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Brexit will be good for global economy, May to tell world leaders

Theresa May is to tell world leaders that the Brexit deal she has reached with the EU will be good for the global economy as she uses a international gathering to push her “global Britain” message.

The Prime Minister is joining leaders including US President Donald Trump, China’s Xi Jinping and Japan’s Shinzo Abe at the annual summit of the G20 group of leading economies in Argentina.

Mrs May becomes the first serving UK Prime Minister to visit Argentine capital Buenos Aires, and only the second to travel to the country, following a Tony Blair trip over the border from Brazil in 2001.

The long-running dispute over the Falkland Islands – still claimed as Las Malvinas by Argentina, 36 years after the 1982 war – is likely to be discussed in a one-on-one meeting with President Mauricio Macri, but is not thought likely to dominate the talks, which will focus on trade.

This week’s announcement of a new air link between the islands and Latin America via Argentina has been hailed by Downing Street as a sign of “strengthening” relations, but officials insist there is no change in the UK’s stance on sovereignty.

More awkward for Mrs May could be a potential encounter with Saudi Crown Prince Mohammed bin Salman, after the UK’s condemnation of the killing of journalist Jamal Khashoggi in October.

Asked whether Mrs May would be willing to shake the Crown Prince’s hand, a senior UK official said the PM believed it was important to “engage” with Saudi Arabia and would take any opportunity to get across Britain’s message on the need for “full accountability and full transparency” over the Khashoggi killing and an end to bloodshed in Yemen.

The two-day G20 gathering marks a brief respite for Mrs May from bitter wrangling in Westminster over the Brexit plan she agreed with EU leaders in Brussels on Sunday.

European Council president Donald Tusk and Commission chief Jean-Claude Juncker will be in Buenos Aires, along with France’s Emmanuel Macron and German Chancellor Angela Merkel, but the EU side has made clear there will be no more negotiation on the UK’s Withdrawal Agreement.

Mrs May will take the opportunity to voice Britain’s determination to “play a full and active role on trade on the global stage” following Brexit.

She will make clear that once the UK regains its individual seat on the World Trade Organisation next April, it will push for urgent reform of the body to open up digital trade and e-commerce and introduce greater transparency.

Arguing that Brexit will have positive consequences for the world economy, Mrs May will tell fellow leaders: “Our relationship with the EU will remain close. A free trade area, with no tariffs, fees, charges, quantitative restrictions or rules of origin checks, will protect jobs, including those that rely on integrated supply chains.

“International firms that have invested in UK production or use European bases to supply the UK market will benefit from these arrangements.

“For the first time in more than four decades, the UK will have an independent trade policy. We will play a full and active role on trade on the global stage, working with friends new and old, at a time of unprecedented global inter-connectedness.”

The PM will discuss ways to boost trade and investment with President Macri, with the pair expected to agree the appointment of the first UK trade envoy for Argentina.

The summit is the PM’s first visit to Latin America, which has been identified as an important post-Brexit trade partner, as a market of 638 million people with a combined GDP of £4.4 trillion and a growing middle class.

Speaking before setting off for Argentina, Mrs May said: “The announcement of a new trade envoy for Argentina and progress in transitioning our trade agreement with Chile show that we are already taking significant steps to boost trade in fast-growing new markets.

“We have strong links to build on – British energy companies are on the ground in Argentina, working to develop local energy sources, while financial services firms support the funding of these projects to expand Argentinian infrastructure.

“In my discussions with President Macri we will be exploring how we can develop this further for the prosperity of both our countries.”

Source: East Lothian Courier

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Brexit costing UK £500M a week, study says

Brexit vote caused £26 billion annual loss to the UK economy, according to the Center for European Reform.

The British economy is 2.5 percent smaller today than if the U.K. had voted to remain in the European Union, according to the Center for European Reform, a think tank.

In a report published Sunday, the think tank said the U.K. suffered a £26 billion blow to the economy annually, equivalent to £500 million a week, without yet having formally left the bloc.

The weekly losses contrast the claims of Leave campaign, which promised a “Brexit dividend” whereby the U.K. will keep the payments it currently makes to the EU — notably an alleged weekly sum of £350 million, disputed by experts, that the campaign said would be diverted instead to the U.K.’s National Health Service.

The study noted that the U.K. is the slowest-growing advanced economy among its peers. “The U.K. has grown by 3.1 percent over that period [since 2016]. Compare that to the average of the 22 most advanced economies: 5.2 percent — which amounts to a 2.1 percent gap, not far away from our estimate of the cost of Brexit,” the report said.

Large companies like Airbus and BMW have warned of potential lay-offs and closures to operations if the U.K. leaves the EU without a deal. British Prime Minister Theresa May’s post-Brexit plan to effectively keep the U.K. in the EU’s single market for goods and agricultural products was rejected by the EU, and faces opposition from Brexiteer MPs in her own party.

Source: Politico

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‘Brexodus’ to cost UK up to 12,000 finance jobs: City chief

Brexit will cost Britain up to 12,000 financial services jobs in the short-term, the City of London financial district’s leader said on Tuesday, and many more jobs might disappear in the longer term.

At the lower end of the scale, 3,500 jobs could be lost to EU states, Catherine McGuinness told parliament’s Exiting the European Union Committee. More than 2 million people work in financial services across Britain, with 396,000 in London.

“We are not expecting a big Brexodus in the first instance. But depending on how things pan out … in the longer term, we may see many more go,” McGuinness told lawmakers.

