Housing minister Kit Malthouse has become the 10th MP to enter the race to replace Theresa May as the country’s prime minister.
A Leave campaigner, Malthouse has gained plaudits amongst Tory backbenchers since becoming MP for Hampshire in 2015, in particular for penning the so-called Malthouse Compromise plan to break the parliamentary deadlock on Brexit.
His idea was to replace the Irish backstop with alternative plans over a three-year period remains the only proposed solution which won a majority in the commons over a gruelling six-months of infighting over the terms of the Brexit deal.
Citing fresh polling that suggests 56 per cent of Brits do not want a senior Cabinet minister to succeed Theresa May, he said: “This leadership campaign cannot be about the same old faces, scarred by the wars that have split the Tory Party over the last 3 years. I believe I’m the new face, with fresh new ideas, from a new and talented generation.”
Writing in The Sun this evening, Malthouse said: “We must revolutionise our economy, freeing a new generation of entrepreneurs to take risks and build businesses, creating jobs and wealth.
“As a councillor I led the effort that halved rough sleepers in central London, and now I’m building houses for the young. I’m a Northern boy who built a business in the Midlands and now represents a stunning part of Hampshire.
“My family’s story is one of education, hard work and opportunity, and that’s what I want for everyone.”
Malthouse’s decision to run will come as a minor blow for his political ally Boris Johnson, who is currently the frontrunner in the Tory leadership race. Malthouse was formerly a deputy mayor under Johnson while he was Mayor of London.
The announcement comes hours after Malthouse’s Cabinet colleague Home Secretary Sajid Javid said he would also throw his hat in the ring for the top job.
In a video circulated today on Twitter, Javid said “first and foremost, we must deliver Brexit”.
In the video, Mr Javid said he wanted to “rebuild trust, to find unity and create new opportunities for our country”.
A new prime minister — and the new chancellor of the exchequer that might accompany them — could have very different priorities from May and Philip Hammond, potentially opening the door for a different slate of candidates for the top BOE job. The finance chief is the one formally responsible for making the appointment.
The prime minister’s decision also ups the uncertainty faced by the U.K., which Hammond has previously acknowledged could deter candidates. Potential governors don’t have long to make up their mind. The closing date for applying for the BOE role is June 5 — two days before May will stand down — with a decision due in October. A new prime minister is likely to be in place by the end of July.
“Not only do we not know who’s in the running and who is actually possible, but we also don’t know who is going to be making that choice — or, to be honest, even which party may be making the decision,” said George Buckley, chief U.K. economist at Nomura in London.
If a Brexiteer succeeds May, it could lead to an awkward end to the tenure of Mark Carney, who is set to leave the role in January. In the meantime, the change of leadership leaves the Canadian facing a tricky policy dilemma of whether he should keep preparing the ground for the interest-rate hikes he says are needed while further uncertainty stalks the economy.
Carney has come under frequent criticism from anti-European Union politicians, many of whom consider him to have been overly gloomy on Britain’s prospects. While Hammond has been a more sympathetic ear in the Treasury, the relationship could be more strained if one of Carney’s prominent critics takes the role.
In a Bloomberg TV interview Friday, Roger Bootle, chairman of Capital Economics and a member of pro-Brexit group Economists for Free Trade, said that a new chancellor was almost certain.
“I would be very surprised if any new prime minister stuck with the current one,” he said.
While a Brexiteer PM might add some unexpected names in the race to replace Carney, a more orthodox candidate can’t be ruled out — especially if they are looking for a safer choice to burnish their economic credentials.
Jacob Rees-Mogg, an arch critic of Carney, suggested last year that Andrew Bailey, the chief executive officer of the Financial Conduct Authority, and BOE Chief Economist Andy Haldane — two men regularly cited as potential replacements — could take the job.
If front-runner Boris Johnson prevails, former adviser and pro-Brexit economist Gerard Lyons could be a potential choice for the central bank.
