3 November 2016

Irish PM “urges EU not to lose plot” over Brexit as Merkel calls for “as little friction as possible”

Speaking yesterday before the “all-island” Irish civic forum on Brexit, Irish Taoiseach Enda Kenny said, “Europe has got to decide for itself in these [UK exit] negotiations where it wants to be in the next 50 years. If it becomes obsessed with what the UK might or not get, then Europe itself loses the plot.” Kenny warned that Prime Minister Theresa May might trigger Article 50, the formal process for leaving the EU, earlier than March 2017, “in December – or January or February,” but added, “the argument may well get quite vicious after a while, because there are those around the European table who take a very poor view of the fact that Britain decided to leave.” He also discussed the UK-Irish border, saying, “Neither I, nor the Prime Minister, desire to limit the freedom of people on both sides of the Irish Sea to trade, to live, to work, to travel freely across these islands. Therefore, we have agreed that the benefits of the Common Travel Area be preserved.”

Separately, German Chancellor Angela Merkel is quoted as saying, “There should be as little friction as possible [within the negotiations over the UK’s exit from the EU] because Great Britain is a major trading partner.” She warned, however, “We have to keep the 27 [other EU states] together and should not set standards which eventually would lead to cherry picking within Europe.” She reiterated that the EU’s four freedoms principle will be the “basis on which we conduct the negotiations.”

Source: BBC News The Financial Times Handelsblatt Der Standard Press Association

High Court to rule on Brexit challenge today

The High Court in London will deliver its verdict this morning on whether the Prime Minister requires parliamentary approval in order to trigger Article 50, the formal mechanism for exiting the EU. The judgement will be announced at the Royal Courts of Justice at 10am, but an appeal is expected regardless of the result. This would be heard at the Supreme Court in December.

Separately, John Kerr, the crossbench member of the House of Lords who wrote Article 50, said, “[An Article 50 declaration] is not irrevocable – you can change your mind while the process is going on. During that period, if a country were to decide actually we don’t want to leave after all, everybody would be very cross about it being a waste of time, they might try to extract a political price, but legally they couldn’t insist that you leave.”

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Bank of England expected to hold interest rates and upgrade growth forecasts

The Bank of England is today expected to keep interest rates unchanged and revise its GDP growth forecasts upwards, along with the release of its latest inflation report. The upgrade is due to the UK economy performing better than expected in the three months after the vote to leave the EU. Meanwhile, Kathrin Muehlbronner, senior vice president at Moody’s Investors Service, said yesterday, “We would downgrade the UK’s sovereign rating if the outcome of the negotiations with the EU was a loss of access to the single market as this would materially damage its medium-term growth prospects.” Other reasons for a downgrade cited include any reduction in the “credibility of the UK’s fiscal policy,” but a Moody’s press release stated, “for UK banks, the loss of passporting rights that operate across jurisdictions would be credit negative but manageable.”

In separate comments, Xavier Rolet, CEO of the London Stock Exchange Group, told a House of Lords’ committee that, if the UK were to lose the ability to clear euro-denominated transactions as a result of Brexit, this would fragment markets and cost European banks an extra £63 bn in additional collateral. He added, “I understand that some discussions have already originated in the EU for limiting the ability of US-based clearing houses to clear euro-denominated securities by capping or somehow restricting their ability to engage meaningfully in their business.”

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Theresa May vows to “boost free trade with fast growing economies” as Colombian President visits London

Following a meeting yesterday with Colombian President Juan Manuel Santos, Prime Minister Theresa May said, “As the UK prepares to leave the EU, I am determined that Britain should become the global champion of free trade, and that means boosting trade with fast-growing economies like Colombia… I want to see even more British companies and investors taking up the opportunities that Colombia offers and I want Colombian businesses to see the UK as a leading hub for finance, innovation, research and development.”

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Merkel rejects Brexit parallels in Swiss-EU negotiations

Following a bilateral meeting with Swiss President Johann Schneider-Ammann, German Chancellor Angela Merkel said she is “optimistic” that EU negotiations with Switzerland over the country’s immigration policy will be successful. However, she rejected any parallels to Brexit, saying, “We want a solution [with Switzerland] that of course comports with the freedom of movement. We’ve continued to cite fundamental freedoms to Britain. But to me these are two completely different instances.” Schneider-Ammann said that it “could be that we [Switzerland] are compatible with the EU’s freedom of movement rules already,” after the lower house of the Swiss parliament passed a plan that includes hiring preferences for Swiss workers but no quotas for EU workers already in Switzerland.

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Lords' committee recommends revived relations with EU and others at the UN

The Press Association quotes a report from the House of Lords’ International Relations Committee, which said, “The UK should negotiate its exit from the EU bearing in mind that one of our strongest allies in international organisations will be the EU. Therefore, as part of its Brexit negotiations, the UK should aim to set up effective ways of continuing to work closely with the EU at the UN. Simultaneously, the UK should seek to diversify its alliances, creatively considering new opportunities and methods of leveraging its alliances and influencing other regional blocs at the UN.” Lord Howell of Guildford, chair of the committee, added, “Given the new status that the UK will have outside of the EU, our committee feels strongly that the UN will be an increasingly important arena in which to promote our foreign policy objectives. We will need to reinvigorate both old ties and build new strong alliances where possible.”

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Director of Public Prosecutions cites value of EU justice cooperation for UK

The Press Association reports that Alison Saunders, Director of Public Prosecutions, told the House of Lords’ EU Home Affairs Sub-Committee yesterday, “There are a package of [European cooperation] measures we think are really important and not just the obvious ones such as the European Arrest Warrant (EAW).“ She explained, “A substantial majority of our cases have some sort of international connection. The crime which we prosecute tends to be more and more global… It’s three times faster to use an EAW and it is four times less expensive.” Saunders went on to highlight the value of initiatives including SIS II (Schengen Information System II), Eurojust and mutual recognition on proceeds of crime.

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Trust in French President Hollande sinks to all-time low

According to a new Kantar Sofres poll for Le Figaro Magazine, only 11% of French people trust President François Hollande – down from 13% in the previous month. This is the lowest level on record for a French president with this pollster. Trust in Prime Minister Manuel Valls rose slightly from 22% to 25%.

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