Brexit

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Shortly after the UK voted to leave the European Union, we pointed out how dependant British startups and, more importantly, British venture capitalists are on funding from Europe. The European Investment Fund, specifically, gives VCs in London hundreds of millions of euros each year.
It’s still unclear what will happen to that money, just as most things Brexit-related are unclear, but VCs are wasting no time in lobbying for new tax breaks and funding in order to plug any potential gap. From The Economist on Friday:

Shed a tear for the poor, government-dependent British venture capitalist | FT Alphaville

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More evidence of the cost came Monday: A third of U.K. business leaders say they have delayed or canceled investments in the wake of the vote to leave the European Union, putting at risk projects worth an estimated £65.5 billion ($82 billion). More than 40% of large and medium sized companies have abandoned investments because of Brexit, according to a survey of senior executives commissioned by Hitachi Capital and the Centre for Economic and Business Research. The rate was 23% for smaller firms, possibly because they do less business overseas. The sharp drop in the value of the pound was the main reason for rethinking investments, the survey found. The currency has fallen 15% against the dollar following the EU referendum, putting pressure on companies that sell products in Britain but count their profit in other currencies.

Brexit cost: $82 billion in lost investment - Nov. 14, 2016

Britain is probably leaving the EU customs union, Boris Johnson, the foreign secretary, has claimed, despite Whitehall warnings that it could seriously harm the economy. The cabinet minister made the revelation in an interview with a Czech newspaper, despite Theresa May’s insistence that her government will not be providing a running commentary on Brexit. According to the interview, which was reported in Czech, Johnson said: “Probably, we will need to leave the customs union, but this is a question which will be dealt with in the negotiations”. The move is likely to alarm businesses that move goods to and from the EU as it would mean extra checks at the border. A leaked cabinet paper revealed by the Guardian last month showed ministers have been warned that pulling out of the EU customs union could lead to a 4.5% fall in GDP by 2030 and the clogging up of trade through Britain’s ports. The issue has caused a split among ministers, with Liam Fox, the trade secretary, pushing for the UK to leave because membership of the customs union prevents the negotiation of independent trade deals with non-EU countries..

Britain probably leaving EU customs union, says Boris Johnson | Politics | The Guardian

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Whitehall is struggling to cope with the scale of work generated by the Brexit vote and the lack of a common strategy among cabinet ministers, according to a report about a leaked Cabinet Office memo. The note found that departments were working on more than 500 projects related to leaving the EU and may need to hire an extra 30,000 civil servants to deal with the additional work. It identified a tendency by Theresa May to “draw in decisions and settle matters herself” as a strategy that could not be sustained, and highlighted a split between the three Brexit ministers – Liam Fox, Boris Johnson and David Davis – and the chancellor, Philip Hammond, and his ally Greg Clark, the business secretary. The note, leaked to the Times and said to be dated 7 November, also claimed that “no common strategy has emerged” on Brexit between departments despite extended debate among the permanent secretaries who head Whitehall departments.

In addition, it said major industry players were expected to “point a gun to the government’s head” to get what they wanted after the carmaker Nissan was given assurances that it would not lose out from investing in Britain after Brexit. It is understood the report was written by a consultant at the professional services firm Deloitte. A government source said it was “unsolicited” and its contents were not recognised..

Leaked Brexit memo: Whitehall struggling to cope and no single plan | Politics | The Guardian

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But what soon became clear was that almost everything was still in doubt. At the end of a campaign that dominated the news for months, it was suddenly obvious that the winning side had no plan for how or when the UK would leave the EU – while the deceptive claims that carried the leave campaign to victory suddenly crumbled.

