislative council — the city’s parliament that’s commonly referred to as the Legco — are elected by general public voters. Hong Kong’s chief executive, the city’s top leader, can only be nominated and elected by a committee that consists of 1,200 members, mostly pro-Beijing elites.

Opposition members have been pushing for the Chinese government to honor a full democracy that they say had been promised by Beijing in the Basic Law, the city’s mini constitution, which gives general public voters the rights to elect their leader. This has also been one of the five demands that the anti-government protesters are advocating. It was the core reason that sparked the 2014 Umbrella Movement, another wave of massive pro-democracy protests.

Without the change in political structure, the only way for the public to have a say about their leader is through the district councilors — who make up around 10% of the election committee — and Legco lawmakers, who account for about 6%.

Will election take place as planned?

Given the escalated violence, attacks on candidates and serious traffic disruptions in Hong Kong, there have been general concerns on whether or not the district council election will take place as scheduled.

A protester runs during an attempt to leave The Hong Kong Polytechnic University on November 18, 2019 in Hong Kong, China.

Anthony Kwan | Getty Images News | Getty Images

Lui from the Hong Kong Baptist University thinks the pro-establishment camp has split views on the matter, amid recent pro-Beijing commentaries that seem to set a tone of sticking with the timetable.

But Lau from China Association of Hong Kong and Macao Studies estimates there is only a 50-50 chance for the election to take place as scheduled.

“From the government’s point of view, to stop the election from taking place will meet a tide of criticisms by both local communities and international communities,” said Lau, a former head of central policy unit for the Hong Kong government . He said that continuing the election under unfavorable conditions may also have the problem of generating unfair results.

Asked if it’s better to go ahead with the elections, he told CNBC: “I don’t know because we have to take into account the situation in Hong Kong, particularly on the day of the election, see whether the election can be held smoothly.”

At a regular media briefing on Tuesday, Hong Kong leader Lam reiterated that the administration hopes to go ahead with the election — as long as it can be carried out in a fair, justified, safe and orderly manner.

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Highlights and top moments from Atlanta

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The 10 leading Democratic presidential contenders took to the debate stage on Wednesday in Atlanta after a momentous day of impeachment testimony in Washington.

While attention going into the event was focused on South Bend, Indiana, Mayor Pete Buttigieg, who has recently surged in the first contest state of Iowa, the young Democrat emerged largely unscathed after two hours of debate, parrying critiques from Rep. Tulsi Gabbard and Sen. Amy Klobuchar about his experience.

Instead, much of the ire was directed at President Donald Trump, with Sen. Bernie Sanders of Vermont calling him the “most corrupt president in the modern history of the United States of America.”

“If you think a woman can’t beat Donald Trump — Nancy Pelosi does it every single day,” Klobuchar said at one point.

Despite the harsh words, former Vice President Joe Biden chided Democrats who have chanted “lock him up” at Sanders rallies and sports events, and said if he is elected he would not order Trump to be criminally investigated.

The debate itself was largely cordial, punctuated by a contentious skirmish between Sen. Kamala Harris and Gabbard that echoed moments from earlier debates. And, at one point, Sen. Cory Booker expressed his shock that Biden still disagreed with legalizing marijuana because it could be a “gateway drug.”

“I thought you might have been high when you said it!” Booker said.

Here are the top moments from the fifth Democratic debate.

Trump impeachment takes center stage

(L-R) Democratic presidential hopefuls Mayor of South Bend Pete Buttigieg, Massachusetts Senator Elizabeth Warren, Former Vice President Joe Biden and Vermont Senator Bernie Sanders participate in the fifth Democratic primary debate of the 2020 presidential campaign season co-hosted by MSNBC and The Washington Post at Tyler Perry Studios in Atlanta, Georgia on November 20, 2019.

Saul Loeb | AFP | Getty Images

The fourth day of public impeachment hearings in the House ended shortly before the debate got started. The candidates used the issue to give versions of their stump speeches.

Sen. Elizabeth Warren, who has been a vocal proponent of impeachment, said she will “of course” lobby her GOP colleagues to vote to remove the president if Trump is impeached.

But she said the testimony earlier in the day by Ambassador Gordon Sondland, a Trump donor who lacked foreign policy experience before his diplomatic appointment, pointed to a deeper issue.

“That tells us about what’s happening in Washington. The corruption. How money buys its way into Washington,” Warren said.

Sanders said that if Democrats are only focused on Trump, they will lose in 2020. Sanders said they must also campaign against the “rigged” economy dominated by a “handful of billionaires.”

“What the American people understand is that the American Congress can walk and chew bubble gum at the same time,” he said.

Biden said the impeaching testimony showed that Trump “doesn’t want me to be the nominee.” The next president, he said, will have to go to states like Georgia and North Carolina to achieve a Senate majority, and “that’s what I’ll do”

Harris rips Gabbard

Democratic presidential candidate Sen. Kamala Harris (D-CA) speaks during the Democratic Presidential Debate at Tyler Perry Studios November 20, 2019 in Atlanta, Georgia.

Alex Wong | Getty Images

Harris continued her spat with Hawaii Rep. Gabbard, referring to her as a Democratic candidate “who during the Obama administration spent four years, full-time on Fox News criticizing Obama” and accusing her of attacking fellow Democrats on stage.

