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The U.K.'s Brexit minister gave an insight into how workers from the European Union (EU) would be treated in a post-Brexit Britain when he told lawmakers that EU employees would be allowed to remain — provided other countries afforded the same protection to British workers.
Brexit: EU citizens working in the UK can stay
David Davis was expressing his opinion rather than government policy when he said it would be unlikely for Britain to stay in the single market after Brexit negotiations, the prime minister’s spokeswoman has said. The secretary of state for exiting the EU told MPs on Monday that the government’s priority was securing restrictions to European migration, and conceded that there could be an economic price to pay for that.
David Davis's single market stance 'not government policy' | Politics | The Guardian
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So, it's not complicated then.. A quick survey of the problems, from The Economist
Not so simple
Britain will not find it easy to strike comprehensive trade deals quickly
The big argument within government is over how hard to try to stay in the EU’s single market and customs union. For Brexiteers, both are problematic. The EU insists that single-market membership like Norway’s means accepting free movement of people, paying into its budget and observing its rules with no say in them. Being in the customs union would prevent trade deals with third countries, putting Liam Fox, the international trade secretary who recently denounced British business as “too lazy and too fat” to export, out of a job.
It is more likely that a post-Brexit Britain will be out of the customs union and not a full member of the single market. Dr Fox would then have his work cut out. His first task would be to negotiate a free-trade agreement (FTA) with the EU. Admittedly, nobody wants tariffs on goods. But the bigger concern is non-tariff barriers such as regulations, especially for services, which make up 80% of the British economy. Outside the customs union Britain would also face customs checks for rules of origin, which could add between 4% and 15% to the costs of exports.
An FTA with the EU would take time, even if drawn up in parallel to the Article 50 negotiations for Brexit. Lobbies from farming to financial services would pile in. And ratification by every EU country and the European Parliament would extend the process beyond the two-year limit set by Article 50 (Canada began negotiating its free-trade deal with the EU in 2007; it is still not in force). So an interim deal may be needed. Alan Winters of the UK Trade Policy Observatory at Sussex University suggests agreeing informally to keep current trade arrangements until an FTA is in force. But that would in effect prolong EU membership, which Brexiteers would hate.
It may also be impossible for Britain to keep in place the EU’s 53-odd free-trade deals with third countries. Roderick Abbott, a former deputy director-general of the WTO, says these cannot simply be inherited after Brexit. Third countries will want to know first about Britain’s future trade relations with the EU. South Korea conceded fuller access for the EU to its market in hopes of using Britain as a gateway to the single market. It will be reluctant to give Britain alone similar terms.
For all Dr Fox’s enthusiasm over deals with the likes of Australia, India and America, they too will first want to see the terms of a putative EU-Britain FTA. Many are negotiating trade deals with the EU, which a post-Brexit Britain would be left out of. Yet there is a glimmer of hope for Brexiteers. If accords like the planned EU-US Transatlantic Trade and Investment Partnership fizzle because of opposition in Europe, Britain might be better placed to do bilateral deals, albeit with less bargaining power.
The final puzzle for Dr Fox will be the fallback should free-trade deals prove impossible or take too long: trading on WTO terms. Brexiteers say this is simple, as Britain is already a member of the WTO. Yet its tariff, quota and subsidy rules are fixed by its EU membership. Post-Brexit it needs terms of its own, and they have to be negotiated and approved by all 163 other WTO members, a process that the WTO’s director-general has called “tortuous”. The alternative of scrapping all tariffs and quotas might appeal to some economists, but it would not be welcomed by British farmers or manufacturers, and it would deprive Britain of bargaining chips for future bilateral trade deals. Trading with the EU under WTO rules would mean tariffs on cars, pharmaceuticals and most agricultural products, and it would not cover services.
British exporters may have gained from a lower exchange rate since the Brexit referendum. But they face huge future uncertainties over their terms of trade—no matter how fat and lazy they may be.
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A group of Central European EU members known as the Visegrad Four is ready to veto any Brexit deal that would limit people's right to work in the UK, Slovakian PM Robert Fico says. In an interview with the Reuters news agency, Mr Fico said Hungary, Poland, the Czech Republic and Slovakia would be uncompromising in negotiations.
Visegrad Group of EU states 'could veto Brexit deal' - BBC News
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In March 2015, the U.K. won a landmark Court of Justice of the European Union case against the European Central Bank regarding the clearing of euro-denominated securities and derivatives. It is a huge business, with the value of daily transaction turnover exceeding $1 trillion. Though the U.K. does not use the euro as a currency, the court upheld its privileges to clear the euro because it is part of the EU. Leaving the EU could therefore not only mean losing the business itself, but the ecosystem around the business, which often follows.