How technology disrupted the truth | Katharine Viner | Media | The Guardian

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The British government seems to have four red lines. It wants to stop free movement of labour; to be allowed to pursue an independent trade policy; not to contribute to the EU Budget; and to break away from legal oversight by the European Court of Justice. (All of these can be summed up by the slogan "taking back control"). The EU's sole red line seems to be that Britain cannot benefit from "cherry picking"

Trade-offs: Brexit means...a lot of complex trade decisions | The Economist

If you give notice to your landlord or your employer, you trigger a process which, if you don’t do anything else, will leave you homeless or jobless after a given period. Furthermore, even if you do take some action, the decision is still partly in the hands of others. You need to find a house you like and a landlord that will let to you or a job you like and an employer that will have you. For this reason, most people don’t give notice to their landlords without having another home to go to or notice to their employers without having another job lined up. The only people who do are those who have enough money behind them to give them other options. Or those who are extremely reckless.

MPs should not vote for Article 50 until they are sure what it means | Flip Chart Fairy Tales

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Workers in Britain face the biggest squeeze on their pay for 70 years as Brexit knocks wage growth and stokes inflation, according to an analysis of the UK’s government’s latest tax and spending plans. Picking over Philip Hammond’s autumn statement, the Institute for Fiscal Studies said real wages in the UK – pay adjusted for inflation – will still be below their 2008 level in 2021. Paul Johnson, the thinktank’s director said: “One cannot stress how dreadful that is – more than a decade without real earnings growth. We have certainly not seen a period remotely like it in the last 70 years.” His comments follows signs that the pound’s sharp fall since the referendum result is hiking the cost of UK imports and could soon be passed on to consumers. At the same time, experts say pay growth could stall as companies grapple with political and economic uncertainty.

IFS warns of biggest squeeze on pay for 70 years over Brexit | Business | The Guardian

U.K. real estate prices may be dropping at a much faster pace than official reports indicate, according to the Irish agency that manages property loans acquired from bailed-out banks. Reports since Britain’s vote to leave the European Union point to the value of land in central London declining by more than 10 percent in the past year, while house prices are 11 percent below their 2014 peak, said Frank Daly, chairman of Ireland’s National Asset Management Agency, known as NAMA.

London Property Prices Falling Faster Than You Think, NAMA Warns - Bloomberg

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At the moment it is verging on political heresy to say the UK should not proceed with leaving the EU, because that was the democratic outcome of the election. However, there was nothing binding about the vote and no legal obligation for the government to pursue Brexit.

Can Brexit really be stopped? | Politics | The Guardian

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The Bank of England governor is urging Theresa May to abandon her timetable for completing Brexit by 2019, it has been reported. Mark Carney is working on a 'secret plan’ for a transitional arrangement which would see Britain stay in the single market until 2021, to head off the worst economic damage. The governor has held private meetings and dinners in the past two weeks, appealing to business leaders to focus on a common goal for Britain’s EU exit, the Sunday Times reported.

Bank of England's Mark Carney 'in plot to make Theresa May abandon Brexit timetable' | The Independent

Despite the recent announcements from Google, Facebook, Apple, Jaguar Land Rover and Tata, the OECD is particularly concerned about the outlook for foreign direct investment into the UK. Who knows, the Paris-based thinktank could be right. The Brexit divorce negotiations have yet to begin, after all. For the time being, however, the OECD should not be surprised if it is the target for the old joke: there are three sorts of economists – the ones who can count and the ones who can’t.

Scepticism about a Brexit apocalypse looks increasingly justified | Business | The Guardian

But there’s a big difference between today and the 1930s, and it becomes clear when you dig into YouGov’s stats. In Britain, the No 1 predictor of becoming an “authoritarian populist” is your age. Thirty-eight per cent of them are over 60; a further 21% aged between 50 and 60. Low educational achievement is another big predictor, though not as strong... The rightwing populist masses of the 1930s were mostly drawn from the economically ruined lower middle class. Though there were workers who supported Hitler, the majority opposed him, albeit ineffectively. The clearest divide was class. Today, the clearest divide is by age and education.

