3 October 2017

Theresa May suggests sectoral transition

Prime Minister Theresa May has insisted she does not want to be surrounded by “yes men” in her Cabinet, in an interview with BBC Radio 4. Asked whether there were any red lines which Foreign Secretary Boris Johnson should not cross, the Prime Minister said that “I don’t set red lines.” She added, “All I would say is actually I think leadership is about ensuring you have a team of people who aren’t yes men, but a team of people of different voices around the table, so you can discuss matters, come to an agreement and then put that Government view forward, and that’s exactly what they’ve done.”

The Prime Minister also seemed to suggest a sectoral exit during the transition period, she said that: “there is an implementation period [of] around two years… it is a practical period… it could be less than two years in some areas. If we find that there are some things that can be changed in a shorter period of time without disrupting economies, without disrupting business, then we will bring those in earlier.”

Politico reports that UK officials speaking on condition of anonymity believe the Prime Minister is leaning towards a “softer” Brexit favoured by Chancellor Philip Hammond over the vision laid out by Foreign Secretary Boris Johnson. This version of Brexit involves a “lasting agreement with Brussels to maintain equivalent rules and regulations with the EU, potentially for decades after Brexit.” This would enable greater access to the single market after the proposed two-year transition, and it is hoped that it would also minimise damage to the UK economy.

Source: Politico Politico BBC

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Barnier says the UK has not made ‘sufficient’ progress

Addressing MEPs on Tuesday, Michel Barnier said there are still ‘stumbling blocks’ in Brexit negotiations, as the UK has still not cleared hurdles over its Brexit bill, Ireland and the rights of citizens. As a result, the EU’s chief negotiator said the second part of UK-EU negotiations over the transition period and future relations could not yet begin. He warned about ‘serious divergences’ over the financial settlement, and the role of the EU’s highest court in implementing the rights of EU citizens living in the UK.

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Catalan referendum illegal, says the European Commission

“Under the Spanish Constitution, yesterday’s vote in Catalonia was not legal” said Margaritis Schinas, the European Commission chief spokesman on Monday. “For the European Commission, as President Juncker has reiterated repeatedly, this is an internal matter for Spain that has to be dealt with in line with the constitutional order of Spain. We also reiterate the legal position held by this Commission as well as by its predecessors. If a referendum were to be organised in line with the Spanish Constitution it would mean that the territory leaving would find itself outside of the European Union.” Schinas’s comments come after regional President Carles Puigdemont appealed to the EU to consecrate the result of the referendum, which saw independence winning with approximately 90%, although the turnout stopped at 42.3 percent. Meanwhile, the UN has asked the Spanish authorities to investigate the violence which left more than 800 injured during the clashes between Catalan independence supporters and the Spanish police.

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Slowdown in UK manufacturing

An “IHS Markit” survey has indicated that UK manufacturers are showing signs of a slowdown due to the weakness of the pound and the increasing cost of imported materials used in production. Rob Dobson, the company’s director said, “Although it looks as if the sector made solid progress through the third quarter as a whole, the growth slowdown in September is a further sign that momentum is being lost across the broader UK economy.”

Overall, official data shows that the UK economy has been growing at a slower pace than previously thought. It is reported that the slow progress of Brexit negotiations and the resulting uncertainty has been preventing some businesses from investing in their UK operations.

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Merkel under pressure by Bavarian allies over refugee cap

Angela Merkel’s CDU is increasingly coming under pressure from its Bavarian sister party CSU, whose chairman Horst Seehofer calls on Merkel to back his proposal for an annual cap of 200.000 on refugee intakes. The cap, which the CSU’s lead candidate Joachim Herrmann said his party “is not willing to do without”, is opposed by all other parties involved in the upcoming coalition negotiations. Seehofer predicted the upcoming talks between the CDU and the CSU to be “the most difficult talks since […] 1976”, when the two parties’ union nearly collapsed. The CSU, traditionally more conservative than the CDU, lost more than ten percentage points in the recent federal elections, mostly to the far-right Alternative für Deutschland.

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The EC refuses to state its preferences for EU UK-based agencies’ relocation

Commenting on its assessment of offers to host the European Banking Authority and the European Medicines Agency – released on Saturday – the European Commission said in a statement that “[the assessment] respects the member states’ decision that the criteria should be unweighted and does not provide a ranking or shortlist of any kind.” The competition to secure the relocation of the two agencies currently based in the UK is strong. Nineteen member states have requested to host the European Medicines Agency (EMA) and eight have bid for the European Banking Authority (EBA). In an attempt to secure success, some governments have proposed tax breaks or rent-free headquarters for the two institutions. EU leaders will now discuss the question at the next summit and are expected to take a decision a month later. The EMA reported that more than 70% of its current staff would be ready to resign should the decision clash with their stated preferences: Amsterdam, Barcelona or Vienna. EU leaders will therefore face a dilemma, torn between privileging business continuity and assigning the agencies to less represented Eastern European countries.

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Bottle deposit scheme could be introduced in the UK

Britain could introduce bottle deposit scheme after Environment Secretary Michael Gove suggested his support for this measure. Countries such as Denmark and Germany, where schemes are in place, have been able to recycle up to 90 per cent of plastic bottles, against a 57 per cent for Britain. Gove said: “We are [calling] for evidence to help us understand how reward and return schemes for plastic bottles and other drinks containers could work. This approach has seen great success in countries such as Denmark in curbing plastic pollution and we want to hear people’s ideas on how we could make it work in England.” Gove’s declarations follow pressures from environment organisations such as Greenpeace, Friends of the Earth and the Marine Conservation Society, after in February Defra dismissed calls for a deposit scheme saying it would be costly and noting household recycling collections were already doing the job.

Elsewhere, Open Europe Director Henry Newman will be in conversation with Michael Gove at the Tory Party Conference.

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