Brexit News for Monday 10 April

Brexit News for Monday 10 April

City of London policy chief confident that London will remain leading financial hub…

The Square Mile’s outlook has improved since the triggering of Article 50, City of London policy chief Mark Boleat has said. Prime Minister Theresa May formally launched Brexit proceedings with a letter to EU Council president Donald Tusk in late March, and Boleat, who supported a Remain vote in the referendum, said he is confident that London would remain a leading financial hub. The City policy chief said that while some relocations would take place, “nobody is going to say ‘we are closing down in London'”. “On the whole, I think things are looking rather better,” Boleat told newswire AFP. “We would hope that the negotiations go quickly and go well.” Boleat also hit back at some EU politicians who want to thwart London’s dominance of the euro-denominated clearing market. “The clearing is done in London because that is where the expertise is. That’s where the market is. Brexit will not change that,” he said. “Euro clearing is already a political football – but we hope that economic reality will determine the outcome, not a wish to have a trophy function move to another place.” – City A.M.

  • London fintech is unique and will remain so after Brexit – Mark Boleat for City A.M.
  • What’s the biggest opportunity for UK fintech after Brexit? – City A.M.

…as France’s finance minister threatens post-Brexit trading loss for UK

France’s finance minister has warned that the City of London will lose lucrative euro-denominated trading operations after Brexit, saying that allowing them to continue there would threaten the currency bloc’s “sovereignty”. Speaking to the Financial Times, Michel Sapin said that other euro area countries share Paris’s conviction that key processes such as the clearing of euro-denominated derivatives must be relocated so that they come under the full oversight of EU supervisors. France’s president François Hollande has repeatedly warned that the vote for Brexit will have consequences for the City. He said back in June that the decision meant the repatriation of clearing to the continent. Since then, some regulators and Brussels lawmakers have suggested that the concerns could instead be addressed by making sure that EU financial supervisors play a role in overseeing the City after Brexit. – FT (£)

Commonwealth report finds post-Brexit trade deal with India ‘worth extra £2 billion to British economy’…

Britain will be able to increase its exports to India by more than £2 billion per year after Brexit by cutting EU red tape, a new analysis has found. The UK currently faces significant tariffs on its trade with India because of the European Union’s failure to agree a free trade deal. The deal has been held up for a decade by European Union regulations on intellectual property and data protection, with which India is refusing to comply. But after Britain leaves the EU, the deal can go ahead because British trade negotiators regard the disputed EU rules as unnecessary. – Daily Telegraph

…as EY forecasts boost to growth from international trade and lower pound

Rising overseas trade will offset a looming squeeze on consumers to produce another year of 1.8 per cent GDP growth, the EY Item Club forecasts today. While the post-Brexit-vote fall in sterling has contributed to a jump in inflation, expected to reach 3 per cent this summer, EY says the lower pound is also expected “to spur growth in exports”. It sees a rise of 6.7 per cent in 2017 and 5.3 per cent in 2018. Boosted by “increasing evidence of momentum in the UK’s major international trading partners”, EY believes the revival in Britain’s overseas markets “will support the economy’s readjustment away from consumer spending towards trade and help smooth the impact of Brexit on GDP”. It believes that trade will add 0.2 per cent to GDP this year and 0.6 per cent next, one reason why EY has lifted its GDP forecasts from 1.3 per cent to a same-again 1.8 per cent for 2017. – The Times (£)

…and Lord O’Neill says Brexit will be ‘liberating if May seizes the chances in Asia’

“I’m a Remainer but there are more important issues for the British economy than whether or not we are members of the European Union. Maybe even some good could come from leaving,” he said. Whether Theresa May’s Tory Party is culturally disposed to meet this challenge is an open question. In his view the May government has been exasperatingly slow out of the starting gate: it has dropped the ball badly in Asia; and risks starving the country of vitally needed foreign talent with the wrong kind of immigration curbs. Jim O’Neill, who resigned from his post as Treasury minister last year after a string of policy disputes, said Theresa May has been skillful in handling talks with the EU. Nobody in sophisticated circles pays much attention to the tabloid dichotomy of “hard” and “soft” Brexits at this stage, an issue that has been overtaken by events. – Daily Telegraph (£)

Brexiteers divided over calls for ban on unskilled migrants…

Calls to stop unskilled migrants from moving to Britain in order to cut annual net migration below 50,000 have divided leading Brexiteers, The Times can reveal. Leave Means Leave, the hard Brexit campaign group, released a report yesterday calling for a five-year halt to unskilled migration. It believes this would lead to greater opportunities for the 826,000 British 16 to 24-year-olds who are not working. The report suggests the introduction of a temporary work permit to allow up to 50,000 seasonal agricultural workers, tapering numbers after a year to encourage the training of replacements, while an independent body will determine the safe staffing levels of the NHS. The report also says that there should be no further restrictions on student immigration. – The Times (£)

  • Pressure group urges introduction of system of working visas – Bloomberg
  • How Britain can take back control of immigration – Owen Patterson MP for The Times (£)

