Brexit News for Tuesday 11 April

Brexit News for Tuesday 11 April

Acrimonious Brexit could hit European Union’s credit rating, says S&P ratings agency…

An acrimonious Brexit, in which Britain declines to honour its existing financial obligations could put pressure on the European Union’s ‘double A’ rating, S&P Global said on Monday. Having recently triggered the EU exit process, Britain’s government is facing a request from the European Commission to honour its existing financial obligations, which reportedly could reach 60 billion euros. S&P said the claims were unlikely to be legally enforceable however, and that the EU’s rating could suffer if the UK didn’t stump up the money… It said a non-payment of obligations would not constitute a default by Britain. – Reuters

…as Flanders leads calls for EU to avoid “punishment project” Brexit…

If any region knows the havoc that can be wrought by a disturbance in trade flows with Britain, it’s Flanders, in northern Belgium. Since the Middle Ages, dependence on England has made Flanders rich… Flemish Minister-President Geert Bourgeois insisted there should be no question of trying to make an example out of the U.K. in Brexit negotiations. And he is far from powerless because Belgium, and therefore the EU, cannot ratify the terms of any free trade agreement with Britain without consent from the regions. “A couple of countries are in a punishment project,” Bourgeois said in an interview with POLITICO. “Some European countries export nothing or close to nothing to the United Kingdom, while Flanders will be hit hard by what I call a hard Brexit.” – Politico

  • Brexit will not spell ‘disastrous economic failure’ for UK, says Italian finance minister – Daily Express
  • Portuguese Prime Minister calls for Britain to remain “strongest ally” and “closest partner” after Brexit at Southern EU summit – AP

…while new poll shows dramatic hardening of German public opinion on Brexit

A huge majority of Germans would like to see Britain suffer when the Brexit negotiations start next month, according to a new poll. A massive 88% are urging Angela Merkel to take a tough line with Theresa May and only 10% are hoping to reach a compromise, independent research shows… Last year, in the aftermath of the referendum, about a third of Germans were worried that their economy – particularly their powerful car industry – would be hit by loss of exports to the British market. But these fears appeared to have declined in the wake of Mrs May triggering Article 50 and beginning Brexit. Now only 18% of Germans are concerned on this issue, says the poll conducted for the German TV channel ZDF. The highly-regarded poll conducted regularly by ZDF was carried out between 4-6 April and was based on phone interviews with 1,384 people. – The Sun

  • Merkel ally David McAllister calls on EU to drop ‘spirit of revenge’ during Brexit talks with the UK [Thursday] – Daily Express

Sturgeon launched major European charm offensive in the weeks after the referendum

Nicola Sturgeon and her senior ministers held more than 80 meetings with European leaders and other influential figures in the weeks after the Brexit vote as they tried to win support for Scotland’s future within Europe. Travel and engagement details obtained from the Scottish government show the extent of the first minister’s charm offensive in Europe… In the past week Alfonso Dastis, the Spanish foreign minister, has made it clear that his country would not stand in the way of a Scottish application to join the EU while Elmar Brok, a German MEP and ally of Angela Merkel, said that there would not be many obstacles to Scotland joining… Adam Tomkins, the Scottish Conservative constitution spokesman, said: “Rather than trying to work with the UK government to get the best deal from Brexit, it’s clear the SNP were already manoeuvring for independence.” – The Times (£)

  • Independent Scotland would be welcome to join EU, say Green MEPs – The Guardian
  • Shetland Islands could go independent if Scotland leaves UK, says former Chancellor Lord Lamont – The Independent

London bank group offers plan for EU market access after Brexit

The U.K. and the European Union should strike a deal that offers both sides access to each other’s markets and goes beyond the option of regulatory equivalence, according to an advisory group set up by bank lobbying bodies. The International Regulatory Strategy Group, which is sponsored by the City of London Corporation and TheCityUK, laid out a possible framework for the bespoke agreement between Britain and EU that the U.K. government has said it plans to negotiate. Along with criteria for access, the report proposes a joint committee that ensures regulations stay aligned and lays out ways to resolve disputes within a free trade agreement that covers financial services… EU member states want to avoid granting a deal that gives the U.K. full advantages of membership in the bloc after it exits. British lawmakers have argued that EU companies also benefit from London being a financial capital. The report echoes that case, saying the U.K. is a “significant source” of funding for smaller EU corporations. – Bloomberg

  • City backs Carney with plan to keep finance open after Brexit – Daily Telegraph
  • Brexit failed to derail the Financial Conduct Authority’s fintech sandbox – in fact, it’s expanding – City A.M.
  • European regulators offer Brexit sweeteners to lure investment banks from London – Reuters

EU visa scheme will help skilled Britons after Brexit, says think tank

Thousands of British people may be allowed to work in the European Union after Brexit under a special visa scheme designed to encourage highly skilled migrants from outside the bloc, a report says. The EU is proposing to extend a “blue card” system that gives skilled migrants from outside the EU the right to live and work in member states provided they meet certain conditions such as earning a high enough salary. Proposals to increase the number of cards issued would give opportunities for British citizens to work in the EU even if Britain failed to strike a specific deal on the issue in the Brexit negotiations, according to Migration Watch UK, which campaigns for lower immigration. – The Times (£)