“When Donald Trump was elected, not even sworn in, [she] buddied up to Steve Bannon to get a meeting with Donald Trump in the Trump Tower, fails to call a war criminal by what he is, as a war criminal, and then spends full time during the course of this campaign again criticizing the Democratic Party.”

Bannon, Trump’s former chief strategist, reportedly contacted Gabbard to arrange a meeting with Trump prior to his inauguration. Gabbard has also taken heat for challenging President Barack Obama for refusing to characterize the Islamic State using the words “radical Islamic terrorism.”

Gabbard pushed back on Harris, accusing her of “continuing to traffic in lies and smears and innuendos because she cannot challenge the substance of the argument that I’m making.”

She said Harris’ response “only makes me guess that she will as president continue the status quo, continue the Bush-Clinton-Trump foreign policy of regime change wars, which is deeply destructive.”

Warren defends her wealth tax

Democratic presidential hopefuls (L-R) Mayor of South Bend, Indiana, Pete Buttigieg, Massachusetts Senator Elizabeth Warren and Former Vice President Joe Biden participate in the fifth Democratic primary debate of the 2020 presidential campaign season co-hosted by MSNBC and The Washington Post at Tyler Perry Studios in Atlanta, Georgia on November 20, 2019.

Saul Loeb | AFP | Getty Images

Warren trumpeted her plan for a wealth tax after weeks of sparring with rich Americans over the policy made national headlines.

While not mocking billionaires as harshly as she has at times, the senator from Massachusetts cited her tax policy as a tool to unite a divided country. She made the case that voters across the political spectrum care about holding the wealthiest Americans accountable and lifting up the working class.

“I’m tired of freeloading billionaires,” she said in promoting taxes that would help to fund social programs such as “Medicare for All” and universal child care.

Warren’s plan, which would tax wealth from $50 million to $1 billion at 2% and net worth above $1 billion at 6%, polls well even among Republicans and independents.

But Booker criticized it Wednesday night as the wrong way to boost tax revenue.

Biden says he wouldn’t order Trump probe

Democratic presidential hopeful former Vice President Joe Biden speaks during the fifth Democratic primary debate of the 2020 presidential campaign season co-hosted by MSNBC and The Washington Post at Tyler Perry Studios in Atlanta, Georgia on November 20, 2019.

Saul Loeb | AFP | Getty Images

The focus of Democrats’ impeachment inquiry has been on whether Trump pressured Ukraine to investigate Biden using a White House meeting and military funds as leverage.

But on Wednesday, Biden said he would not order a criminal investigation into Trump if Biden succeeds in 2020.

“I would not dictate who should be prosecuted or who should be exonerated. That’s not the role of the president of the United States,” Biden said.

Biden said he would do “whatever is determined by the attorney general.”

“If that was the judgment, that he violated the law and he should be in fact criminally prosecuted, then so be it, but I would not direct it,” Biden said.

The last president to leave office in the face of impeachment, Richard Nixon, was pardoned by his successor Gerald Ford.

Steyer challenges Biden on climate change

Democratic presidential candidate Tom Steyer speaks during the Democratic Presidential Debate at Tyler Perry Studios November 20, 2019 in Atlanta, Georgia.

Alex Wong | Getty Images

Billionaire philanthropist Tom Steyer took on Biden in a dramatic exchange over the environment, calling himself “the only person on this stage who will say that climate is the No. 1 priority for me.”

“Vice President Biden won’t say it. Senator Warren won’t say it. It is a state of emergency and I would declare a state of emergency on day one,” Steyer said. “I would use the emergency powers of the presidency. I know that we have to do this.”

Biden fired back, saying he didn’t “need a lecture from my friend” and that he believes climate change “is the existential threat to humanity.”

And Biden accused Steyer of hypocrisy. The former hedge fund manager, Biden said, “was introducing more coal mines and produced more coal all around the world, according to the press, than all of Great Britain produces.”

Steyer responded that “everybody in this room has lived in an economy based on fossil fuels.”

“We all have to come to the same conclusion that I came to over a decade ago. If we’re waiting for Congress to pass one of the bills — and I know everybody on this stage cares about this — but Congress has never passed an important climate bill ever. This is a problem which continues to get worse.”

‘Black voters are pissed off’

Democratic presidential candidate Senator Cory Booker speaks during the fifth 2020 campaign debate at the Tyler Perry Studios in Atlanta, Georgia, U.S., November 20, 2019.

Brendan McDermid | Reuters

Booker took perhaps the most direct shot of the night when he targeted Biden, one of the primary race’s front-runners and one of its most conservative on drug policy.

During a discussion in which he said “black voters are pissed off” about politicians who appeal to them only when they need votes, the New Jersey U.S. senator criticized Biden for opposing federal marijuana legalization.

Enforcement of U.S. marijuana laws has disproportionately affected black Americans. “This week, I hear [Biden] literally say that I don’t think we should legalize marijuana,” said Booker, one of three black candidates in the Democratic race, including newly announced candidate Deval Patrick. “I thought you might have been high when you said it … because marijuana in our country is already legal for privileged people. The war on drugs has been a war on black and brown people.”

Biden responded by saying he thinks “we should decriminalize marijuana, period.” He added that “anyone who has a record should be let out of jail, their records expunged, be completely zeroed out.”

Most surveys of the Democratic primary race have found black voters support Biden, who was Obama’s vice president, by wide margins.

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