Ruth Lea: Under Theresa May, Brexit Britain will clearly be leaving both the Single Market and the Customs Union

ruthleaRuth Lea is Economic Adviser at Arbuthnot Banking Group.

When I heard the Prime Minister’s Brexit speech at the Conservative Party Conference on 2nd October, I had little doubt that this was one of the most important speeches any British Prime Minister had given for decades.

It was crystal clear that Brexit really did mean Brexit; Leave really did mean Leave; and  Britain will pass its own laws and govern itself.

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Polling shows Brexit was a rejection of the EU’s closed-minded institutions – not internationalism or globalisation


The narrative that Brexit has sounded the death knell of globalisation, heralding the rise of a new age of populism as countries turn in on themselves and reject open markets and international trade, has been a well-worn one since the referendum in June.

The persistence of this glib caricature of Brexit is much to the exasperation of a great many Leavers, who campaigned for an open, outward-looking Brexit to free the UK from an outdated and inefficient regional bloc and expand British horizons to encompass the whole world in an ever-more globalised and interconnected 21st Century.

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Brexit News for Tuesday 25th October

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House of Lords ‘will not block Brexit’, Labour’s leading peer admits

Labour’s leader in the House of Lords has said the party’s peers “will not block” Brexit, in what could be a boost for Theresa May. Baroness Angela Smith said peers had to be “adult” in approaching the issue and that threats over blocking Britain’s EU withdrawal only gave Brexiteers reason to cry foul. Baroness Smith also said that while Labour peers would not block Brexit, they did take seriously their responsibility in “assisting the Government to make the best possible arrangements for the UK”. – The Independent

Theresa May in “frank exchange of views” with Nicola Sturgeon at No 10 Brexit meeting with leaders of the devolved nations

Theresa May has warned Nicola Sturgeon that she risks “undermining” Brexit negotiations as a Downing Street summit descended into acrimony… Ms Sturgeon, who has said she is prepared to hold a second referendum unless Britain remains part of the Single Market, said that there had been a “frank exchange of views” and accused Mrs May of driving Scotland “over a hard Brexit cliff-edge”. In a pointed criticism of Ms Sturgeon’s referendum threat, Mrs May said that the “great union” has been a “cornerstone of our prosperity in the past” and will be “absolutely vital”. She said: “Working together, the nations of the United Kingdom will make a success of leaving the European Union – and we will further strengthen our own unique and enduring union as we do so.” – Daily Telegraph

  • Constructive talks? Don’t believe a word of it – Matt Chorley for The Times (£) Red Box
  • Our constitution is clear: Nicola Sturgeon has absolutely no right to veto Brexit – Tom Harris for the Daily Telegraph
  • Arlene Foster and Martin McGuinness find ‘widespread support’ for Northern Ireland over Brexit – Irish News
  • Brexit doesn’t mean division in Northern Ireland – Pauline Haddaway for Spiked
  • MPs to discuss impact of Brexit on Welsh funding – ITV

Manufacturing exports boosted by pound

Manufacturing exports have received a significant boost from the weakness of sterling, according to the the latest report from the CBI. The Industrial Trends Survey showed that export volumes grew that their fastest pace for two and a half years in the three months to October.
The pound has fallen by nearly a fifth against the dollar since the EU referendum at the end of June. Export orders are expected to rise further over the next three months. – BBC

Small business owners are less worried about Brexit than before the referendum

In May, more than a quarter (28 per cent) of SMEs believed Brexit would result in a recession, but this has now dropped to 18 per cent and slightly more believe that the economy will continue growing as it was before the referendum… James Endersby, managing director at Opinium Research, said: “Now that the some time has passed since that historic vote, for the moment we’re seeing that fear is starting to dispel and the outlook of SME leaders is looking up – this should put spirits in good stead as we start to enter negotiations and see the long-term implications pan out.” – Small Business

Fewer UK firms are struggling despite Brexit vote, survey shows

The number of UK companies struggling to stay afloat has fallen in a further sign that the economy is holding up after the Brexit vote. In the three months after the referendum on 23 June, the number of firms in significant financial distress fell 6% to 248,916 from the preceding quarter, according to the insolvency company Begbies Traynor. The number of distressed companies fell 2% from a year earlier. – The Guardian