Sir Gerald Howarth MP on BrexitCentral: We need a migration policy fit for 21st Century Britain

…as industry leaders warn that British workers for British jobs is a ‘fallacy’

Businesses across the UK have warned that tighter immigration controls will weaken the nation’s global standing, describing suggestions that British workers could simply replace EU nationals as a “fallacy”. Industry groups representing hundreds of thousands of businesses have told the House of Lords economic affairs committee that restrictions on foreign staff in workplaces such as hospitals, universities and factories would hit business and the wider economy. More than two dozen written submissions to the committee’s inquiry on Brexit and the labour market urged policymakers to maintain a flexible system after the UK leaves the EU. – Daily Telegraph

Southern EU leaders to meet today to discuss Brexit…

Leaders of southern European Union nations will meet in Madrid today in a show of unity and to back greater EU integration after Britain began the process of leaving the bloc. Spanish Prime Minister Mariano Rajoy and the leaders of France, Italy, Portugal, Greece, Cyprus and Malta will gather at El Pardo palace outside Madrid. The meeting will be a chance to “launch a message of unity and commitment to the project of European integration at a decisive moment in our history,” the office of Spanish Prime Minister Mariano Rajoy said in a statement. “Europe must continue to work to address the issues of greatest concern to its citizens and strengthen its project of integration,” the statement continued. Also on the summit agenda is the issue of immigration, of particular interest to southern EU states which are on the frontline of the problem. The leaders will also discuss economic, social and defence policies. The meeting of the leaders will be the third by the group following gatherings in Athens in September and Lisbon in January. – RTE

…as Spaniards living beside Gibraltar are angered by Madrid’s attitude towards the Rock

Spaniards living close to the border with Gibraltar say they are fearful for their livelihoods and furious at their country’s aggressive stance towards Britain, amid growing tensions about the future of the territory after Brexit. “I want Gibraltar to stay British. Spain’s government isn’t worthy of the name and should start by looking after its own huge problems,” says Jesús Moya, 48, from San Roque, who travels in and out of Gibraltar every day to work as a delivery man for Nestlé. Unemployment in the area is about 35 per cent and many local businesses depend on Gibraltarians who visit to enjoy Andalucian food and hospitality. – Daily Telegraph

  • Foreign Office shows solidarity by posting The Sun’s patriotic ‘Hands Off Our Rock’ poster in their headquarters – The Sun

Angela Merkel seeks to strengthen EU’s liberal voice with UK’s departure imminent

Angela Merkel, German chancellor, is pressing Finland and other liberal-minded EU member states to speak up for liberal economic policies as the UK, their traditional standard-bearer, prepares for Brexit. Berlin is concerned that with the UK leaving, the EU economic debate will shift in favour of France, Italy and other south European countries. These countries have long put less faith in free markets and deregulation than the British-led northern lobby and pushed instead for a state-led approach, often linked to increased public spending. Ms Merkel fears this could undermine the EU’s competitiveness at a time when it faces challenges from emerging economies led by China and from the populist US president Donald Trump, who is considering protectionist economic measures that could harm the EU. – FT (£)

EU is shifting in Scotland’s favour, claims Salmond

Europe’s “tectonic plates” are shifting in Scotland’s favour and away from the UK, Alex Salmond has claimed as a cross-party group of European politicians endorsed an independent Scotland’s membership of the EU. The former first minister said that a “sea change” in Europe’s approach to the UK would ease Scotland’s path to becoming an independent member state within the EU. Mr Salmond cited the declaration last week by Alfonso Dastis, Spain’s foreign minister, that the Spanish government would not block a Scottish application to join the EU, and the intervention of Elmar Brok, a German MEP and key ally of Angela Merkel, who said there would not be many obstacles to Scotland joining the EU. The former first minister was also reacting to a letter to Ken Macintosh, Holyrood’s presiding officer, from 50 European politicians, the contents of which were disclosed yesterday. – The Times (£)

  • This latest evidence of economic uncertainty will be of further concern as Scotland seeks to avoid a technical ­recession – The Times (£)

London still top of the shops in Europe…

When it comes to shopping, central London is still the leader in Europe with more store openings taking place than in any other city in the EU and double-digit rental growth last year. A new report shows that despite the shock of the Brexit vote in June demand from retailers, particularly overseas, to have a presence in the UK capital continued to grow, pushing up rental growth by 48 per cent overall last year. Paul Souber, co-head of EMEA retail at Colliers International, said retailers wanted to open stores in central London given the volume of spend by Britons and tourists compared with many other cities on the continent. He said that figures from Oxford Economics and Colliers showed that there was €84 billion of retail spending in the capital alone last year. – The Times (£)

…as think-tank says Birmingham and Liverpool can turn into economic powerhouses to rival Zurich or Frankfurt