How do we fight the loudmouth politics of authoritarian populism? | Paul Mason | Opinion | The Guardian

George Osborne, the former chancellor, made more than £320,400 in a month from giving speeches to US banks, financial organisations and a university, his register of interests shows. The senior Conservative, who is still an MP, appears to be a popular choice with American financiers, after he signed up to the Washington Speakers’ Bureau on leaving government... The total he is expecting to receive for freelancing in just one month is almost four times his annual salary as a backbencher, which is £74,000. The former chancellor is following in the footsteps of Tony Blair and Gordon Brown who also signed up to the agency. He is not earning anywhere near as much as the £200,000 a time that Blair was thought to command, but around the same as Brown, who donated fees of about £70,000 to his charitable foundation.

George Osborne made more than £300,000 in a month from speeches | Politics | The Guardian

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A British government minister has raised the prospect that the U.K. could seek to stay in the customs union even after leaving the European Union, in a further sign that Prime Minister Theresa May’s team may be softening its approach to Brexit. The government is considering keeping membership of the customs union for certain products, Trade Minister Greg Hands suggested in an interview with Bloomberg this week. He said the government is “looking at broad possibilities” for how such unions can operate, as he explained what May meant when she said in November that membership was not “binary.”

“You can choose which markets, which products the customs unions affect and which they don’t -- so there isn’t a binary thing of being inside the customs union or outside of the customs union,” Hands said. “The history of international trade has got all kinds of examples of customs unions.” Europe’s customs union allows members to enjoy tariff-free trade among each other and imposes the same duties on external countries. Hands’s comments signal the U.K. could be planning to seek agreements on duty-free trade with the EU for individual sectors, hoping that the likes of Germany will agree so as to protect access to the British market for their own exporters..

U.K. Could Stay in Customs Union After Brexit, Trade Aide Says - Bloomberg

The government has a less than 50% chance of securing an orderly exit from the European Union within two years and will potentially have to accept a phased departure lasting much longer, prompting “a decade of uncertainty”, Lord Kerr, Britain’s most experienced EU negotiator, has said.

Chance of an 'orderly' Brexit within two years is less than 50% – peer | Politics | The Guardian

Britain's farms face a major labour shortage in the wake of Brexit, according to the country's biggest farming union. A survey by the National Union of Farmers (NFU) and seen by the Financial Times found that half the companies providing UK farm labour were unable to fulfill the horticultural sector's demands for workers between July and September. The UK's horticultural sector — the part of agriculture which pertains to crops rather than animals — relies heavily on seasonal migrant workers to carry out labour-intensive tasks such as fruit-picking. A large majority of those workers come from the EU, and they appear to have been put off by the Brexit vote, and the government's subsequent plans to cut immigration numbers.

Britain's farming industry faces post-Brexit labour crisis - Business Insider

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The Tory party could lose the next general election if Theresa May alienates its core of moderate supporters by imitating Ukip and pushing through a hard Brexit, a group of former Conservative ministers and MPs says. The warning to the prime minister from the party’s senior ranks comes after Tory voters turned to the pro-EU Lib Dems in droves in Thursday’s Richmond Park byelection, delivering one of the biggest electoral shocks of recent times. As recriminations grew among Conservative and Labour supporters over the outcome – which saw the Lib Dems make their first parliamentary byelection gain in a decade with a 21.75% swing from pro-Brexit former Tory MP Zac Goldsmith – Tim Farron, the Lib Dem leader, told Conservatives that his party was now targeting dozens of Tory seats.

Top Tories: hard Brexit stance could lose us next election | Politics | The Guardian

In an interview with the Guardian, Sarah Olney said her victory over Zac Goldsmith on a 21.5% swing was secured thanks to voters who felt the prime minister was only focusing on the part of the population that voted to leave the EU. “What I found when I was talking to voters is an awful lot of people who’ve never voted anything else but Tory said they were going to vote for us,” she said, arguing that people back the Conservatives for “stability, security and economic competence”. “The referendum result and Theresa May’s response to it has blown all that out of the water – people no longer trust them.”

Push for hard Brexit led to Richmond Park win, says new Lib Dem MP | Politics | The Guardian