  • Despite Brexit, 78% of business leaders think UK is ‘a good place to start a business’, Barclays research shows – International Business Times

James Forsyth identifies several nuggets from yesterday’s Commons statement by Theresa May on the European Summit

Today’s most interesting nugget was May’s response that staying in the customs union is not a yes or no question. This will add to the sense in Westminster that the Government is looking to stay in the customs union in certain sectors, for instance-car manufacturing, while leaving it in most areas. It is also worth noting when Gisela Stuart, the Labour co-chair of Vote Leave, asked about a 2020 deadline for being out of free movement and the like, the Prime Minister refused to endorse it. – James Forsyth of the Spectator’s Coffee House blog

  • Theresa May says Britain will be the “most passionate, the most consistent and the most convincing advocate” of free trade across the world, following Brexit – PoliticsHome
  • Five takeaways from Theresa May’s first EU summit – Left Foot Forward
  • The three big mistakes the government has made in its Brexit talks – Stephen Bush for the New Statesman

£700m bill from EU is revealed by Treasury web blunder

Britain’s public finances have been hit by a post-Brexit £700 million EU budget bill, an internal Treasury briefing reveals. Brussels increased its demand by more than 25 per cent last month, according to the note intended only for Treasury ministers and officials… Last night officials said that the European Commission had levied the larger-than-normal bill last month to make up for an unusually small bill in March. They denied that Brussels had timed its demands to avoid damaging the Remain campaign. “We just don’t recognise claims this was a political bung,” a Treasury spokesman said. – The Times (£)

  • Drop in value of the pound will have an impact on the EU’s budget – EU Reporter

EU may be going to the dogs, admits German Foreign Minister…

German Foreign Minister Frank-Walter Steinmeier has warned that the European Union faced an existential risk. “The financial crisis, the wave of refugees into Europe, and the shock of the British referendum have pushed Europe into serious turbulence,” he told the Munich-based Süddeutsche Zeitung newspaper. “Even dyed-in-the-wool backers of Europe can see that we have to convince people again, and we have to do it outside of the ivory towers of the professional backers of Europe,” Steinmeier said. “If we don’t know how to appreciate the value of the EU, then it’s going to go to the dogs,” he added. – EurActiv

… as EU trade deal with Canada teeters on the brink of collapse

The EU’s hopes of signing a free-trade agreement with Canada this week are on a knife-edge after Belgium announced it could not sign the treaty because of opposition from regional parliaments. The collapse of the negotiations in Belgium highlights the pitfalls that may await the British government when it seeks to negotiate a trade deal with the EU after Brexit… British officials have played down similarities, arguing that putting up trade barriers will be a very different exercise to taking them down… That optimism appeared to be given some credibility by Merkel, who suggested on Friday that she did not see a parallel between Ceta and future talks with the UK. – The Guardian

  • Is the blocking of the EU-Canada trade deal a bad sign for Britain? Denis MacShane and Andrew Lilico for City A.M.
  • Will the collapse of the EU/Canada trade deal speed the demise of Jean-Claude Juncker? – New Statesman

> Related comment on BrexitCentral:

UK will need interim EU deal before Brexit, says ex-Foreign Office chief…

Theresa May will have to negotiate an interim agreement on Britain’s future relationship with the EU even if the terms of Brexit can be agreed within two years, according to Sir Simon Fraser, former permanent undersecretary at the FCO from 2010 to 2015, who supported remain in the EU referendum… He said he did not expect the EU to give an early signal on whether it would give the UK an interim agreement, since this would represent a concession. But an unfavourable rupture was not in either side’s economic interest, Fraser said. – The Guardian

