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The U.K. acknowledged for the first time on paper that it will have to pay money to the European Union as it withdraws from the bloc, seeking to damp down a row over the country’s so-called Brexit bill.
“The government has been clear that we will work with the EU to determine a fair settlement of the U.K.’s rights and obligations as a departing member state,” Brexit Minister Joyce Anelay, a member of the House of Lords, said Thursday in a written statement to Parliament that referred explicitly to the “financial settlement” with the EU. “The government recognizes that the U.K. has obligations to the EU, and the EU obligations to the U.K., that will survive the U.K.’s withdrawal — and that these need to be resolved.”
Frankfurt’s attempt to become the EU’s pre-eminent post-Brexit financial centre received another boost on Thursday as more details emerged of Deutsche Bank and Citigroup’s plans to beef up their operations in the German financial capital.
In a video published on Thursday, Deutsche Bank chief executive John Cryan has told staff that Germany’s biggest bank will begin to book the “vast majority” of the assets in its UK global markets business to Frankfurt.
Jim Cowles, Citigroup’s Europe, Middle East and Africa chief, told his staff the bank had decided to base its EU broker dealer — its main trading operation — in Frankfurt, but would scatter some other businesses across Amsterdam, Paris, Dublin, Luxembourg and Madrid.
The news underlines how Germany’s financial centre is stealing a march on rivals, such as Dublin, Paris and Luxembourg, in the contest to win banking jobs and tax revenues from London ahead of Britain’s departure from the EU in March 2019.
Helped by the presence of the eurozone banking regulator at the European Central Bank, Frankfurt has a particular edge in attracting the financial market trading operations that global investment banks are looking to shift from the UK to avoid being cut off from their EU clients.
The sharp fall in sterling triggered by the EU referendum result is having an adverse effect on Britain’s already weak public finances but has yet to bring about the expected improvement in the trade deficit, a Guardian analysis of the economic news of the past month shows.
In a period in which business confidence took a hit from the government’s loss of its overall majority in the general election, the Guardian’s monthly tracker found little evidence that the impact of a more competitive currency was offsetting a slowdown in consumer spending caused by dearer imports.
The latest data suggests the first official estimate of growth in the second quarter – due on Wednesday – will show a modest pickup from the 0.2% recorded in the first three months of 2017 but will not match the robust expansion recorded in the first six months after the Brexit vote.
Despite a weather-induced pickup in retail activity in June, consumer spending has been dampened by the failure of wages to keep pace with prices – a feature of the economy since the turn of the year.
There have been some signs over the past month that the effects of the post-Brexit referendum depreciation of the pound may soon start to fade. The annual inflation rate showed a surprise fall to 2.6% from 2.9%, helped by cheaper fuel prices, while industry’s fuel and raw material bills are rising by 10% a year rather than the 20% rate of increase seen at the turn of the year.
The pound started to fall against other currencies in the autumn of 2015 as financial markets started to factor in the possibility of the UK voting to leave the EU. By the time it reached its low point shortly after Theresa May raised the prospect at the Conservative party conference of Britain leaving without a deal, sterling had fallen by 22% against a basket of currencies. It has since risen by around 4% and is currently trading at just under $1.30 against the US dollar.
A weaker currency makes exports cheaper and imports dearer, but the latest set of official trade figures found that a rise in exports was accompanied by an even bigger increase in imports. In May, imports grew by 4.8%, almost double the 2.5% increase in exports, and, as a result, the UK trade deficit in goods widened by more than £1bn to £11.9bn.
It's hard to disagree, yet the likely reality is that no-one has any idea whatsoever how this all going to pan out.
Those of us who remember the dark days of '92 when Britain was expelled from the ERM will recall the certainty of the majority : Britain was no longer Great & would now fall ignominiously out of the world's leading economies... yet just over a decade later, sterling proved to be one of the underlying strengths of the UK economy, giving the government
the tools of monetary policy of which Eurozone nations can only dream...
And anyway - with apologies for sounding like a stuck record - we're not out yet & may never be...
"For who knows what the 'morrow may bring..."
Example scenario : the idiot Tories continue to self-destruct, forcing a general election within 12 months, in which the previously not-even-remotely-electable Jeremy "Glasto" Corbyn becomes PM. Loving his new image as protector of the youth - mostly Remainers - he stops the Leave process, causing consternation in Brussels (but really deep-down joy)... etc, etc... Not possible under the terms of Article 50 ? Everything is possible...
PS. And vice-versa (Leaving could turn out to be fantastic) !
A lot of good has also been irrevocably done, the vote having shaken up the Eurocrats and shown them that whilst most within the EU consider economic union to be highly desirable, political union must be put on the back-burner (for all sorts of reasons).
BRUSSELS (Reuters) - Talks between Britain and the European Union on their future relationship are now less likely to start in October, the EU's top negotiator has said, because of lack of progress on Brexit divorce issues so far, EU officials said.
[...]
But with no progress on the financial settlement except Britain's general admission that it would owe the EU an unspecified amount, and little to no real progress on other issues, the odds of a future trade relationship discussion starting in two months are declining.
EU officials said progress was difficult not because Britain had unacceptable demands, but because it had no position at all on many issues.
Do excuse the minor edits, but that is just a wonderful phrase to use in any context, irrespective of the current state of the in-out-shake-it-all-about shenanigans.
It reminds me of the sweeping rhetorical power of swapping all 'buts' with 'ands'.