Danish PM calls for “peaceful” Brexit but warns UK must not get “competitive advantages”
Danish Prime Minister Lars Løkke Rasmussen said in an interview with Bloomberg, “We need to be extremely careful that the side that leaves [the EU] doesn’t get particular competitive advantages on its way out…We all want a peaceful divorce, but when you agree to part ways – and in this situation, only one side wants to part ways – then we need to protect our own interests first.”
Belgian Prime Minister Charles Michel told Frankfurter Allgemeine Zeitung, “I’m for close relations between the EU and Britain, but one has to tell the truth: Britain won’t be able to stay outside of the EU and, at the same time, enjoy all the advantages [of membership]. If one were to accept that out of weakness, one would be opening the door to a dismemberment of Europe.” He added, “The four freedoms are the foundation of the European project. One will have to be ambitious and creative. The longer Britain waits with the [EU exit] negotiations, the harder it gets. The positions will then become more rigid. And it will become more difficult to find compromises.”
Paschal Donohoe, Irish Minister for Public Expenditure, said over the weekend, “One theme is already very clear. We can’t assume that the future European Union is the current union minus the UK, with the only change consisting of British departure. What remains will change. The centre of gravity will shift.”
Sources: Bloomberg: Rasmussen, The Irish Times, Frankfurter Allgemeine Zeitung: Michel
Macron warns UK over loss of EU financial services ‘passport’, while office capacity constraints threaten to disrupt any movement of financial services from London
Former French Economy Minister Emmanuel Macron told The Guardian that the prospect of the UK having ‘passporting’ rights for its financial services, the ability to freely sell them cross-border or via branches across the EU, “should not be seen as a technical issue but a matter of sovereignty.” He added, “The financial passport is part of full access to the EU market and a precondition for that is the contribution to the EU budget.” When asked whether the UK should be allowed to continue to clear euro-denominated trading post-Brexit, Macron said, “For me, definitely not.”
Meanwhile, Bloomberg reports that financial firms considering moving from London after Brexit could struggle to find sufficient office space in other EU capitals. Currently, vacancy rates in the relevant districts in Paris, Frankfurt and Amsterdam are at their lowest levels for a decade. In particular, there are only a handful of buildings that could accommodate thousands of staff if a large bank sought to move a portion of its operations from London.
Separately, in an interview with Finnish broadcaster YLE on Saturday, Nordea Bank CEO Casper von Koskull said, “I think [the Brexit vote] came as a bit of a surprise for the Brits themselves. Now it may well be that this will be a process that lasts three, four or five years…It may be that the Brexit process will not be started until after two years. And then it will take many years to finish.”
Sources: The Guardian: Macron, Bloomberg, Bloomberg 2
Home Secretary commits to cutting immigration to “tens of thousands” and refuses to rule out prospect of UK citizens facing visas to travel to Europe
Speaking on the BBC’s Andrew Marr Show yesterday, UK Home Secretary Amber Rudd said, “I’m completely committed to making sure that we reduce it [immigration] and yes, tens of thousands, although it will take some time.” Rudd said that a number of systems were being considered, including a “work permit system” but added nothing has been ruled out yet. It was also reported over the weekend that the European Commission is drawing up plans for a visa waiver programme similar to the ESTA scheme that applies to travellers entering the US.
Rudd confirmed that she could not “rule out” British tourists and businesspeople having to pay visa fees to enter France, Germany or other EU countries as part of any Brexit deal. However, she said such reports are a “reminder” that the issue will be part of a “reciprocal” negotiation, and added voters might be “surprised” if it came to that. Rudd also confirmed that the government was looking to “bring down the numbers” of foreign students.
Sources: Andrew Marr Show: Rudd, The Times
Hammond rows back on Osborne’s pledge to cut corporation tax post-Brexit
Chancellor Philip Hammond reportedly told his European counterparts at Saturday’s meeting of EU finance ministers that he will not seek to lower the UK’s corporate tax rate below 17% (it currently stands at 20%). Hammond is going to hold meetings today with some of the UK’s key exporters and importers to discuss the upcoming Brexit negotiations.
Sources: Bloomberg, The Daily Telegraph
Owen Smith says he could apply to re-join EU if he becomes PM
Labour leadership hopeful Owen Smith told the BBC’s Andrew Marr Show yesterday that he would consider applying to re-join the EU if he became Prime Minister and the UK had already left. He said it was hard to answer a “hypothetical question” about what he would do if he took over with the UK already outside the EU. However, he added that, if the “price of staying out” was a recession and damage to the NHS, “then I think the sensible and responsible thing for a Labour government to do is to say we are better off in the EU.” Asked if that meant the UK accepting the euro and becoming part of the passport-free Schengen zone, he said, “Potentially – but again we are getting into hypotheticals built on hypotheticals.”
Sources: BBC, Andrew Marr Show: Smith, The Guardian
Boris Johnson endorses ‘Change Britain’ campaign
Foreign Secretary Boris Johnson declared that he is backing the ‘Change Britain’ campaign, whose aims include a “return” of controls over borders, laws, money and trade from the EU to Britain. The group is being headed by leading Vote Leave figures, including Michael Gove and Lord Lawson. The campaign appears to have dropped the Vote Leave pledge to spend £350m a week more on the NHS. Appearing on the BBC’s Andrew Marr show, Home Secretary Amber Rudd said that “Boris is not the driver. [Prime Minister] Theresa May is the driver.” Meanwhile, in an interview with The Sunday Telegraph, former Culture Secretary John Whittingdale called on Theresa May to trigger Article 50 within weeks.
