11 October 2017

Donald Tusk: EU is not preparing for a ‘no deal’ scenario in Brexit talks

European Council President Donald Tusk has said that the EU is not preparing for a ‘no deal’ scenario in the Brexit negotiations. He added, “We are negotiating in good faith, and we still hope that the so-called ‘sufficient progress’ will be possible by December.” Tusk warned that “if it turns out that the talks continue at a slow pace, and that sufficient progress hasn’t been reached, then – together with our UK friends – we will have to think about where we are heading.” This comes after the UK government said that it is preparing for “all eventualities.”

Separately, The Times reports that the EU’s chief Brexit negotiator, Michel Barnier, will this week urge the EU27 to give him permission to prepare a new negotiating mandate on transitional arrangements and a future trade deal this month. He is expected to suggest this could be done by December, when “sufficient progress” on the withdrawal arrangement is due to be achieved, to allow talks to move to the second stage quickly. He had previously called for the EU’s existing negotiating guidelines, given to him by the EU27, to be amended to include transition talks, but Germany, France and Romania were opposed to this. The Times quotes one diplomat who said Germany wants more guarantees from the UK regarding the financial settlement “and it wants it more or less in writing.”

Elsewhere, no UK-EU negotiations are scheduled for today, reportedly to allow EU27 representatives to discuss the state of talks on the financial settlement with the EU’s lead budget negotiator, Stéphanie Riso.

Meanwhile, in an interview with LBC radio yesterday, Prime Minister Theresa May refused to say how she would vote in a second referendum on EU membership. She said, “What I did last time around was I looked at everything and came to a judgement and I’d do exactly the same this time round.”

Source: Reuters The Guardian Financial Times Financial Times

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No budget will be allocated for a no-deal Brexit unless scenario imminent, says Hammond

Chancellor Philip Hammond has confirmed that the Government is preparing for all eventualities post-Brexit. However, he refused to commit money for a no-deal scenario at this stage. The move will anger Brexiteers, who are convinced the government should show it is ready to walk away from negotiations if the EU presents the UK with a bad deal. “The government and the Treasury are prepared. We are planning for every outcome and we will find any necessary funding and we will only spend it when it’s responsible to do so”, said the Chancellor. He stressed it would not be wise to allocate specific money for a no-deal Brexit while the budget is tight and negotiations are still ongoing.

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The Daily Telegraph: The UK could join NAFTA if no deal is struck with the EU

According to The Daily Telegraph, the UK Government is examining the possibility of the UK joining the North American Free Trade Association in case the country does not secure a post-Brexit trade deal with the EU. This deal would allow Britain to join the US, Canada, and Mexico in a trading bloc that would account for over 30 per cent of the world economy. The Telegraph reports that this scenario is considered as part of the Government’s ‘Project After’, a working group that is developing ideas for alternative ‘no deal’ options. According to the BBC, other options currently discussed include joining the TTP and unilateral free trade. This report comes after Prime Minister Theresa May published on Monday detailed plans for post-Brexit customs and trading arrangements, including plans for a ‘no deal’ scenario.

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Nicola Sturgeon: Brexit strengthens the case for Scottish independence

At her party’s conference on Tuesday, Scottish National Party (SNP) leader Nicola Sturgeon said that the case for independence does not depend on Brexit, but that “Brexit does show us what can happen when we don’t control our own future.”

The Scottish First Minister argued that Scots should be able to choose their own future when the “terms of Brexit are clear” and said that “we have a mandate to give the people that choice.”

According to the latest YouGov survey however, 50 per cent of people would at present vote against Scotland becoming an independent country, with only 39 per cent being in favour.

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Irish Finance Minister reveals €300 million loan scheme to support SMEs exposed to Brexit

Irish Finance Minister, Paschal Donohoe, has revealed plans for a €300 million Brexit loan scheme to support Irish SMEs with “unique exposure” to the UK’s withdrawal from the EU. He said the scheme “will give SMEs the time to put in place the necessary changes to help their businesses grow in the future.” He also revealed the Minister for Agriculture, Food and the Marine will receive an additional €25 million “to provide for the development of further Brexit response loans for the agri-food industry.” Donohoe told the Irish parliament, “As the impact of Brexit unfolds over the coming years, it is clear that there are likely to be permanent changes in our trade patterns. Small and medium businesses will need to innovate and increasingly look to new European and international markets other than the UK.”