…as Australia reportedly rules out trade talks until Britain has left the EU

In a blow to Liam Fox’s plans to line up deals for the UK to sign shortly after Brexit, his Australian opposite number Steven Ciobo said that he had received advice that this would be illegal. He added that while he believed that a trade deal would then be negotiated as “efficiently and promptly as possible”, he refused to give it a time frame. Privately Australian officials want the deal to include privileged access to UK labour markets for Australian workers as well as allowing Australian financial service companies to expand into the UK. Most experts believe any trade deal would take at least a year to negotiate. – The Times (£)

> Francis Hoar on BrexitCentral: Why the UK is legally free to negotiate future trade agreements before Brexit

Sweden holds out olive branch to Brexit Britain

Sweden has warned that it would be a serious mistake to chastise Britain for voting to leave the EU, appealing instead for an amicable settlement to minimise damage for both sides.,, “We’ve heard some voices from the Continent that now is the time to punish the British, whereas our instinct instead is that this is the new situation and we have to make the best of it. We have to see what is good for jobs and growth,” Magdalena Andersson, the Swedish finance minister, told the Daily Telegraph on a trip to London. – Daily Telegraph

James Quinn: Four reasons why banks won’t leave the City of London after Brexit

The ‘shock and awe’ approach some in the banking lobby are taking in the prolonged pre-Article 50 shadow dance over whether the UK remains in the single market is frankly too much. It risks rubbing politicians up in such a way that could lead to a far worse settlement. It also isn’t true that banks will leave the UK over Brexit. Jobs will go, but not banks. [But a high number of layoffs] is unlikely for the following four reasons. – James Quinn for the Daily Telegraph

  • Hurting the City would hurt the European economy – Xavier Rolet on ConservativeHome

Stella Creasy MP: Like it or hate it, it doesn’t matter: Brexit is happening, and we’ve got to make a success of it

Brexit should be as much about innovating in what we make and create as it is about seeking to renew our trading deals with the world. New products must be sought alongside new markets. This doesn’t have to mean cutting corners or cutting jobs, but it does mean being prepared to learn new skills and invest in helping those in industries that are struggling to make this leap to move on. The UK has an incredible and varied set of services and products to offer the world, but will need to focus on what we do well and uniquely here to thrive. – Stella Creasy MP for the New Statesman

Hartley Booth: If the EU thinks it can stop more breakaways by making threats, it really is doomed

Instead of threats, the European Union could take Brexit as an opportunity to reform, and by doing so secure their house against the predicted hurricanes of economic and political challenges ahead. Through internal reforms they could remove the fear of collapse and take away the desire to threaten, in effect, a trade war. Nor is the fundamental answer so difficult. Internal reform could enable us to be closer allies. – Hartley Booth for the Daily Telegraph

Ryan Bourne: Britain must pursue a ‘hard Brexit’ to create a more open economy

If we remained in the single market, membership would mean the whole economy continuing to be bound by the “one size fits all” regulation emanating from Brussels. It would also mean no say on new regulation imposed by Brussels, not least that designed to curb “Anglo-Saxon finance”. In contrast, leaving would allow us gradually to reassess employment, financial, insurance, environmental and clinical trials regulation once more, and absolve ourselves of the EU precautionary principle, which deters innovation… In short, a clean Brexit provides both the opportunities and the international pressures for a Britain more open, and more liberal, on economics than ever. – Ryan Bourne for the FT (£)

Brexit comment in brief

  • Stop flapping: The government’s direction of travel on Brexit couldn’t be any clearer – Alex Deane for City A.M.
  • Towards a hard Brexit – Anand Menon for The Times (£) Red Box
  • The EU would be mad to start a trade war with Britain. Here’s why – Ross Clark for the Spectator’s Coffee House blog
  • How would we spend all the tariff money if the EU wants to damage their trade with us? – John Redwood’s Diary
  • The eurozone is turning into a poverty machine – Matthew Lynn for the Daily Telegraph
  • Why the UK needs Bank of England governor Mark Carney to stay in place for Brexit – Tracey Boles for City A.M.
  • Brexit offers the chance to send the boiler-room salesmen and their schemes packing – Richard Evans for the Daily Telegraph
  • Get ready for Merkexit – Mujtaba Rahman on Politico