A U.K. exit might also limit the ability of London-based clearing banks to execute derivatives transactions with EU clients if the country fails to maintain the EU passport for financial services. And there is more. Especially since the crisis, financial services have become one of the most regulated industries.
The EU adopted considerable common regulation to ensure safe, supervised, and pan-European banking services. The City of London has been benefitting from this. Though a lot of the deals, for example, M&A, ECM (equity capital markets) and DCM (debt capital markets) are ‘sourced’ out of London, the real economy transactions take place in Europe’s strong economies like Germany and the Netherlands. Losing EU passport rights, deviating from EU regulation, disengaging from the Capital Markets Union will shift market players to the bigger piece of the pie (the remaining 27 EU countries) and away from the smaller slice (the U.K.).
Finally, the EU will stay an important market for the U.K. economy. To be able to export to EU countries the U.K. will have to fulfil EU regulation, but after Brexit they will lose the ability to influence EU regulation (e.g. emission rules for cars, regulation on food and energy efficiency rules on equipment)
How Brexit Could Boost the European Union - Knowledge@Wharton
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09-28-2016, 08:23 AM
(This post was last modified: 09-30-2016, 02:33 AM by admin.)
The U.K.’s vote to leave the European Union has left more than three-quarters of chief executive officers saying they would consider moving their headquarters or operations outside Britain, according to a survey of 100 business leaders by the accountancy firm KPMG. Some 72 percent of the CEOs surveyed said they voted “Remain” in the June 23 Brexit referendum , KPMG said on Monday in an e-mailed statement. While 69 percent said they’re confident Britain’s economy will continue to grow over the next year, and 73 percent expressed confidence their companies will grow, 76 percent are mulling some form of relocation. “CEOs are reacting to the prevailing uncertainty with contingency planning,” KPMG U.K. Chairman Simon Collins said in a statement. “Over half believe the U.K.’s ability to do business will be disrupted once we Brexit and therefore, for many CEOs, it is important that they plan different scenarios to hedge against future disruption.”
Brexit Leads Three-Quarters of Britain’s CEOs to Consider Moving - Bloomberg
Heavy machinery whirrs and clanks on the factory floor of precision metalworking firm Robert Bion & Co, where a planned three-meter robotic arm would have been speeding up output by now, if Britain had not voted to leave the European Union. "We're waiting to get a clear idea of what the future might be before we make any significant investments," owner Nick Bion said at the company his father founded in 1964 in Reading, west of London. Britain's economy has held up better than most economists predicted since voters chose in June to quit the EU. Consumers have carried on shopping and employers have not laid off workers on a large scale, despite uncertainty over the country's future trade relations with its biggest export market.
From robots to websites, British firms curb spending due to Brexit | Reuters
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10-01-2016, 01:25 AM
(This post was last modified: 10-01-2016, 01:59 AM by admin.)
European diplomats are increasingly convinced the UK will sever economic ties with the continent when it leaves the European Union, as hopes of a special partnership languish. As the European commission’s chief Brexit negotiator, Michel Barnier, prepares to start work on Saturday, the dominant mood among senior diplomats is that the UK is on the path to “hard Brexit”, namely giving up membership of the EU single market, as well as the customs union that allows free circulation of goods. Under this clean-break scenario, London-based banks would lose the passports that allow them to operate across the continent, while Britain’s trade would be governed by a new agreement yet to be defined.
UK heading for hard Brexit, say European diplomats | Politics | The Guardian
But here is a useful compromise, as hard Brexit is going to have very big consequences on the UK economy..
The Belgian economist has written a paper with four influential European policymakers calling for “a continental partnership” that would allow Britain to remain part of the single market without having to accept complete free movement of people. The price of access to an outer EU tier would be contributing to the EU budget and following EU regulations. The paper has caused consternation in Paris, Berlin and Brussels. One senior source described it as “the full cherry-picking approach” and “politically, a non-starter”. British Eurosceptics would also object to paying into the EU budget and accepting the writ of the European court of justice.
UK heading for hard Brexit, say European diplomats | Politics | The Guardian
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10-01-2016, 05:19 AM
(This post was last modified: 10-01-2016, 05:21 AM by admin.)
Without passporting..
