4 August 2017

Bank of England votes to hold interest rates, as Carney cites business support for Brexit transition

The Bank of England (BoE) Monetary Policy Committee yesterday voted to hold the interest rate at 0.25%, but signalled that this could rise within a year. The BoE also revised down their growth forecasts for 2017 and 2018 to 1.7% and 1.6% respectively, from May projections of 1.9% and 1.7%. BoE governor, Mark Carney, warned that uncertainty regarding the UK’s future relationship with the EU was holding up business investment and household spending. He said that the BoE expected investment in the UK economy in 2020 to be 20 percentage points lower than original forecasts from before the referendum last year.

Elsewhere, in an interview with the Guardian, Carney said, “If the UK financial system thrives in a post-Brexit world, which is the plan, it will not be 10 times GDP [its current size], it will be 15 to 20 times GDP in another quarter of century, because we will keep our market share of cross-border capital flows.” But he indicated that the BoE’s assumption was that “the level of regulation [post-Brexit] will be at least as high as it currently is and that’s a level that in many cases substantially exceeds international norms.” He also noted that the Bank’s policy assumption of “a smooth transition to a new economic relationship with the EU will be tested,” adding that business leaders had been “pretty clear” a transition would be in the best interests of the UK and the EU.

Separately, a new report by the Institute of Directors argues that a transitional deal would provide an important “bridging period” between the “broad” terms of future UK-EU relations under the withdrawal agreement, and bilateral agreement on the “technical detail of new regulatory cooperation.”

Source: The Daily Telegraph Financial Times Guardian The Daily Telegraph

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Gove reportedly promises access to UK waters for European fishermen

Environment Secretary Michael Gove has reportedly told European fishermen that they will still have the right to catch “large amounts” of fish in UK waters post-Brexit. The Telegraph reports that Gove made the comments during a trip to Denmark, saying, “Britain has no fish cutters [employed to clean, trim and bone fish] or the production facilities enough to catch all the fish in British waters.” Echoing comments Gove made in his first speech as Environment Secretary, a spokesman at the Department for Environment, Food and Rural Affairs said, “Leaving the EU means we will take back control of our territorial waters. As we have always said, other countries will be able to access to our waters – but for the first time in 50 years it will be on our terms and under our control. We will allocate quotas on the basis of what is scientifically sustainable, making sure we have a healthy marine environment and profitable fishing industry in the UK.”

Managing Director of the Danish fisheries association, Niels Wichmann, told Denmark’s Jyllands-Posten newspaper, “Fishermen from Denmark and other EU countries will continue to have access to British waters after Brexit. It is a logical announcement but it is still very positive and a little surprising that it comes from a British minister so early in the negotiation process.”


Irish Taoiseach to meet parties in Northern Ireland to discuss Brexit and governance

In a speech ahead of meetings with Northern Ireland’s main political parties, Irish Taoiseach Leo Varadkar is expected to say, “The challenge in our generation is Brexit… Every single aspect of life in Northern Ireland could be affected by the outcome, jobs and the economy, the border, citizens’ rights, cross border workers, travel, trade, agriculture, energy, fisheries, aviation, EU funding, tourism, public services, the list goes on.” On the immediate negotiation priorities, he will say, “The three key issues are citizens’ rights, the financial settlement and issues relating to Ireland. It is my fervent hope that progress will have been made, but I do not underestimate the challenges we face.” Varadkar will stress the need for representative and government bodies to work together to resolve issues relating both to Brexit and day-to-day governance, saying, “For our part, the Irish Government will discharge our responsibilities as co-guarantors of the Good Friday Agreement. We will do all we can, in Brussels, in London and in Dublin, to achieve the best outcome for everyone on this island to protect our peace, our freedom, our rights, and our prosperity. We need the Executive, the [Northern Irish] Assembly, the North-South Ministerial Council, and the British-Irish Council up and running and acting in the interests of our peoples. We need that more than ever, and we need it now.”


GMB union suggests curbing free movement is more important than retaining single market membership

The leader of the GMB union, the third largest in the UK, has suggested that curbing free movement of people is a more important priority that remaining in the single market. Tim Roache, General Secretary of GMB, told the Today programme on BBC Radio 4 that the outcome of the Brexit referendum was due to frustration at high levels of migration which had driven down wages. He also suggested that it may be possible to negotiate ongoing membership of the single market while tackling freedom of movement. However, he said that the UK did not need to remain in the single market to retain many of the benefits, adding, “People, companies, countries in the EU want to trade with the UK — there’s no doubt about that. What we need to do if we’re out of the single market is use that as an opportunity for positive investment.”


French ambassador claims UK election result has promoted diverse Brexit debate

In an interview for The Guardian, the outgoing French ambassador to the UK Sylvie Bermann suggested that, while Brexit was a key issue for the UK, “It is not the case in France or in Europe – the priority in the EU is to protect and strengthen the EU and to deal with migration crisis. Brexit is not a priority for us.” She also emphasised the importance of continued defence cooperation between the UK and France in any negotiation outcome. Bermann called the result of the June general election a ”game changer,” adding, “Now you hear more diverse opinions about Brexit, more views from the business community. I think it is a good thing when you have a real debate – it is democracy.”


Tusk warns we are “closer” to a break in relations between Poland and the EU

Speaking following his questioning by the Polish prosecutor’s office yesterday regarding his role in the Smolensk plane crash in 2010 when he was Prime Minister of Poland, European Council president Donald Tusk said, “There is a question mark over Poland’s European future today. The fact that a European tribunal decision is rejected so arrogantly is evidence of something very dangerous in my opinion – it is an overt attempt to put Poland in conflict with the European Union. It smells like an introduction to an announcement that Poland does not need the European Union and that Poland is not needed for the EU. I’m afraid we are closer to that moment.” Tusk said that judicial reforms were designed to be used as “a tool against the opposition. And indeed against people they don’t like. I’m afraid I belong to this bunch.” Suggesting that PiS was alienating Poland’s regional allies within the EU by their actions, Tusk added, “There are several issues where the behaviour of the Polish government appears to be very controversial … This is how the whole EU sees it and that sometimes even includes Budapest [typically a strong ally of Poland in the EU].”