Hammond said the next BOE governor should have international status, prompting speculation that former Reserve Bank of India chief Raghuram Rajan could be in the frame. May, a former BOE economist, has also encouraged women to apply for the role.
Of course, the decision might not even be in the gift of the Conservative Party. If the leader calls a general election to buttress their position, Labour could seize power for the first time in almost a decade. The opposition party has explored proposals to change the BOE’s mandate, including targets for house-price inflation, productivity and climate change.
Theresa May tells EU leaders that she would be willing to extend the Brexit transition period by another 12 months.
The offer means the UK may not cut its ties with the EU until at least December 2021.
May’s offer is reportedly dependent on the EU dropping its demands for the Northern Ireland Brexit “backstop.
Prominent Brexiteers condemned the offer as meaning UK may “never leave at all.”
EU leaders in Brussels agree there has not been enough progress to hold a summit in November.
BRUSSELS, BELGIUM — Theresa May has told European leaders she is prepared to extend the Brexit transition period by another year, keeping the UK tied to EU rules and regulations until at least December 2021.
The UK prime minister told a meeting of EU leaders in Brussels on Wednesday evening that she would be willing to accept a longer transition period— or “implementation period” — in order to unlock Brexit negotiations.
Under current plans, the UK will stay in the EU’s customs union and single market for 21 months after Brexit day, giving it time to prepare businesses, borders, and many other areas of British life for leaving the EU.
However, May told EU leaders that she’d consider accepting a transition period lasting 33 months, meaning the UK wouldn’t completely depart the EU until at nearly six years after the 2016 referendum.
However, the offer is reportedly dependent on the EU abandoning its plans for the Northern Ireland “backstop” which could keep the province within EU customs and trade rules indefinitely if the UK fails to secure an alternative arrangement before the end of the transition.
Speaking to the BBC on Thursday, May said she was open to extending the transition by a number of months but said that she hoped that doing so wouldn’t be necessary.
The offer was met with an immediate backlash from prominent Brexiteers, with Conservative MP Nadine Dorries calling on May to stand down and make way for David Davis as leader.
“If Theresa May is asking for a longer transition period, she is stalling,” Dorries tweeted.
“It’s time to stand aside and let someone who can negotiate get on with it and deliver. I fully support DD as an interim leader. I’ve done my bit. It’s time for my colleagues to do theirs.”
Her colleague John Redwood MP said that any extension would be ” unacceptable”.
Meanwhile, Leave campaigner and former UKIP leader Nigel Farage tweeted that “Mrs May’s acceptance of an extension to the transition period will take us to the next general election which may mean we never leave at all.”
November Brexit summit off
May addressed leaders of other EU member states on Wednesday evening on the first day of the European Council summit. European leaders paid respect to May’s positive tone but said there had not been enough progress in Brexit talks to schedule another council summit in November.
A provisional deal collapsed on Sunday after the UK refused to accept the EU’s proposal for Northern Ireland to remain in the single market and customs union as part of the “backstop” for preserving the frictionless Irish border.
May said this proposal was unacceptable as it would create an array of new customs and regulatory checks between Northern Ireland and Great Britain, consequently undermining the constitutional integrity of the UK.
Michel Barnier, the EU’s chief Brexit negotiator, reportedly mooted the idea of offering the UK government a longer transition period last week. This, Barnier believes, would reduce the likelihood of the backstop ever being used.
A spokesperson for the prime minister refused to categorically rule out an extended transition period earlier on Wednesday, telling reporters in Westminster: “We’re not calling for an extension to the implementation deal.”
It is doubtful whether pro-Brexit MPs would accept a longer transition period. It would mean an additional 12 months of the UK paying into the EU budget and following EU rules, like the free movement of people. Pro-Leave Conservative MP Peter Bone told ITV on Wednesday night that extending the transition would be a “silly” and “absurd” idea.
May also has to please the Democratic Unionist Party which props up her fragile government. The DUP has said it will not sign up to any backstop clause which would create new checks between Northern Ireland and the rest of the UK.