Banks, insurers and asset managers in Britain are opening hubs in the EU before Britain’s departure from the EU in March to ensure continuity in services to customers there.

So far, there have been 1,600 confirmed job moves, a City of London spokeswoman said separately.

The City was disappointed that Britain’s government ditched its preferred option of future EU trade based on mutual recognition, whereby Britain and the EU accept each other’s rules under two-way regulatory cooperation.

“We had expected continued support for mutual recognition,” McGuinness said.

Instead, Britain has asked for financial-services access based on a more accommodative version of the EU’s equivalence system, used by Japan and the United States, whereby Brussels alone decides who gets access.

The EU had already dismissed mutual recognition and has said it won’t adapt its equivalence system in the way Britain wants.

“We can all see it’s going to be an uphill task to persuade the EU27,” McGuinness said.

Huw Evans, director general of the Association of British Insurers, said that opting for some form of equivalence posed a risk that Britain would end up becoming a “rule taker” – having to continue copying EU rules in return for access after Brexit.

“You are asking the EU to partner with you in a way to make equivalence work in future. Equivalence… is something the EU considers proprietary,” Evans said. “It’s quite a big psychological ask.”

There was plenty of opportunity for “mischief making” by EU states topping up equivalence with national rules, Evans said.

THROWN UNDER A BUS

The lawmakers also quizzed the broadcasting and tech sectors about Britain’s “White Paper” proposals for future EU trade, which calls for full access for goods, but less access for services in return for flexibility to diverge from EU rules.

Sammy Wilson, a committee member, accused the industry officials of giving “alarmist evidence”, adding that foreign direct investment in financial services was around a 10-year high.

“You are now trying to do an Airbus on us with the kind of evidence you have been giving,” Wilson said, referring to Brexit warnings from the European aircraft manufacturer that angered some government ministers.

“There is no getting away that Brexit is deeply suboptimal,” Evans replied.

“This isn’t a scare story,” added McGuinness.

The government also ditched mutual recognition for broadcasters from its White Paper but, unlike with banks, proposed no alternative, Adam Minns, executive director of Commercial Broadcasters Association, told lawmakers.

“The White Paper for us was a backward step. We are not certain if we are being thrown under a bus or just hitting a temporary roadblock. This could not have come at a worst time,” Minns said.

Britain is home to 1,200 international TV channels that beam programmes to viewers in the European Union, but without an EU licence they would have to relocate, Minns said.

Giles Derrington, head of Brexit policy at techUK, said the sector wanted the same trade-off as proposed for goods, meaning EU rules in return for EU access, but without flexibility to diverge.

The tech sector struggles to see where the benefits of diverging from EU rules would come from, Derrington said.

Lawmakers asked whether the industry officials if they would like Britain to join Norway in the European Economic Area, whose members must follow EU rules but without any say over them.

“I look at the EEA longingly. We don’t desire more flexibility at the moment,” Minns said.

Source: UK Reuters

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Carney – no deal Brexit would prompt interest rate review

Bank of England Governor Mark Carney said on Tuesday that a no-deal Brexit would have “big” economic consequences, prompt a review of interest rates and leave many bankers idle.

Britain and the EU have negotiated a transition deal that would effectively keep Britain as non-voting member of the bloc from Brexit day next March until the end of 2020.

But it has not been ratified yet, meaning the UK could crash out and have to rely on WTO trading terms which, Carney said, would leave the country worse off.

“Our job is to make sure we are as prepared as possible,” Carney told MPs at a parliamentary hearing held at an air show in Farnborough, southern England.

Crashing out would prompt the Bank’s monetary policy committee to reassess the economic outlook and interest rates.

“It would be a material event. I wouldn’t prejudge in which direction, though,” Carney said.

“Speaking very narrowly about the financial services side, in the event of a no-deal scenario… there would be big economic consequences. We might have a lot of idle bankers as there is not a lot of demand for their services,” Carney said

Lenders, insurers and asset managers in Britain are playing safe and opening new EU hubs by March to maintain links with customers there irrespective of whether a transition deal of generous future trading terms are secured.

But they worry that without a transition deal, existing cross-border contracts such as derivatives and insurance policies would be disrupted, leaving consumers unable to make claims or companies not covered against adverse moves in currencies or borrowing costs.

Britain has said it will legislate to ensure “continuity” in contracts and that the EU must reciprocate, but the bloc says it was up to banks and not public authorities to get ready.

COLD COMFORT

“Yes, we are concerned that the EU has not yet indicated its solution. The private sector cannot solve these issues,” Carney said.

“This is fundamentally about taking responsibility to protect the financial system… It’s cold comfort, but it will be worse in Europe than it is here.”

Britain’s banks, however, hold enough capital and cash reserves to withstand a disorderly Brexit, Carney said.

Britain last week published its proposals for a future trading agreement with the EU after Brexit, saying it wanted close ties in goods, but with financial services having less access to the bloc than now.

The financial sector attacked the government for not backing the industry’s more ambitious proposals that seek to replicate existing market access.

The industry’s proposals, which the Bank had also backed, were rejected by EU officials in Brussels who say it would mean Britain getting all the benefits of EU membership without the costs and obligations.

Carney said it was too soon to judge what the government’s proposals meant for financial services or for the Bank’s ability to take all decisions necessary to keep the financial system and banks stable.

“It’s premature for us to make a judgement on the White Paper and the outcome of these negotiations. It’s also not clear which activities are going to be in scope,” Carney said.

The White Paper was a “first step” in a hugely important negotiation, he added.

Source: UK Reuters