12 July 2017

David Davis: Brexit withdrawal and trade agreement can be concluded in two years

Speaking to the Lord’s EU select committee, Brexit Secretary David Davis rejected claims that the government has softened its stance on Brexit since the general election. He added, “I believe we can get a free trade negotiation concluded, and a customs agreement negotiation concluded, in the [two year] period. What will be much more difficult, however, is to get all the practical implementations that go with it. Not so much for us; it will be quite tough to get our customs in the right place in two years, but it’s doable.” On the issue of the Irish border, Davis said there won’t be a solution “probably until near the end of the process, because we’ll need to know what the free trade agreement will be.”

Source: The Guardian BBC News

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Merkel: Citizens' rights guaranteed by the UK will be "largely reciprocated"

Speaking at a business conference in Bavaria, German Chancellor Angela Merkel said British citizens in the EU will not be sent back after Brexit, stating, “Now we’ve heard what kind of offers Britain has made the EU citizens from the 27 member states living in Britain, and they will of course continue to be largely reciprocated by us.” On the matter of ECJ jurisdiction she said, “Britain doesn’t want the European Court of Justice, but we say it can’t be just British courts.” Merkel also commented on a potential tightening of the ECB’s monetary policy saying, “We’re not yet back where we want to be in terms of the ECB’s monetary policy. The good news is that all euro zone member states are growing again.”

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Boris Johnson rejects suggestions of an “extortionate” exit bill

Foreign Secretary Boris Johnson yesterday told MPs that he rejected suggestions of the UK paying a large exit bill when leaving the EU, stating, “The sums I have seen that they propose to demand from this country appear to be extortionate. ‘Go whistle’ seems to me to be an entirely appropriate expression.” He also declared that the Government has no contingency plan for the possibility of the UK leaving the EU without a trade deal, saying, “There is no plan for no deal because we are going to get a great deal.” Johnson’s statement attracted criticism from the opposition benches, with Labour MP Chris Bryant saying, “For the government to threaten to leave the EU with no deal, while boasting about not having a plan for that eventuality, is completely unacceptable.”

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UK financial services show solid performance despite Brexit concerns as banks discuss relocation plans

A CBI/PwC survey of 94 UK financial services firms reported increased profits and headcount in the quarter to June amongst a majority, despite falling optimism about the future. 41 per cent said profits had increased in the period with 6 per cent experiencing a decrease, while 46 per cent had increased headcount and 17 per cent had seen a reduction. The survey also found that 25 per cent were less optimistic about the future while 15 per cent said they were more positive. Andrew Kail, head of financial services at PwC, said, “Currently the financial services sector is performing well in both business volume terms and underlying profitability. However, another quarter of falling optimism points to an industry harbouring concerns about the future. The UK will continue to be a leading financial centre, but political uncertainty and the ongoing wait for an agreed Brexit blueprint are fuelling more questions about companies’ futures and the performance of the wider economy.” This came as EY reported that 59 of 222 financial service firms surveyed were either considering their options for relocation or had already started to move staff and operations from the UK as a result of Brexit.

Separately, at a conference in Paris, the heads of a number of banks with presence in the UK have indicated to Reuters that they could transfer staff to EU27 countries. Frederic Oudea, chief executive of French bank Societe Generale, suggested 400 corporate and investment banking roles could move, HSBC Chief Executive Stuart Gulliver said, “There are about 1,000 jobs out of 43,000 that are employed in the UK that will be unlawful for our activities to be carried out of the UK, if it’s hard Brexit,” and Jamie Dimon, Chief Executive of JPMorgan, suggested that they will “probably use the Frankfurt bank” as their base post-Brexit.

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Lords Committee says EU anti-trafficking naval mission should not be renewed

The House of Lords EU External Affairs Sub-Committee has concluded that the European Union anti-people-smuggling naval mission Operation Sophia failed to achieve its main objective, despite the capture of 110 suspected traffickers and 463 vessels being prevented from smuggling since 2015. Baroness Verma, who chairs the committee, said, “People smuggling begins onshore, so a naval mission is the wrong tool for tackling this dangerous, inhumane and unscrupulous business. Once the boats have set sail, it is too late. Operation Sophia has failed to meet the objective of its mandate – to disrupt the business model of people smuggling. It should not be renewed.” She continued, “Future UK and EU action should focus on tackling people smuggling in source and transit countries, and supporting sustainable economic development and good governance in these countries.”

A spokesman for the UK Government, which participated in the operation alongside other EU member states, said, “Operation Sophia and the UK’s contribution to it is saving lives and helping to disrupt the activities of smugglers who continue to exploit migrants trying to reach Europe. UK ships mean fewer children drowning and dangerous smuggling boats destroyed before they can be reused. The operation is part of the UK Government’s wider approach to tackling irregular migration at source.”

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Vince Cable says immigration “was a massive issue” for Leave voters

Vince Cable, expected to be the leader of the Liberal Democrats, yesterday said that the Leave voters he encountered during the campaign “were overwhelmingly elderly people who were obsessed by the worry of 80 million Turks coming to their village. Immigration was a massive issue for them though they never actually encountered any.” He also said that a second vote on membership of the EU would “kill the issue for ever” and reiterated his belief that there was a “very real” possibility that Brexit will not happen.

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Number of UK solicitors registering in Ireland up ten-fold after Brexit

Politico reports that almost 1,000 solicitors from England and Wales have registered in Ireland in the year following Britain’s vote to leave the EU. This is ten times higher than the average annual figure, and has been interpreted as a concern over losing right of representation at the European Court of Justice.

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BoE deputy governor warns a reduction of trade between UK and EU would be mutually harmful

In a speech yesterday, the Bank of England Deputy Governor, Ben Broadbent, said a reduction in trade between Britain and the European Union would harm both economies. He argued that a reduction in trade with the EU would damage Britain’s comparative advantage in areas of relative strength, such as financial services, and force Britain to produce more of the goods it currently imports from the EU. He added, “All else equal, the first shift – i.e. away from services exports – would tend to lower UK income, the second to raise certain costs – that is, of food and machinery. Trade really is mutually beneficial and less of it costs us all.”

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