The prime minister will be in Brussels until Friday in an attempt to make progress in Brexit negotiations.
Barnier told reporters that negotiators needed “much more time” to reach a deal. Officials have said a deal could be struck as late as the European Council’s December summit, with both sides determined to avoid no deal.
European Parliament President Antonio Tajani, who was among a number of EU officials addressed by May on Wednesday, said that while May expressed “goodwill,” she didn’t say “anything substantially new.”
Friday’s boost to the Pound comes closely on the heels of a sluice of bad news for the UK economy, which has recently seen consumer spending fall and the outlook for consumer credit deteriorate further.
The Pound rose strongly throughout the morning session Friday as October’s European Council summit looked set to conclude on a positive note.
Comments from German Chancellor Angela Merkel, Prime Minister Theresa May and a host of other officials were behind the lift, all of which seemed to suggest Brexit negotiations may soon move forward onto the subjects of trade and transition.
“My impression is that these talks are moving forward step by step,” Merkel told reporters. “From my side there are no indications at all that we won’t succeed.”
Markets have feared a possible delay to the progression of talks on to the subject of trade beyond December.
PM May reiterated her Florence promise that the EU will not suffer a budgetary black hole during the current spending period, as a result of Brexit, which runs into 2020.
“There is still some ways to go on Brexit,” says Theresa May. “I am ambitious and positive about the Brexit negotiations.” She also reiterated that the UK will “honour our commitments.”
Any delay of trade or transition talks beyond December is seen as raising the risk of a so called “hard Brexit”, or a “no deal Brexit”, given the time it is likely to take to agree details of a “transition deal” as well as the future relationship.
Despite a rise in the headline measure, the latest borrowing figure was the lowest of any September month for a decade.
The Pound-to-Euro rate had risen 0.43% to 1.1145 a short time ahead of noon while the Pound-to-Dollar rate added 0.08% to 1.3159, making Sterling the best performer against the greenback out of the G10 basket.
Despite this, economists still see consumer spending as having stabilised during the third quarter and are also predicting a steady performance from the economy during the period.
However, with inflation pressures already dampening spending, the outlook for consumers and credit supply to households appeared to darken further on Thursday.
“UK household debt levels are high and still growing,” says Annabel Schaafsma, head of Moody‘s EMEA consumer surveillance team. “As real income declines, UK consumers are vulnerable to an economic downturn and any increases in inflation or interest rates could cause problems for household finances, especially for those on lower incomes.”
Moody’s, the ratings agency, said the faltering outlook for the UK consumer will have an impact on credit providers who support their business using the securitisation market.
“Additionally, consumer credit has been growing in excess of the rate of household income. This suggests we will see a weakening future performance of some UK consumer securitisation deals,” says Schaafsma.
Securitisations are an important source of liquidity for banks of all sizes and also for some corporates. Even mobile phone contracts can be securitized and sold on to investors, unlocking capital and providing an instant return for originators.
However, investor demand for UK securitization deals looks set to weaken, particularly in the mortgage market.
“Moody’s expects higher delinquencies in newer, non-conforming RMBS, as opposed to older, more seasoned deals. The borrowers in newer deals are more likely to be paying higher interest rates and have a smaller safety net. Buy-to-let RMBS is very sensitive to a weaker economy and occupancy rates and rents are expected to decline,” the ratings agency says in a statement.
Bank of England Credit Survey Points To Tighter Supply
Recent BoE changes to bank capital requirements for different types of consumer loans had been expected to slow the pace of lending to households during the months ahead.
But a rise in default rates over the third quarter looks as if it might accelerate the pace at which banks now cut back lending to consumers.
“Default rates on credit card lending were reported to have increased slightly in Q3, while those on other unsecured lending increased significantly,” the Bank of England says, in its latest quarterly Credit Conditions survey. “Lenders reported that the availability of unsecured credit to households decreased in Q3 and expected a significant decrease in Q4.”