Brexit News for Thursday 12th January

Brexit News for Thursday 12th January

Mark Carney eats humble pie on Brexit, admitting it poses a greater risk to the EU than the UK…

Brexit is no longer the biggest risk to the U.K.’s financial stability, Bank of England Governor Mark Carney said on Wednesday, reversing his previous warnings about the threat Britain’s EU exit posed to the British economy… “Financial stability risks around [the EU exit] process are greater on the Continent than they are in the U.K”, [Carney said]. “There is a tremendous financial services capacity in Britain and even though there will be shortfalls at the point of leaving [depending on the exit arrangement], these are more likely to affect Europe,” Carney said. The remarks represent a reversal by the governor, who faced calls to resign from leading Brexiteers after he issued stark warning about the dangers of leaving the EU in the run-up to the June 23 referendum last year… Almost seven months after the vote, the sharp depreciation in sterling has turned out to be the BoE’s only accurate prediction, while other economic indicators have shown the British economy faring much better than expected. – Politico

…as the City of London’s principal lobbying group drops demands for a financial services “passport”

In a list setting out its priorities for the forthcoming EU negotiations that was published on Thursday, TheCityUK abandoned the idea of fighting to retain the financial “passport”, which allows companies to sell their services throughout the single market from a single location. Previously its desired outcome was for the UK either to remain in the EU’s single market, or to strike a special agreement preserving existing passporting rights. But Theresa May’s administration has shown little interest in pursuing such a deal… Miles Celic, the group’s new chief executive, said that a “bespoke deal” tailored to the needs of the UK should be achievable. “It would protect London as a market and those European customers using it,” he said. “That’s an advantage not only for the UK, but for the EU too.” – FT (£)

  • Lobby group calls for clear and upfront transitional plans to see City through lengthy Brexit process – City A.M.
  • What Brexit must deliver for British business – Miles Celic, TheCityUK chief executive for the Daily Telegraph (£)

Small business confidence bounces back to pre-referendum levels…

The Federation of Small Businesses (FSB) reveals today that UK small business confidence in the last quarter bounced back to the level reported before the EU referendum campaign began. FSB’s Small Business Index (SBI) has now moved into positive territory, which means that more small businesses feel confident than those that feel the opposite. – Federation of Small Businesses

…while German businesses are reportedly not concerned about Brexit

Nine out of 10 German business leaders don’t expect Brexit to have major consequences for their operations, according to a poll published in German newspaper FAZ Wednesday. The expectation in London that Germany’s fear of a hard Brexit will push it to make concessions to the U.K. during negotiations is incorrect, the poll’s findings suggest. – Politico

Downing Street pours cold water on suggestion of an EU worker levy…

Companies could be charged to hire skilled workers from the European Union after Brexit, Immigration Minister Robert Goodwill has suggested. A £1,000 immigration “skills charge” is being brought in this April for firms recruiting workers from outside the EU. Mr Goodwill told peers a similar levy for EU workers “may be something that has been suggested to us could apply”. One business group said the idea had “raised eyebrows” while a top European politician said it was “shocking”. But Downing Street said Mr Goodwill’s remarks had been “misinterpreted” and such a levy was “not on the government’s agenda”. – BBC

…as the UK considers unilaterally promising EU citizens that they can stay after Brexit

Theresa May’s government is considering a unilateral pledge to allow three million European citizens residing in the country to remain after Brexit, even before British expatriates obtain the same assurance about their future. Brexit Minister David Jones told lawmakers in London on Tuesday that he wanted the rights of EU nationals living in the U.K. to be among the first questions settled in talks over the country’s exit from the bloc. – Bloomberg

Diane Abbott’s late phone call “forced Jeremy Corbyn to make a migration policy U-turn”

Jeremy Corbyn was forced to backtrack on Labour’s migration policy after pressure from Diane Abbott, sources have said. The shadow home secretary is understood to have raised objections with the Labour leader after he appeared to give his support to more controls on free movement. Labour’s policy was in chaos on Tuesday after he indicated on Monday that he was prepared to address the concerns of voters by announcing that his party favoured “reasonably managed migration”. However, when he delivered his speech he changed a key paragraph to say that the party did not “rule out” keeping free movement in exchange for access to the Single Market. – Daily Telegraph

  • Jeremy Corbyn won’t face political reality on immigration because he doesn’t want to win elections – Tom Harris for the Daily Telegraph (£)

Philip Hammond seeks to assure Germany over ‘smooth path’ to Brexit…

The chancellor, Philip Hammond, has attempted to pave the way for a smooth Brexit by assuring Germany that the UK has no desire to disrupt the EU during its divorce from Brussels… Hammond told a German business conference in Berlin on Wednesday: “The UK government is clear that a strong and successful EU, and a strong and successful euro, are very much in the UK’s interests … [these are] key objective[s] for us in the forthcoming negotiations. We will not do anything that would undermine the EU or risk its unravelling.” – The Guardian

…as fears are raised that “rearguard action” by the Treasury could keep the UK in the Customs Union

Senior Tory sources have told the Daily Express that… Chancellor Philip Hammond is leading efforts to keep the UK in the Customs Union and allow Brussels to control British trade… The fears of a split in the cabinet came as it is understood that Brexit Secretary David Davis reportedly told a private meeting with the Legatum Institute thinktank today that “nothing has been ruled out” with the Customs Union… A senior Tory source said: “It looks like we have won the argument over leaving the Single Market but the messages coming out are suggesting we may still end up staying in the Customs Union either fully or partly, which would be a disaster. It seems that there is a split in the Cabinet and Philip Hammond and the Treasury are fighting hard to keep us in the Customs Union.” – Daily Express