  • Skilled labour shortage will leave British workers in demand across EU after Brexit, says Migration Watch – The Sun

Hotel market has ‘bounced back’ due to weaker pound since Brexit vote, says Travelodge CEO

CEO of Travelodge Peter Gowers said “uncertainty” towards the end of 2016 had a negative impact on the industry but since then the market had “bounced back”. Mr Gowers attributed the results to a weaker pound which has attracted tourists, particularly to London… Speaking on Sky News, he said: “It’s been a strong start to the year, particularly in London as a benefit from the weaker value of Sterling. That’s seen a lot more inbound tourism to London and I think that has helped to recover and actually fears have somewhat abated despite recent events and we’re seeing pretty strong conditions in London right now.” – Daily Express

Economists point finger of blame over Brexit forecasts at Treasury and BBC

Academic economists have pointed the finger of blame at Treasury and private sector colleagues and at the BBC for giving the impression that all economists made the wrong calls on Brexit. In the lead-up to last June’s referendum, the Treasury forecast that leaving would cost households thousands of pounds, and cause an immediate recession, a fall in house prices and significant job losses. In the event, the economy has grown strongly… Short-term forecasts from the Treasury and private-sector economists had been wrong, she said, adding that “those are the economists that have many different kinds of financial incentives and political constraints”. – FT (£)

Theresa May urged to sack five Remoaner trade envoys who opposed Article 50

After the Article 50 vote in the Lords Mrs May sacked Remoaner Tory peer Lord Heseltine for refusing to back the government on Brexit and supporting an amendment for a “meaningful” final vote to allow parliament to veto Leaving the EU at the end of the negotiations. However, Labour MP Rushanara Ali voted against Article 50 in the Commons but remains a trade envoy for Bangladesh. Labour peers Lord Hollick, envoy to Tanzania and Kenya, and Lord Richard Faulkner, envoy to Taiwan, backed the wrecking “meaningful vote” amendment in the Lords but remain in post… Ukip leader Paul Nuttall said: “It is clear that the Government was right to fire the faded Heseltine from his job as advisor but the heads of these five trade envoys should roll as well… Richard Tice, co-chairman of Leave Means Leave said: “Politicians who have been openly obstructing the process of withdrawing from the EU have no place in representing Britain’s interests abroad.” – Daily Express

Stephen Welton: Freed from the EU’s shackles, Brexit Britain can rekindle the regions

Brexit also revealed the UK’s huge regional disparities. While it’s difficult to single out a specific reason for the country’s decision to leave, there was a clear frustration with the status quo in the UK’s former industrial heartlands. This sentiment is understandable. The UK has nationwide potential, yet it is not being sufficiently realised. The Government’s Industrial Strategy Green Paper highlighted just how difficult it is for smaller businesses outside of the M25 to scale up and grow, as they struggle to access long-term capital. The new industrial strategy can play a part in helping to solve this. Government has the ability to help these businesses, through facilitating and encouraging greater private investment, while taking a more direct role in upgrading local infrastructure. The best way to help regions thrive in a post-Brexit world is by accelerating the pace of investment outside London. – Stephen Welton for the Daily Telegraph

Rohan Silva: Now more than ever, Britain needs to attract foreign students

Changes to the visa system have made it much harder for non-EU students to come to the UK, especially if — like Ramanujan — you’re from a poor family. As a result, the number of international students coming to the UK fell last year — including a large drop from India and China… By 2025, eight million young people will be moving from their home country to go to university — a vast economic opportunity for the UK. Our universities already generate £11 billion a year from foreign students, and this could be a major driver of growth in the coming decades… If we’re going to make a success of Brexit, we need to build on our country’s strengths, not undermine them. That means making it easier for our universities to compete globally in the fast-growing market for foreign students, which would be good for the economy — and command public support too. – Rohan Silva for the Evening Standard

Brexit comment in brief

  • How nationalist are today’s politicians? Here is what the public thinks – Martin Baxter for the Daily Telegraph (£)
  • May doesn’t have to wait for Brexit to cut immigration – Thom Brooks for The Times (£)
  • Leicestershire will make a success of Brexit with new jobs and a thriving economy – Nick Rushton for ConservativeHome
  • Bradford will reap benefits of Brexit if it reaches out to world – Mark Garratt for the Yorkshire Post
  • Despite everything, François Fillon is still in contention – just – Stephen Bush for the New Statesman

Brexit news in brief

  • Brexit to trigger UK farm policy overhaul and EU funding gap – Reuters
  • Half of young adults in the UK do not feel European, poll reveals – The Guardian
  • Swiss bosses expect more countries to quit the EU after Brexit, study reveals – Daily Express
  • Trade talks: For non-British eyes only? – Politico
  • Verhofstadt: Citizens’ rights to be top priority in Brexit talks – The Parliament Magazine
  • Post-Brexit Britain more politically active, finds study – Reuters/Mail
  • Slovak media face hefty fines for referring to “Britain” instead of “UK” – The Guardian
  • Cargo train sets off on its first Silk Road service to China – The Times (£)
  • Iceland magma drilling project may revive giant UK power cable link – EurActiv