Metro mayors could help England’s regional cities to become economic powerhouses to rival Frankfurt and Zurich, but they must be given a voice in Britain’s Brexit negotiations, a leading think-tank [IPPR North] says. Voters in Greater Manchester, Merseyside, the West Midlands, the Tees Valley, Cambridgeshire and Peterborough, and the West of England will elect powerful mayors on May 4 in the most radical overhaul of local democracy since 1974. The polls are culmination of plans to devolve powers from Westminster devised by the former Chancellor George Osborne, who said in 2015 the “old model” of trying to run the country from London was “broken” and cities needed to “take control” of their own affairs. – The i

Small construction firms shake off Brexit concerns as confidence is sky-high with investments in the works

Confidence among small construction firms is on the rise as three quarters of subcontractors plan to invest in their business in the coming months. According to the latest SME Confidence Tracker report from business funder Bibby Financial Services (BFS), surveying 1,000 business owners, confidence is bouncing back after uncertainty jitters relating to Britain’s vote to leave the European Union last June. Half of construction small and medium-sized businesses expect work volumes to increase over the next three months; the highest level since before the EU referendum. And businesses have set their sights on investment opportunities. Between April and July, firms plan to invest an average of £10,000 in areas such as staff training, recruitment and machinery. Nearly three quarters of construction firms planning to invest over the next three months was a figure notably higher than the national average across all sectors, which BFS said was 59 per cent. – City A.M.

Government outsourcing deals set to be extended because of Brexit workload

Hundreds of government contracts with the private sector that were due to expire are to be automatically extended because civil servants are too busy with Brexit to focus on new and better-value tenders. One procurement adviser to the government said more than 250 contracts were either close to expiring or had already expired in 2016-17. These are in a wide range of services, from health and justice to back-office processes such as pensions payments. “You can go through department by department and they all have huge, expiring contracts,” the adviser said. “Brexit has pushed them down the list of priorities so there are lots of extensions and re-extensions of existing deals.” – FT (£)

Matthew Lynn: We need a Brexit that’s hard for us and soft for them

Will we end up with a Hard Brexit, with queues of lorries stacking up at Dover, and exporters spending days filling in customs forms every time they sell something on a continent? Or will the final deal be a Soft Brexit, with European firms maintaining tariff-free access to our markets, and vice-versa, in a trade deal that replicates many of the features of the single market? As the negotiations over our exit from the European market start, that is the question most people in business want to see answered as quickly as possible. There is, however, a third option, and it is one the UK should already be preparing for. A Hard/Soft Brexit – that is, one that is hard for us, and soft for them. If talks do break down, and we end up trading with the EU on the basis of World Trade Organisation rules, then we will face modest tariffs on our products, and we can impose them on the remaining 27 members. But, in fact, even if they do impose tariffs on us, we should keep our market completely open, and refuse to retaliate. In the long run it will work out for the best, which is why it makes sense to start preparing the ground. – Matthew Lynn for the Daily Telegraph (£)

Mark Littlewood: Westminster must now prepare to lose control

Ten months after the EU referendum, there is little overall consensus about exactly how the Leave side triumphed. No doubt, in years to come, screeds of academic papers and doctoral theses will seek to explain why a majority of voters chose to strike such a stunning blow against the status quo. They are just as likely to reach a myriad of contradictory conclusions. So, I’m minded to just accept the most simplistic of explanations, namely that the Brexiteers designed the best campaign slogan. “Take back control” chimed with millions of people who felt they had minimal political influence over the swathe of policy decisions that affect their daily lives. – The Times (£)

Sophy Ridge: Am I allowed to be bored by Brexit?

Am I allowed to say it yet? Is it too soon, too raw? Are feelings still running too high for me to get away with voicing the unthinkable? I can’t help the thought creeping into my mind – and if you’re totally honest with yourself, I bet it’s a feeling that you’ve had too. I am starting to get slightly bored of Brexit. Don’t get me wrong. It’s the story of a lifetime and I will probably never cover anything like it as a journalist. It’s a political revolution that will change the country and have profound consequences – many of which we don’t even realise. It’s sent shockwaves through the Westminster establishment and burst the London bubble. But does everything have to be viewed through the Brexit lens? Not everything is “despite Brexit” or “because of Brexit”. And remember, we have another two years of this to go. Don’t get me wrong, I love an interesting story about the consequences of leaving the European Union as much as the next person. – Sky News

Brexit comment in brief

  • The parties.The leaders. And leaving the EU. What my 10,000-sample poll and focus groups found. – Lord Ashcroft for ConservativeHome
  • Campaigners should heed costs of leaving a wider economic union – Oliver Kamm for The Times (£)
  • How much will it cost to leave EU? Careful thought needed – not Brexit horse trading – Chris Haskins for the Yorkshire Post
  • Is the eurozone’s economic recovery sustainable? – Tim Wallace for the Daily Telegraph (£)

Brexit news in brief

  • BrewDog toasts £213m US private equity investment – BBC News
  • Virgin Atlantic Airways suffers fall in profits as it calls for quick Brexit airline agreement – Daily Telegraph
  • Nation proves economy can expand while emissions fall – The Times (£)
  • Employers struggle to reassure staff with Brexit anxiety – FT (£)