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The UK’s Chancellor of the Exchequer, Philip Hammond, will deliver his annual Budget statement to the House of Commons later today after admitting yesterday that in the “extremely unlikely situation” of a No Deal exit from the EU, the Government would be required to take “different approach” to economic policy. Hammond told Ridge on Sunday that in the event of No Deal “frankly we’d need to have a new Budget that set out a new strategy for the future.” He added that his current approach was “based on the assumption…of a deal being done with the European Union.” He went on to say that “If we left the European Union without a deal we would want to see how markets and businesses and consumers responded to that and then, as any responsible Government would, we would take appropriate fiscal measures to protect the economy, to prepare us for the future and to strike out in a new direction that would ensure that Britain was able to succeed whatever the circumstances we found ourselves in.” Hammond is expected to use the Budget to announce extra spending on road building, social care and universal credit, as he declares the start of “a new chapter” in Britain’s economic policy.
Meanwhile John McDonnell, the Labour Party’s Shadow Chancellor, has accused Hammond of “callous complacency” in his approach to economic policy. McDonnell said that he was “really shocked” that Hammond “has gone back to what he said some time ago, which is basically he seems to have accepted a No Deal Brexit and he does want us to be like Singapore, a sort of tax haven, which will undermine our manufacturing base.” McDonnell also said that Prime Minister Theresa May should “step to one side” if she cannot negotiate a deal with the EU because “there is too much at risk from a No Deal”. He added that the Labour Party’s six tests were “based upon what the Government promised us” and that if they can “bring back a deal that protects jobs and the economy, [then] yes, of course we’ll support it.”
Separately, senior Eurosceptic Conservative MPs yesterday accused the Treasury of attempting to “bribe the electorate” into acquiescing to the Prime Minister’s Brexit plan, the Telegraph reports. Chairman of the European Research Group, Jacob Rees-Mogg, said “[Hammond] is not coming at this with a great pool of trust, he is coming at this from a Treasury that has been discredited by an anti-Brexit approach. To say ‘I can do clever things if you do as you are told’ is the wrong approach.”
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Preliminary results show German Chancellor Angela Merkel’s party, the Christian Democratic Union (CDU), and their coalition partners the Social Democratic Party (SPD), both suffered a large drop in support in the regional elections in Hesse. The CDU are estimated to take 27% of the vote, and the SPD 19.8%, both around 10 percentage points lower than the previous election in 2013. Support for the Green Party rose around 8 percentage points from 2013, to 19.5%. The far-right Alternative for Germany (AfD) are expected to take 13.1% of the vote. The SPD leader Andrea Nahles said the disappointing result was due in part to the performance of the federal government, adding it needed to find a “reasonable way of working.” She also added that her party would need to “check whether this government is still the right place for us.”
The Financial Times reports that the UK has replicated 14 of the 236 international agreements it is currently a member of as a result of its EU membership. The UK needs to “roll over” the existing treaties in order to retain their benefits in the event of a No Deal Brexit. A Government spokesperson said, “We are working closely with partners to replace the agreements in the event of no deal [Brexit].”
Separately, Elke König, the head of the Eurozone’s Single Resolution Board, said that banks should prepare for potential disruption caused by a No Deal Brexit scenario on their own and should not expect any help from regulators. She also told the Financial Times that any banks relocating to the EU27 after Brexit would have to move “an entity within the group” so that regulators can understand where to take control in case of a crisis situation.
Meanwhile, the Commonwealth Bank of Australia has applied for a banking licence in the Netherlands and is planning to relocate a part of its staff from London to Amsterdam in order to ensure it can provide services across the EU after Brexit.
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The European Commission intends to press ahead with plans to move towards qualified majority voting for tax policy at a summit next May, according to the Sunday Times. Under current rules each member state has a veto over changes to tax policy, which has prevented policies leading to the harmonisation of corporation tax rates across the EU. The Conservative MP John Redwood invoked the plan as another reason that the UK should not enter into a transition period, since the Commission could “use this to stop us doing what we want to do”. Tax experts have said that it is unlikely that any changes could be implemented during a two-year transition period, however.
Meanwhile, the commentator John Downing has written that battles over taxation policy will be Ireland’s “biggest EU post-Brexit battle” as the country defines a new role in the EU. Downing argues that “the UK’s departure is a big loss as London’s insistence on fiscal sovereignty was a big bulwark against changes to the current position whereby taxation is the sole preserve of the member states.”
The Independent reports that it has seen written guidance from officials in the House of Commons library stating that the Commons cannot “legally and in isolation prevent a no-deal Brexit.” Sir David Natzler, the Commons chief clerk, said that if a Brexit deal was defeated in the Commons, any subsequent vote on what should happen in the event of ‘No Deal’ would have “no statutory significance.” MPs would have to seek another course of action, such as a no confidence vote, in order to prevent a ‘No Deal’ outcome.
French President Emmanuel Macron and German Chancellor Angela Merkel travelled to Istanbul on Saturday for a summit with Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin. The four leaders issued a joint statement on Syria stressing the “importance of a lasting ceasefire, while underlining the necessity to continue fight against terrorism”. The French and German leaders also agreed there should be a “co-ordinated” European position on arms sales to Saudi Arabia after the murder of Saudi journalist Jamal Khashoggi. It follows an earlier commitment by Merkel to halt all arms sales to Saudi Arabia until the murder is explained.
The President of Ireland, Michael D. Higgins, was re-elected for a second seven-year term on Friday, winning 55.81 per cent share of the vote and the largest personal mandate of any President in the history of the office. Higgins, who stood as an independent, was supported by all the major political parties except Sinn Fein, though he also faced four other independent candidates. The election was notable for the late “surge” of independent candidate Peter Casey, who was widely criticised for his controversial comments about Irish Travellers during the election campaign. Casey came in second place with 23.1 per cent of the vote, while the four other candidates each polled under 10 per cent. Turnout for the presidential election was 43.87 per cent, the lowest in any presidential election in history. Irish voters also approved a proposal to amend the constitution to remove blasphemy as an offence, with 64.85 per cent endorsing the change.
Meanwhile, the Sunday Independent reports that Irish Taoiseach Leo Varadkar is considering calling a snap election as exit polling showed his Fine Gael party performing strongly.
The Universities and Science Minister, Sam Gyimah, has said the government is “doing everything we can” to make sure there is “no cliff edge for science” after Brexit. In an interview with the Telegraph, Gyimah was speaking after it was reported that 97 per cent of scientists surveyed at the Francis Crick Institute said that Brexit would be bad for UK science. Gyimah added that “Nobody wants a chaotic Brexit…there are going to be challenges, and there are lots of difficulties but the UK is in a strong place”. The Government will publish its International Science Strategy before Christmas.