Up to 70,000 financial jobs could be lost if Britain leaves the EU without a new relationship in place for the City of London, its industry body is expected to say. Research commissioned by TheCityUK is expected to claim next week that if the UK fails to secure a trade deal beyond the standard World Trade Organisation terms, many tens of thousands of posts would be put at risk as entire swathes of financial business leave the country.
The financial sector would be harder hit than the UK economy as a whole by a complete departure from established EU trade relationships, owing to its central position in services such as trade clearing and capital markets, TheCityUK has repeatedly warned. The trade body has estimated that 1.1m people are employed in financial services across the UK, with a million more in related professional services such as IT and the law. Financial services attracted 35pc of the UK’s total foreign direct investment between 2008 and 2014, increasing even after the credit crunch, TheCityUK said earlier this month as it began to set out the stall for the industry in the forthcoming Brexit negotiations. Meanwhile, the industry is responsible for an international trade surplus of £22.8bn, more than 40pc of which comes from European Union trade.
City warning of threat to 70,000 jobs without Brexit trade arrangement
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Basically, hard Brexit (leaving the single market) seems unavoidable, for political reasons..
The feeling among most Tory MPs and activists as the conference begins is that May, Davis, Johnson and Liam Fox, the international trade secretary, are tending towards a hard Brexit along the lines Tice would like. Increasingly there is a realisation that because immigration was the main concern for most Leave voters, continued single market membership will be, as one minister put it, “politically unsellable”, as it would involve accepting EU free-movement rules. Jonathan Isaby, editor of a new website, Brexit Central, set up by Matthew Elliott, the former chief executive of Vote Leave, said anything less than hard Brexit would be seen by the public as a betrayal. “The signals from the government are getting ever clearer that we will see a clean Brexit: restoring full sovereignty to Westminster, taking back control of our borders, and giving elected British politicians the power to negotiate our own trade deals around the globe. This clean Brexit is what the British public voted for in such large numbers at the referendum. Any deal that involved membership of the single market – which is being promoted by some Remain campaigners unwilling to accept the verdict of the British people – would be akin to a phoney Brexit and totally unacceptable.”
Bitter fight over Brexit set to overshadow Conservative conference | Politics | The Guardian
But the economic cost will be significant...
Leave voters in Sunderland – 61% in favour – will have woken up on Friday to the news that Renault Nissan, the largest car plant in Europe and a crucial pillar of the local economy, employing 7,000 people, has deferred all new investment until the details of Brexit are clear. The chief executive, Carlos Ghosn, explained that it was not because the company did not value its Sunderland plant, its most efficient. Rather, as a major exporter to the EU, its profitability depends on the prevailing tariff regime, which promises to change sharply for the worse. “Important investment decisions,” he said, “would not be made in the dark.”
If so, Renault Nissan will face up to 10% tariffs on the cars it ships to the EU. Unless the UK government is prepared to compensate it, a bill that could top £350m a year, it cannot make new investments. The Sunderland economy will be devastated. The same is true for the entire UK car industry. Last Wednesday, Jaguar Land Rover made similar remarks: if the position had been more explicit and fairly reported rather than airily dismissed as Project Fear, the wafer-thin 3,800 majority for Leave in Birmingham might have switched their vote.
Every part of our economy involved in selling into Europe will be affected both by the rise in tariffs and by the new necessity to guarantee that our products and services meet EU regulatory standards, the so-called passport. This doesn’t only apply to the City where 5,500 UK registered firms turn out to hold the invaluable passport, but to tens of thousand of companies across the economy.
Nor do hard Brexiters confront the fact that alongside China and the US, Britain has accumulated a stunning $1tn-plus stock of foreign direct investment. Nearly 500 multinationals have regional or global headquarters here, more than twice the rest of Europe combined. They are here to take advantage of our ultra pro-business environment – so much for the Eurosceptic babble about being stifled by Brussels – and trade freely with the EU. Britain was becoming a combination of New York and California, with a whole continental hinterland in which to trade. Hard Brexit kills all that stone dead and puts phantoms in its place.
Nissan is an early sign of the downturns and the divisions Brexit could bring | Will Hutton | Opinion | The Guardian
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10-09-2016, 12:00 PM
(This post was last modified: 10-09-2016, 12:01 PM by admin.)
