4 October 2017

Davis: UK planning for no-deal Brexit

Brexit Secretary David Davis said in his speech at the Conservative Party Conference yesterday that the government is stepping up efforts to ensure the UK is prepared for a no-deal scenario if there is no breakthrough in talks. He said, “There is a determined exercise under way in Whitehall devoted to contingency arrangements so that we are ready for any outcome”, and added, “Not because it is what we seek, but because it needs to be done.”

Also at the conference, Foreign Secretary Boris Johnson said during his speech that it was time to let the British lion “roar”. Johnson gave his thorough endorsement for a post-Brexit “Global Britain”, and claimed that the UK “can win the future” and should make the most of the opportunities presented. Backing Prime Minister Theresa May’s, he said, “The whole cabinet is united […] on every syllable [of the Florence speech]”, adding that, “The whole country owes her a debt for her steadfastness.” The Foreign Secretary was critical of those who believed Britain would “bottle it”, and warned of the threats posed by Jeremy Corbyn and the Labour Party.

Prime Minister Theresa May is giving her conference speech later today, where she will call on her party to unite and “do our duty for Britain” by giving “the country the government it needs”. In an attempt to re-engage with the population, she will remind her colleagues that “the daily lives of ordinary people go on” beyond Westminster, and that “they must be our focus today”. She is expected to announce a set of domestic reforms, including a new council house building programme.

Source: Bloomberg The Guardian The Huffington Post

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European Parliament: “Sufficient progress has not yet been made” in Brexit talks

Yesterday the European Parliament passed a resolution calling on EU leaders to postpone their assessment of progress in the Brexit talks, which is due to take place at the European Council summit later this month, “unless there is a major breakthrough” in the next round of negotiations. According to the resolution, “sufficient progress has not yet been made” on the Northern Irish border, the rights of EU citizens, and the UK’s financial obligations. The resolution, which was drafted by the five major political groupings in Parliament, passed by a wide margin with 557 MEPs voting in favour, 92 against, and 29 abstaining.

Speaking at the European Parliament, European Commission President Jean-Claude Juncker warned Prime Minister Theresa May not to bypass the EU Brexit negotiator Michel Barnier by approaching individual EU leaders. He said, “For those that think that the UK should just go over Michel Barnier’s head, I remind them that the Commission has been appointed by the 27 member states. My choice of Michel Barnier has been welcomed by them and he acts on their behalf of a clear negotiating mandate.” He added, “In Florence, [May] struck an optimistic tone on the future relationship between the UK and the EU. When it comes to Brexit we still cannot talk about the future without any real clarity… We first need to agree on the terms of the divorce then we have to see if we can lovingly find each other again. Until now I can’t say that we are ready to enter the second phase of the negotiations.”

During the same debate, German MEP and leader of the European People’s Party Manfred Weber said, “Who should I call in London – Theresa May, [Foreign Secretary] Boris Johnson or [Brexit Secretary] David Davis?” and urged May to “sack Boris Johnson.” Meanwhile, British MEP and former leader of UKIP Nigel Farage said, “We need a proper Prime Minister who says to Michel Barnier here’s a deadline, here’s a date…if we can’t reach a sensible deal on trade and everything else then we are simply leaving and reverting to WTO rules.”


BoE: Brexit risk to bank lending and clearing

Brexit may make it more difficult for British companies to borrow from European banks, and may force some clearing activity to leave London, the Bank of England (BoE) said yesterday. The BoE’s Financial Policy Committee (FPC) said, “The risk of disruption to wholesale UK banking services appeared to be slightly higher than previously thought, given that a number of EEA firms branching into the UK were not sufficiently focused on addressing the issue.” The Committee also said that there was a “substantial risk” of disruption to cross-border clearing operations in financial services, and that clearing houses were making contingency plans, “including the potential to relocate some clearing activity from the UK in order to provide services to EU clients.”


Banks' Brexit moving costs could be over $500 million each

Banks contemplating transferring personnel out of the UK in response to Brexit expect the process to cost more than $500 million each, according to Bloomberg. “There’s no doubt that the costs are significantly bigger than the banks originally expected,” said Jon Terry of PwC. “There aren’t enough qualified people in local EU markets to meet the needs of the banks, so they are going to have to rely on moving more expensive staff from elsewhere. And a lot of those people don’t want to move.” Moving a few hundred staff into new EU offices by April 2019 may cost up to $100 million in personnel expenses alone. HSBC said in July that it faces a bill of as much as $300 million to transfer 1,000 workers to its Parisian subsidiary.


Jeremy Hunt guarantees rights of EU workers in health sector

Health Secretary Jeremy Hunt yesterday announced that EU citizens working in the NHS or British social care systems will be able to stay in the UK post-Brexit “with the same rights [they] have now”. During his speech, which was given at the Conservative party conference in Manchester, Hunt said he understood why the 150,000 EU27 healthcare workers currently employed in the UK were “a bit worried”, but assured them the government was “confident [they] would be able to stay”.


Leaders of Catalan independence movement call for international mediation

Carles Puigdemont, pro-independence President of the region of Catalonia, called on the EU to mediate between the separatist region and the Spanish government in Madrid. “There is no push button for independence”, Puigdemont said, adding that, “It’s obvious that we need mediation” and that his region seeks “a new understanding with the Spanish state”. Meanwhile, Spanish European Affairs Minister Jorge Toledo told Politico that Madrid would not accept any third-party mediator. This comes after a violent crackdown by Spanish police on Catalonia’s independence referendum last Sunday, which left hundreds injured.


German President calls for clearer distinction between migrants and asylum seekers

In a speech marking the occasion of the German Unification Day, German President Frank-Walter Steinmeier called for the government to “regain the distinction” between “those who are politically persecuted and those who are fleeing economic misery”. Only if Germany accepted this difference and honestly debated “which and how much immigration we want, maybe even need”, would the be able “to overcome the polarisation of this [immigration] debate”. His speech comes shortly after the German elections, which saw the far-right, anti-immigration party Alternative für Deutschland become the third strongest party in the German parliament.