Separately, according to the Irish Times, Ireland is bracing itself to lose its bid to host the European Medicines Agency (EMA) and the European Banking Authority (EBA) when they move from London after Brexit. Frankfurt is considered the leading contender for the EBA, while Amsterdam and Copenhagen are reportedly among the top choices under consideration for the EMA.

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IMF forecasts slowdown for the UK economy

In its last World Economic Outlook, the IMF has predicted that the UK will represent a “notable exception” to growth in advanced economies. According to the international organisation, the British economy will grow by 1.7 percent in 2017, a negative difference of 0.1 percent compared to 2016. In 2018 growth is predicted to stop at an even lower rate of 1.5 percent. “We forecast in the pre-referendum period, as did others, there would be long run negative effects on the British economy,” said Maurice Obstfeld, chief economist at the IMF, “I think we’re starting to see those.” The prediction nonetheless remains more optimistic than the one released by the OECD, which forecasts growth to stop at 1 percent.

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Catalan government suspends independence to open dialogue with Madrid

Addresing the regional parliament yeserday, the Catalan leader Carles Puigdemont affirmed that the referendum has given him a mandate to establish a sovereign state but also called for “the suspension of the effects of the declaration of independence for a few weeks, to open a period of dialogue.” He stressed that “If everyone acts responsibly the conflict can be resolved in a calm and agreed manner.” The Spanish government has however rejected what it defined a “tacit” declaration of independence and prime Minister Rajoy has called a cabinet meeting for today. calling Meanwhile, appealing directly to the Catalan leader, the President of the European Council Donald Tusk asked him on Tuesday “to respect in your intentions the constitutional order [of Spain] and not to announce a decision that would make such a dialogue impossible.” Elsewhere, before a meeting with German Chancellor Merkel in Frankfurt, French President Emmanuel Macron denied that the EU should play a mediating role, saying “It is an internal Spanish matter.”

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European Parliament gives support to law which threatens London euro clearing

The European Parliament yesterday debated a draft law which proposes greater supervision of foreign clearing houses trading in euro-denominated products. The law calls for euro-denominated business with EU-based customers must move to the bloc if a clearing house is systemically important to the euro zone.

Lawmakers from the two biggest parties, the European People’s Party and the Progressive Alliance of Socialists and Democrats, endorsed the draft law at the first debate yesterday, but called for some changes. The chair of the parliament’s economic affairs committee, Roberto Gualtieri, said that, “In principle, I support the proposal, which I find necessary”, but added that the parliament should be “very cautious, reflective, and in a listening mood.” The European parliament and EU member states have a final say on the reform, with changes expected during the approval process.

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Paris and Berlin diverge on Eurozone reform

The German Finance Ministry provided Eurogroup finance ministers with a paper entitled “Paving the way towards a Stability Union” at a meeting in Luxembourg earlier this week, outlining Berlin’s position on key areas of Eurozone reform. The paper proposes a “predictable debt restructuring mechanism” that would render bailouts from the European Stability Mechanism (ESM) conditional on the country’s willingness “to carry out comprehensive debt restructuring if this is necessary to ensure debt sustainability.” The German paper was also critical of Macron’s plan for a large Eurozone budget, calling it “economically not necessary for a stable monetary union”. French Finance Minister Bruno Le Maire had said such a mechanism was “a real red line for the French government because we think that it could weaken the Eurozone and sow doubt among investors”. Le Maire remained optimistic, stating that, “There is a difference in views, but it does happen that we have differences of view with Germany, and at the end of the day we always find a compromise”. Jeroen Dijsselbloem, the Eurogroup’s President, announced more detailed negotiations on Eurozone reform would take place next month.

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Ruth Davidson: London Conservatives should be distinguishable from the national brand to succeed

Writing in the Evening Standard, the leader of the Scottish Conservatives, Ruth Davidson, argues, “London Conservatives need to look more like London, rather than indistinguishable from the national brand, if they are to avoid defeat and succeed.” She writes, “Just as London is not Scotland… London is not the rest of the country either…With a city that is more liberal, diverse, constantly growing, younger and more multi-cultural than the UK as a whole, the Conservative message needs to reflect the aspirations of Londoners.”

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