Brexit news in brief

  • Buy-to-let continues to boom after Brexit, figures show – Daily Express
  • Butlins boss: Brexit can ‘unlock potential’ of seaside towns – Sky News
  • Boom time in the City as Brexit gives a boost to professional advisers – City A.M.
  • Warning Euro judges could take control over Article 50 terms – Daily Express
  • A Stop Brexit party would beat Labour in a general election, poll claims – LabourList
  • Anti-emigration party storms to victory in Lithuania – Daily Telegraph

Justin Protts: Failing to agree free trade terms with the UK post-Brexit and reverting to WTO rules would cost EU exporters £13 billion

justinJustin Protts is Research Fellow at the think tank Civitas. He is the author of the briefing Potential post-Brexit tariff costs for EU-UK trade which is published today.

Months have passed since the referendum and we are still at a point where EU leaders and political commentators are either so incensed or so bewildered by the UK’s vote to leave the EU that they still cannot engage in honest or productive discussions.

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Richard Tice: The positive lessons for the UK from the impending failure of the EU-Canada trade deal

richard-ticeRichard Tice is Co-Chairman of Leaves Means Leave.

What lessons can we learn from the impending failure of the CETA free trade deal between Canada and the EU, other than the obvious fact that our ever-pessimistic news broadcasters are, in reporting the development, looking through the wrong end of the telescope by suggesting it is bad news for the UK?

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Nick Varley: Change Britain’s grassroots campaign began on Saturday promoting the Welcome to Stay pledge

Nicholas Varley Profile ImageNick Varley was Head of Ground Campaign at Vote Leave and is now working with Change Britain via his consultancy Grassroots Influence Ltd.

Change Britain held its first nationwide campaign day on Saturday. Volunteers were out across the United Kingdom in Wales, Northern Ireland, Scotland and every region of England talking directly to the public about Brexit.

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Brexit News for Monday 24th October

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As Theresa May meets leaders of Scotland, Wales and Northern Ireland today, she offers them a ‘hotline’ to David Davis…

Theresa May will on Monday offer the leaders of Scotland, Wales and Northern Ireland the chance to formally feed into her Brexit strategy as the Prime Minister looks to engage the increasingly restive Scots and other regional leaders. Ms May is convening a meeting of the Joint Ministerial Committee to offer Holyrood, Cardiff Bay and Stormont a “direct line” into David Davis, the Brexit secretary in a bid to make good on her promise to engage the devolved administrations in her EU exit plans. – Sky News

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James Skinner: Canada has shown us we were right to leave the EU

james-skinnerJames Skinner is a Briton based in Vancouver, Canada, where he is Executive Director of the Commonwealth Freedom of Movement Organisation

In what comes as no surprise for many politicians, economists and journalists, the Comprehensive Economic and Trade Agreement (CETA) between the European Union and Canada has all but failed. On Friday, Chrystia Freeland, Canada’s trade minister, left the negotiating table in Belgium after talks to ratify CETA broke down with Wallonia’s Minister-President, Paul Magnette.

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John Longworth: If policies are pursued that build confidence, the UK economy can thrive post-Brexit

john-longworthJohn Longworth was formerly Director General of the British Chambers of Commerce and Chairman of the Vote Leave Business Council and is now Co-Chairman of Leave Means Leave.

The Treasury and our key economic institutions face a tough challenge post-Brexit and something of a dilemma. The Treasury and, to a lesser extent, the Bank of England spent four months up to the referendum, telling the world that Armageddon would follow a vote to leave the EU, so it is hardly surprising that the world believed them and confidence was shaken. Armageddon hasn’t happened in the immediate post-Brexit period and in fact the Bank and others are now rowing back from predictions of recession for the UK.

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Brexit News for Sunday 23rd October

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UK economy to grow even faster this year than was forecast before the Brexit vote

Independent forecasts compiled by the Treasury show that the economy is performing far better than expected in the immediate aftermath of the vote. In June the average economist thought GDP would grow by 1.8pc in 2016, a forecast which was slashed in the wake of the 23 June referendum. But since then the country has proved resilient, so economists now anticipate growth of 1.9pc for 2016. – Sunday Telegraph

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