Sources: The Sunday Telegraph, The Sun on Sunday: Stuart, The Times: Leader
TUC: Government must work to keep advantages of single market membership
Frances O’Grady, general secretary of the TUC trade union, will tell delegates at the union’s conference in Brighton today, “We’ve had the votes, the vote was close but clear and now our job is to get on with representing working people, whichever way they cast their vote, and make sure that they don’t pay the price of a Brexit. Government must be ready to step in and work to keep the advantages we get from membership of the single market – for all of our industries, not just the City.”
Source: The Guardian
Calls for Government to push ahead with infrastructure investment after Brexit
The British Chambers of Commerce (BCC) has cut its forecast for UK GDP growth from 2.2% to 1.8% for this year, and to 1% and 1.8% for 2017 and 2018 respectively. The group also called on the Government to push ahead on new infrastructure projects which have been on hold for too long, including “a firm decision on a new airport runway, new nuclear investment, and road and rail schemes.”
Meanwhile, Lloyds Bank Regional Purchasing Managers’ Index (PMI), a measure of private sector activity in England and Wales, returned to growth in August following a fall in July. All regions except Scotland showed a growth in output. Separately, a South Korean energy group is close to joining a consortium of investors in a new £10bn nuclear power plant in Cumbria.
Sources: Reuters, Markit, City AM, The Financial Times
Fox says “lazy” and “fat” British business has become complacent about trade
In comments to a Conservative campaign group, reported in The Times, International Trade Secretary Liam Fox criticised British business for having become “too lazy and too fat”, adding, “Companies who could be contributing to our national prosperity – but choose not to because it might be too difficult or too time-consuming or because they can’t play golf on a Friday afternoon. We’ve got to be saying to them if you want to share in the prosperity of our country you have a duty to contribute to the prosperity of our country.”
Sources: The Times, BBC, Reuters
Franco-German paper outlines proposals for EU ‘defence union’
EUObserver reports that a new Franco-German paper, drafted by the two countries’ defence ministries, calls for a single EU budget for military research and for joint procurement of air-lift, satellite, cyber-defence assets and surveillance drones – in a programme to be coordinated by the European Defence Agency. It adds that the Eurocorps in Strasbourg, an existing military grouping between Germany, France, Belgium, Luxembourg, Italy and Poland, could in future help the EU plan missions in order to speed up deployment.
EU students still keen on studying in UK despite Brexit vote
Britain’s decision to leave the EU has not dented the number of EU students planning to start studying in the UK, according to top institutions. Paul Teulon, Director of admissions for King’s College London, is quoted as saying, “We’ve had no obvious indication at this stage there will be a reduction in the number of EU students”, but added, “We will only really know where we stand towards the end of September or beginning of October.”
Source: The Wall Street Journal
EU Commission to push ahead with plans for common Eurozone budget and jobless scheme
De Volkskrant reports that the European Commission is planning to table proposals for a separate Eurozone budget and a joint Eurozone unemployment benefit scheme next spring, despite opposition from a number of Eurozone countries – notably Germany, the Netherlands and Finland
Sources: Volkskrant, Handelsblatt
EU launches ethics probe into Barroso’s Goldman Sachs appointment
Writing to the European Ombudsman in response to his predecessor José Manuel Barroso’s appointment as non-executive chairman and special adviser on Brexit for Goldman Sachs, European Commission President Jean-Claude Juncker stressed that “Mr Barroso will be received in the Commission not as a former president but as an interest representative”, and that he has also asked Barroso “to provide clarifications on his new responsibilities and the terms of reference of his contact.” Juncker added that he would seek the advice of an “ad hoc ethical committee.”
Sources: Reuters, The Financial Times, Expresso, Juncker’s letter
Hundreds of thousands of Catalans join pro-independence rallies across the region
Hundreds of thousands of Catalans yesterday took part in pro-independence rallies in Barcelona and four other cities across the region to celebrate La Diada – Catalonia’s National Day. Catalan President Carles Puigdemont told the crowd in Barcelona that he will later this month again urge the Spanish government to allow for a binding independence referendum in Catalonia. El País notes, however, that overall turnout in the pro-independence marches was lower than last year.
Source: El País
Rift between EU and IMF is hurting Greek recovery, Tsipras says
Greek Prime Minister Alexis Tsipras told reporters over the weekend, “What is creating conditions of delay in regaining trust of markets and investors…is the constant clash and disagreement between the IMF and European institutions” – particularly with regard to measures to reduce Greece’s debt burden. Tsipras also said that “the country doesn’t need [early] elections. The country needs stability.” Talks between Greek government officials and representatives of the country’s international lenders will resume in Athens today. Kathimerini notes that Greece needs to successfully complete the second review of its third EU/IMF bailout programme before negotiations on debt relief can be launched.
Sources: Kathimerini, Reuters, The Times
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