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Data released yesterday by the Financial Conduct Authority showed that 5,476 UK firms make use of the financial services passport to provide services across the EU and in total have 336,421 passports. 8,008 firms from across the European Economic Area (EEA) make use of the passport to provide financial services in the UK, and have 23,532 passports in total.
Meanwhile, Reuters reports that Eric Litvack, Chairman of the International Swaps and Derivatives Association (ISDA), has warned that moving euro-denominated clearing from the City of London to the continent in the aftermath of Brexit would be a huge task, adding, “We are still exploring the consequences of the euro clearing issue which are multidimensional. It’s very difficult to position ourselves on what is to a large degree a political debate.” He noted that “moving the swaps clearing business would be a significant risk. Moving part or large part of that would be a non-trivial exercise.” On the length of UK-EU exit negotiations, Litvack said, “Everything that needs to be done in two years takes more than two years.”
FCA letter Reuters
In her speech to the UN yesterday, Prime Minister Theresa May said that the vote to leave the EU was not a decision to “turn inwards or walk away from any of our partners.” Speaking to National Public Radio in the US, she said: “The vote was clearly a vote that people wanted us to bring control into the movement of people from the European Union into the United Kingdom, but if I may, I haven’t said in specific terms exactly what trade deal we want with the European Union once we have left, and there are a number of models at the moment.” She added, “What I want is for the United Kingdom to be able to forge its own relationship with the European Union. We’re looking for that new relationship.”
On trade relations with the rest of the world, she said, “I’ve talked to other leaders around the world, and there is a real interest in ensuring that we can develop the economic and trading relationships between the UK and a number of other countries including the United States.”
Xavier Bertrand, the centre-right President of France’s Nord-Pas-de-Calais region, told RTL yesterday, “The dismantlement of the [Calais] jungle needs to happen as quickly as possible. But after the dismantlement, we don’t want to go back to the same tragedy within a few weeks, or months. We need to renegotiate [the Touquet treaty] with the British. If the migrants are in Calais, it’s because they want to go to the UK.”
In an interview with The Financial Times, Michael Saunders, a member of the Bank of England’s Monetary Policy Committee, said: “My views on how the effects of Brexit play out on UK growth have changed compared to what I might have thought eight months ago…The UK should be able to grow at a reasonable pace…over the next 10-15 years.” He added that, “In the near term, the next year or two, I think that the economy will slow but perhaps not slow as much as the consensus has been expecting,” saying, “This is partly because of the support from loose financial conditions” and “partly because of the underlying advantages” of the economy.
Meanwhile, Bloomberg’s monthly poll of economists shows an expectation that the Bank will cut interest rates close to zero later this year.
The Financial Times
At the national convention of Germany’s centre-left Social Democratic party (SPD), two-thirds of the delegates voted in favour for the EU-Canada free trade agreement (CETA). This follows weeks of strong internal criticism against the free trade deal, especially from the left and the youth wing of the party. The SPD decision paves the way for the party leader and German Economy Minister, Sigmar Gabriel, to approve CETA at the EU-Canada summit end of October. However, the deal will still need to be fully ratified by each EU member state.
Frankfurter Allgemeine Zeitung
Czech Secretary of State for EU Affairs Tomas Prouza told Bloomberg, “There is no way whatsoever for the UK to have the cake and eat it at the same time…I see exactly zero chance of success if the UK wants to create first- and second-class citizens in Europe or if it tries to separate the four basic freedoms of movement.” He added, “There will be a very clear rule: nothing is agreed until everything is agreed…Each member state will be able to veto any part of the negotiation mandate to make sure the mandate respects the interests of all EU members.”
However, Hungary appeared to have taken a softer stance, with government spokesman Zoltán Kovács telling reporters in Brussels on Monday, “Do not over speculate on what has been said. It is very difficult to say anything” until the negotiating position of the UK Government becomes clearer.
The manufacturer’s body EEF has called on the UK Government to maintain EU regulations covering everything from working hours to chemicals until after the government sets out its plans for Brexit. “We want government to provide regulatory and policy certainty in this important arena,” said Claire Jakobsson, head of energy and environment policy at the group, in a statement. “But in the longer term there is clearly an opportunity to pull back from EU regulation where it does not work for the UK”.
There were encouraging signs in the property market as major industry figures revised their policies on the doubts caused by the Brexit vote. Reuters reports that Knight Frank, Jones Lang LaSalle and Savills have either revised or removed from their so called “uncertainty clauses” that aimed to take account of the referendum results in valuations. Reuters also reports that only three of the seven funds suspended in the wake of the vote are yet to reopen, with Henderson Global Investors the latest to re-emerge.
Liberal Democrat leader Tim Farron has called for a second Brexit referendum to ensure that the public backs the UK-EU withdrawal agreement that is going to be negotiated by the Government. He told his party’s annual conference, “The absence of leadership from the Prime Minister is astonishing, the absence of clarity as to what will happen to our country is a disgrace…When Theresa May does agree a deal with the EU, we want the people to decide…If we trusted the people to vote for our departure then we must trust the people to vote for our destination.”
In a joint statement 23 EU member states have called on the Commission to delay the implementation of new rules known as the packaged retail and insurance-based investment products (PRIIPs). The rules are aimed at standardising and simplifying consumer information around certain financial instruments and are due to come into force in January.
Albert Isola, Gibraltar’s Financial Services Minister, has said that the relationship with the UK is more critical than EU market access. In an interview with Bloomberg, he said, “There is a modern democracy in Spain and we should be able to have a normal relationship…There should be no change. Spain has borders with Morocco with its two enclaves and those are open and fluid…The controls that the UK wants, they are serious about,” Isola said. The key for Gibraltar is “UK market access, which we know we’ll be able to continue with, so that’s important for us.” This follows comments from Spanish Foreign Minister Jose Manuel Garcia who said he aims to win joint sovereignty over Gibraltar as part of the Brexit negotiations.
The EU’s 28 member states have said Bosnia had made advancement on necessary reforms, so it had accepted the application. It asked the European Commission for an assessment of Bosnia’s readiness. Even though the application has been accepted, the EU states have called on Bosnia to continue “socio-economic reforms (and) reforms in the area of rule of law and public administration.” Speaking in response to the acceptance, Bosnia’s Prime Minister Denis Zvizdic said, “Today is really a historic moment for the European path and European future of Bosnia-Herzegovina.”