UK could reap ‘depreciation dividend’ from increased international student numbers after Brexit

The UK economy could lose out on a potential £2 billion a year Brexit “depreciation dividend” from increased overseas student numbers if the Home Office pursues plans to restrict student entry, according to a major analysis. The analysis says that a 10 per cent depreciation in sterling… could bring in an extra 20,000 students and fee income of £227 million to UK universities by making them more attractive to overseas students. But the positive impact from sterling’s depreciation “assumes that the resulting additional 20,000 students are permitted to study in the United Kingdom. If this is not the case, then the £227 million potential gain that might be achieved by UK higher education institutions may not be realised or only realised in part”, the report says. – Times Higher Education

  • Hard Brexit ‘may spark disaster’ for universities, claim academics – Sky News
  • Universities can thrive outside the European Union if the government lets them – Nick Hillman, Director of the Higher ­Education Policy Institute for The Guardian

Government will lose Brexit supreme court case, ministers believe

Cabinet ministers have privately conceded that they are very likely to lose a landmark legal case on Brexit in the supreme court and have drawn up at least two versions of a bill that could be tabled after the ruling. Sources have told the Guardian that senior government figures are convinced seven of the 11 judges will uphold the high court’s demand that Theresa May secure the consent of MPs and peers before triggering article 50… It is not yet clear when the decision is likely, but the Guardian has been told that the government has asked the supreme court for early sight of the judgment, to allow “contingency planning”. However, a spokesperson for the supreme court made clear on Wednesday that would not happen, saying: “It’s just too sensitive”. – The Guardian

Civil servants should shut up and get on with Brexit, says Sir Bernard Ingham

Britain’s leading civil servants should shut up and get on with dealing with Brexit instead of demanding more money for the extra work, Sir Bernard Ingham has said. He said Sir Ivan Rogers’s resignation as the UK ambassador to the EU was disgraceful and cast doubt on the integrity of the upper Civil Service. Sir Bernard, who was Margaret Thatcher’s press secretary at 10 Downing Street, said senior civil servants had effectively put in a pay claim because the scale of the work involved over Brexit was unprecedented. – Yorkshire Post

  • Let’s hear no more from Ivan the terrible moaner – Sir Bernard Ingham for the Yorkshire Post

Peter Foster: If the EU really seeks to punish Britain with a ‘lose-lose’ Brexit it will only hasten its own destruction

From the moment that Britain voted for Brexit, the European establishment has been hunkered down in a defensive crouch, clearly fearful that the UK’s decision to leave could have a domino-effect that leads to the toppling of their Union… Jeroen Dijsselbloem, the Dutch finance minister and Eurogroup president, plods morosely round Europe issuing grim warnings that Brexit must necessarily be a “lose-lose” deal, with Britain losing considerably more than the other 27 remaining EU member states. But supporters of populists like Ms Le Pen, or Beppe Grillo in Italy or Geert Wilders in the Netherlands might well ask why that has to be the case? …Europe’s political establishment cannot help but see Britain’s vote for Brexit as an act of reckless sabotage, yet millions in the EU see it as a legitimate democratic expression of anti-EU sentiment that EU opinion surveys show to be increasingly widely shared. – Peter Foster for the Daily Telegraph (£)

Fraser Nelson: Michael Gove was (accidentally) right about experts

Michael Gove never intended to make his most famous remark… He had tried to reply that people have ‘had enough of experts from organisations with acronyms saying that they know what is best and getting it consistently wrong’. But he was picked up mid-sentence by his appalled interviewer… As it turned out, the experts were all wrong — or, at least, everyone who predicted a instant and immediate recession after the referendum ended up feasting on humble pie… Economists are not clairvoyants, which is why none of them saw the 2007 crash coming, nor the extraordinary British employment boom, nor the immigration rise, nor the spending splurge that followed the Brexit vote. But a recent Financial Times poll of 120 economists showed they do not feel they were proved wrong about Brexit, even though two thirds of them were wrong about the aftermath of the vote. – Fraser Nelson for The Spectator

Brexit in brief

  • How to fund and gain better border control post-Brexit. I propose a visa waiver system – Charlie Elphicke MP for ConservativeHome
  • The problem for the rest of the EU when discussing the UK’s exit from the EU – John Redwood’s Diary
  • The Brexit negotiation. If May wants a good deal, she must be prepared to walk away – and mean it – Paul Goodman for ConservativeHome
  • Seven Brexit strategies Theresa May could use to erode EU unity – Ian Wishart for Bloomberg
  • The City has nothing to fear from Brexit – Stanislas Yassukovich for the FT (£)
  • Northern Ireland political crisis will not delay Article 50, says Theresa May – The Independent
  • Forget Brexit: London and Belgium are collaborating on fintech – City A.M.
  • Data suggests Brexit failed to knock tech investment in UK – Bloomberg
  • ‘Arts industry will play key role in promoting post Brexit Britain’, say Ministers – Gov.UK
  • Malta PM: UK’s Brexit deal must be “worse than the terms of its membership” – AFP/Digital Journal
  • German centre-left would make EU unity a priority in Brexit talks – The Guardian