Osborne joins with investment banks to reiterate commitment to City of London despite Brexit
In a joint statement released yesterday, Chancellor George Osborne and the heads of six large investment banks pledged to “work together” to meet the “economic challenges” presented by the UK’s vote to leave the EU. They noted that the UK has “one of the most stable legal systems in the world, a brilliant workforce and deep, liquid capital markets unmatched anywhere else in Europe, all of which are underpinned by world class regulators.” The group pledged to “build on all this with a common aim to help London retain its position as the leading international financial centre” and “identify the new opportunities that may now become available.”
Meanwhile, El Periódico reports that Spanish Economy Minister Luis de Guindos had dinner with a group of US investment bankers in London on Wednesday, in a bit to try and attract them to Spain after Brexit. Federico Trillo, the Spanish Ambassador to the UK, told Onda Cero that Spain should consider “tax advantages” for financial entities that decide to relocate to Madrid.
Separately, in a special post-referendum survey, GfK found that consumer confidence in the UK has fallen to its lowest level since December 2013. The decline in confidence was the steepest since January 2011. The survey also found that those who voted to remain in the EU were much more pessimistic about the future of the UK economy, although even those who voted to leave suggested the prospects for the British economy had worsened.
Sources: Statement by the UK Government and investment banks, The Wall Street Journal, The Independent , El Periódico, Reuters
Obama: Special relationship between US and UK will endure
US President Barack Obama argues in an op-ed for the Financial Times, “As difficult as it will be, I am confident that the UK and the EU will be able to agree on an orderly transition to a new relationship…And, while the relationship between the UK and the EU will change, it is worth remembering what will not change. The special relationship between the US and the UK will endure. I have no doubt that the UK will remain one of NATO’s most capable members – a nation that pays its full share for our common security and is a leading contributor to alliance missions. And, given the current threats facing Europe, I fully expect that Britain will continue to be a major contributor to European security.”
Meanwhile, speaking at the NATO summit later today, David Cameron will assert that the UK will continue to play an “essential” role in the organisation and will commit 650 troops to the Baltics in an effort to counter Russian President Vladimir Putin. This follows comments made by German Chancellor Angela Merkel, who said yesterday that Russia’s actions in the Ukraine crisis had “deeply shaken our Eastern allies.”
Sources: The Financial Times: Obama, Bloomberg, The Daily Telegraph
Handelsblatt: Juncker is no longer the right man to lead the European Commission
The front page of German business daily Handelsblatt features European Commission President Jean-Claude Juncker on its front page under the headline, “The impossible President: how Jean-Claude Juncker is endangering the European project.” In a dedicated six-page feature, the paper argues that, given his reaction to the UK referendum, as well as in view of all the other challenges facing Europe, “Juncker is no longer the right man to lead Europe out of this misery.” The paper suggests that First Vice-President Frans Timmermans has the right “format” to take over but notes that Juncker is expected to remain in office until 2019.
Source: Handelsblatt
Theresa May and Andrea Leadsom to face Tory members in run-off to determine who will take over as Prime Minister
Home Secretary Theresa May yesterday won the final ballot of Conservative MPs with 199 votes to Energy Minister Andrea Leadsom’s 84 and Justice Secretary Michael Gove’s 46. May will now face Leadsom in a vote of some 150,000 Tory party members – with the result to be declared on 9 September. Speaking after the vote, May said, “We need strong, proven leadership to negotiate the best deal for Britain as we leave the EU.” The Sun today endorses May, arguing that she “backed Remain, albeit reluctantly. But she has promised ‘Brexit means Brexit’ and we believe she would deliver it.”
Sources: The Financial Times, The Times, Reuters, The Sun
Belgian PM: I won’t accept having to pay the bill for Brexit
Belgian Prime Minister Charles Michel told the Financial Times in an interview, “The truth is this is a very negative situation for the UK…Even with a friend like the UK, I will not accept having to pay the bill. That’s not my intention. Now there is a new relationship.” He went on to criticise the Leave campaign, arguing, “I’m only 40 years old but it’s the first time in my life that I’ve seen a democracy in a situation like this…There is de facto a form of black hole. What comes next? They have not even the courage to lead and say, it’s this direction.”
