Daily Briefing: 1 September 2016
“Brexit means border controls at any price.” The Guardian’s front page headline this morning is not quite as catchy as “Brexit means Brexit”, which has been the soundtrack of Prime Minister Theresa May’s summer. However, it certainly starts to shed a more insightful light on the kind of relationship the UK is likely to have with the rest of Europe once we finally untangle ourselves from our membership of the EU.
May, who has attracted criticism over the past month for sounding like a broken record, used the first cabinet meeting after the summer break to finally start to outline what leaving the EU would look like and agreed proposals with her team that immigration will be a red line in any negotiations with the EU and that it is up to the other 27 nations in the union to decide whether to continue to trade with Brexit Britain — and pay the price of migration controls for the privilege.
Charles Grant, director of the Centre for European Reform, said the planned deal would bring about the end of Britain’s membership of the single market and instead put the country on course for an agreement similar to that of Canada, with “only limited access to the single market and have to content ourselves with a free trade agreement, which would not cover many of our key services sectors including financial services.”
Staying with May’s Brexit plans, and indeed the music idioms, the comments from the PM yesterday will not come as music to the ears of EU citizens who face worrying uncertainty over their future in Britain. The Financial Times lead this morning with the story that the Home Office are piloting a new online application system designed to speed up permanent residence applications from thousands of EU citizens looking to make the UK their home ahead of Britain’s exit negotiations with Brussels. This is in response to a likely spike in demand for residence applications from Europeans already in Britain and fearful of the likely restrictions that will be placed on freedom of movement within the EU bloc.
While the pilot programe will only run for 2 weeks, it is obvious from the PM’s first day back at work that making sense of the consequences of Britain’s decision in June will play on for some time yet.
The Irish government is split in their response to the Apple tax ruling, dashing the hopes of Taoiseach Enda Kenny to reply aggressively and appeal the verdict. Several members of his coalition government requested more time to study the European Commission verdict before deciding whether to back the appeal process, with many Irish commentators predicting this division in the minority government as the biggest political crisis it has faced suggests its days are numbered, only months after its re-election.
The British Medical Association has announced a new wave of junior doctors strikes in England over their contract, beginning with a five-day walkout this month which would signal the longest strike in NHS history. This unprecedented industrial action could force as many as 30,000 operations to be cancelled.
Donald Trump surprised many by repeating his hardline stance on illegal immigration, as he renewed his vow to build a wall on the US-Mexico border at the expense of Mexico. He made the comments during a speech in Phoenix, shortly after a visit to Mexico where he was expected to show a softening of his immigration stance.
BUSINESS AND ECONOMY
Carclo, a listed plastics manufacturer, has had to scrap its dividend after its spiraling pension deficit triggered rules that prevented a payout in what could be a watershed moment for British business. The company discarded its plans after seeing market movements post-Brexit which “had the effect of extinguishing the company’s distributable reserves.”
Germany’s two biggest lenders, Deutsche Bank and Commerzbank, held talks about a tie-up earlier this month, before concluding that they both had significant work to do before such a move would be possible. However, Deutsche’s chief executive, John Cryan, conceded that Germany had too many banks and this caused “fewer economies of scale, more competition, higher price pressures.”
What happened yesterday?
Once again it was a slide in mining shares which had much responsibility for the drop in the FTSE 100.
The UK’s benchmark share index fell 39.28 points to 6,781.51, with Anglo American shares falling 4.6% and BHP Billiton dropping 4.9%. The recent trend in falling mining shares has come about as a result of the added pressure on commodity prices due to a strengthening in the value of the US dollar.
On the currency markets, the pound rose 0.33% against the dollar to $1.3125 and was 0.33% higher against the euro at €1.1777.
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Today’s UK Economic Announcements
(00:05) GFK Consumer Confidence, (07:00) Nationwide House Price Index
Today’s International Economic Annoucements
(13:30) Continuing Claims (US), (13:30) Initial Jobless Claims (US), (15:00) Construction Spending (US), (15:00) ISM Manufacturing (US)
(15:00) ISM Prices Paid (US)
COLUMNS OF INTEREST
Matthew Karnitschnig today writes in Politico.eu about how Angela Merkel has eyes on a fourth term as German Chancellor and will use that historic term to define her legacy. He goes on to say that this legacy will involve “fixing Europe” by going on the offensive to restore confidence in the EU project.
Tim Montgomerie advises Theresa May in today’s Times, suggesting that she should scrap various policy initiatives that were inherited from her predecessor. He welcomes the PM’s decision to pause the Hinckley deal, and argues that Cameron’s costliest errors were the Help to Buy and seven-day NHS and May must now ditch these in order to unshackle herself from ownership of such unconvincing initiatives.
ON THIS DAY
Germany invaded Poland on this day in 1939 by sending in 1.5 million troops. The move came without any prior declaration of war and prompted Britain and France to deliver an ultimatum that either they withdraw or face going to war. Two days later, the two nations declared war on Hitler.
TODAY IN PARLIAMENT
House of Commons
Parliament in Recess.
House of Lords
Parliament in Recess.
Parliament in recess.
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