A new cabinet split over the handling of Brexit has emerged as ministers privately attacked each other over how to approach EU negotiations. Philip Hammond, the Chancellor, has been blamed for talking down Britain’s hopes of getting a good deal and attacked for his “relentless pessimism”. One cabinet colleague went as far saying that Mr Hammond, who voted to stay in the EU, should “watch his back” and could lose his job. However friends of Mr Hammond are furious with the “nonsense and garbage” that Eurosceptics have said about the strength of Britain’s hand in talks. “The obligation is on the Brexit leaders to now tell the British public some hard truths,” a Treasury figure said.
Cabinet split over handling of Brexit
It dawned on investors this week that when it comes to quitting the European Union, safeguarding the economy isn’t Prime Minister Theresa May’s top priority. With the premier signaling that a crackdown on immigration took precedence over membership of the bloc’s single market and European leaders hardening their position, traders responded by driving the pound to its lowest against the dollar since 1985. Following an overnight plunge in Asia, the currency is wrapping up its worst week since the June Brexit vote.
Rude Awakening in the U.K. Over Brexit Cost Sends Pound Down - Bloomberg
Britain and the EU appear more bitterly divided over Brexit than at any time since the referendum, with European leaders ramping up their rhetoric after Theresa May signalled she would seek a clean break with the bloc. The prime minister’s Conservative conference speech, in which she indicated Britain would prioritise immigration control and restore the primacy of UK law to become an “independent, sovereign nation” without full access to the single market, drew a sharp response from continental capitals. In Paris, François Hollande said Britain must suffer the consequences of its decision. “The UK has decided to do a Brexit. I believe even a hard Brexit,” he said. “Well, then we must go all the way through the UK’s willingness to leave the EU. We have to have this firmness.” If not, “we would jeopardise the fundamental principles of the EU”, the French president said on Thursday night. “Other countries would want to leave the EU to get the supposed advantages without the obligations … There must be a threat, there must be a risk, there must be a price.”
EU leaders line up to insist UK will pay a high price for Brexit stance | Politics | The Guardian
In an interview with the Guardian, Joseph Muscat, the prime minister of Malta, which will hold the EU’s rotating presidency when Britain triggers article 50 early next year, said the four freedoms – the movement of goods, capital, services and people – could not be decoupled. “That cannot be negotiated … These principles are the basis for everything the EU does,” he said. The French finance minister, Michel Sapin, said on Friday that eurozone governments would not accept the City of London remaining the main euro clearing centre once Britain left the EU. “There will be activities taking place in London that will only be able to take place on the territory of the European Union,” he said.
EU leaders line up to insist UK will pay a high price for Brexit stance | Politics | The Guardian
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Among the multiple absurdities uttered by those who demanded Britain’s departure from the European Union is the claim that, since the sky has not yet fallen in, all those gloomy warnings from the remain crowd have been proved wrong. Absurd because – and it’s odd that they haven’t spotted this – we have not yet left. We remainers believed that it was the actual leaving, not a mere vote to leave, that would bring economic havoc. That the first few post-referendum months seemed steady enough can be attributed to the hope nurtured by some of our trading partners, along with the markets, that we might not go ahead with this planned act of national self-harm, that we might step back from the brink. Which is why our currency takes a plunge every time Theresa May or her ministers indicate that, no, Brexit really will happen. The harder Brexit threatens to be, the deeper the pound tumbles.
We’re marching towards a mad Brexit. Someone must speak for the 48% | Jonathan Freedland | Opinion | The Guardian
More than half the money donated to groups campaigning in Britain's EU membership referendum was given by 10 individuals or companies, according to research published on Friday, raising questions over the outsize influence of the wealthy on politics. Anti-corruption campaign group Transparency International UK also said 95 percent of donations to the 'Leave' and 'Remain' campaigns in the run-up to the June 23 Brexit vote were made by only 100 donors. "The debate around the biggest question we have faced in a generation was financed by an astonishingly small group of exceptionally wealthy donors. That's a dangerous place for any democracy," said Duncan Hames, Transparency International UK's director of policy.
Wealthy donors dominated Brexit campaign funding - Business Insider
The most important thing to understand is that once Article 50 is triggered, the EU can filibuster the talks, running out the two-year clock, until Britain is ejected in a "hard Brexit" without any of its demands or requests being met. The EU is heavily incentivised to give the UK the worst deal possible. Its leadership wants to keep the rest of the EU together. Therefore the EU needs to teach all its other members a lesson in what would happen to any other country wanting to leave. That is why it will be happy to see Britain drop out without access to the single market.
Article 50 stacks the decks against Theresa May - Business Insider
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