Meanwhile, in an op-ed for Spanish daily El País, German Foreign Minister Frank-Walter Steinmeier calls for “a better EU, flexible, which respects the different ideas about Europe’s future path and allows for different speeds of development – without excluding anyone or leaving anyone behind. Instead of discussing what the final destination of European integration should be, we should work to achieve tangible results.”
Sources: The Financial Times: Michel, El País: Steinmeier
UK Government to start preliminary talks over bilateral free trade deal with India
The UK Government suggested yesterday that it will begin preliminary talks over a bilateral free trade agreement with India. Business Secretary Sajid Javid also said the UK would have 300 trade specialists in place by the end of the year, up from 100 now, adding, “Over the coming months, I will be conducting similar meetings with other key trade partners, outlining the Government’s vision for what the UK’s future trade relationship might look like.”
Sources: Reuters, The Daily Telegraph
Brexit vote sees increased support for EU in Germany
The latest Infratest Dimap Deutschlandtrend poll for ARD and Die Welt has found that support for EU membership has increased in Germany, with 52% saying it has more advantages than disadvantages (an increase of 13 points since the UK vote) and 11% saying it has more disadvantages than advantages (a decrease of 10 points). Support for Chancellor Angela Merkel’s CDU/CSU has also gone up in the wake of the vote and now stands at 34% (+2%), followed by the SPD on 22% (+1%), the Greens on 13%, the populist AfD on 12% (-3%), Die Linke on 9%, and the FDP on 6%. Satisfaction with Merkel herself is also up nine points to 59%.
Sources: Die Welt, ARD
Corbyn wants new relationship with EU that maintains economic ties but loosens state aid restrictions
Writing in The Guardian, Labour leader Jeremy Corbyn argues that the starting point for negotiations between the UK and the EU must be “the maintenance of existing employment and social rights, freedom of trade with Europe, and protection of work and residency rights for both EU citizens in Britain and British citizens in Europe.” He goes on to add that “an end to EU-enforced liberalisation and privatisation of public services – and for freedom for public enterprise and public investment” should also become part of the renegotiation.
Source: The Guardian: Corbyn
Hammond suggests informal talks needed between UK and EU to guarantee rights of migrants on either side
Foreign Secretary Philip Hammond said he will seek to hold informal talks with other EU foreign ministers on Sunday to discuss a potential agreement on guaranteeing reciprocal rights for UK citizens in the EU and EU citizens in the UK after Brexit. However, Hammond added, “I would not recommend a unilateral commitment by the British government before we have received any reassurance of a reciprocal approach to UK nationals in other EU countries…It’s Brussels that has said that until Article 50 [of the EU Treaties] is served, we can’t start discussions.”
Source: The Guardian
EU Commission starts formal process to fine Spain and Portugal for excessive deficit
The European Commission yesterday tabled draft Decisions establishing that Spain and Portugal have both failed to take “effective action” to correct their excessive deficits – the first legal step towards imposing a fine on them. The draft Decisions will be discussed by EU finance ministers when they meet next Tuesday, and will be deemed as adopted unless a qualified majority votes against them. Under EU rules, a fine for excessive deficit amounts to 0.2% of a country’s GDP in the previous year – although EU finance ministers can lower the amount even to zero, essentially making the fine symbolic.
Sources: European Commission press release, Bloomberg
ECB minutes show concerns over negative spill-overs from Brexit
The minutes of the ECB’s monetary policy meeting from early June showed that the bank expressed concerns over the impact of a potential Brexit on the Eurozone. The ECB Governing Council noted that Brexit could lead to “significant, although difficult to anticipate, negative spill-overs to the euro area via a number of channels, including trade and the financial markets.”
Sources: ECB, The Financial Times
UK in talks about giving up rotating EU Presidency in 2017
Speaking to the House of Commons’ Foreign Affairs Select Committee, Foreign Secretary Philip Hammond confirmed that talks were underway about the UK giving up its right to hold the rotating presidency of the EU Council of Ministers, which it is due to take over on 1 July 2017.
Source: The Guardian
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