Niall FitzGerald blasts the “reckless ignorance” of Brexit at FT Brexit and Beyond Summit

NIALL FITZGERALD, Deputy Chairman of Thomson Reuters. Pic taken at Kildare House offices.
Former Unilever Chief Executive Niall FitzGerald blasted the “reckless ignorance” of Brexit at the FT Brexit and Beyond Summit this morning. Read the full text of his speech here.

Niall FitzGerald KBE DSA, former Chief Executive of Unilever and Patron of the British Irish Chamber of Commerce gave a speech entitled “A Brexit that works for all – Big principles for a strong Brexit partnership” this morning at the FT Brexit and Beyond conference in London, which he has kindly provided the text of exclusively to Business & Finance. 

“Thank you for your kind introduction and, without wishing to be being rude at the outset, I want to start by saying that in fact I deeply regret being here at all…

I really would rather be somewhere else this morning – anywhere but talking about Brexit – not because I’m suffering from Brexit fatigue like so many – far from it – but because we really should not have gotten ourselves into this situation in the first place.

We really should not have gotten ourselves into this situation in the first place”

We can debate whether Brexit is the result of political hubris or of an unbalanced recovery or the inevitable effect of a loss of British identity. But it’s happening and it’s costing us already in lost business and lost talent.

And far from making money from Leaving, as we were so cynically promised, I really do wish the UK was spending £50 billion on the UK rather than paying an Exit Bill that stops us delivering a worldclass health service or housing for all or university places for learning and research.

As has been said elsewhere, we’ll be paying £50 billion for nothing but the privilege of not being in the European club, for the right to sit in splendid isolation – cut off from our closest neighbours, trading with them on inferior terms that guarantee a slow but sure decline in the wellbeing of all of us.

We’ll be paying £50 billion for nothing but the privilege of not being in the European club”

Now don’t get me wrong – I’m not in the business of saying “I told you so”. Neither am I in the business of wallowing in some “begrudging Leave” position.

Because of COURSE I have to accept the CURRENT view that Brexit is inevitable, I’m in the business of realism and in proposing the SOLUTIONS (and I’ll say more on this shortly) rather than bemoaning the PROBLEMS.

Mostly, I’m in the business of Business, having spent 37 years in one of the UK’s finest global businesses – Unilever. And in my time there and since, I have been constantly advancing the cause of Britain as a word-class centre for multinational investment and scientific research, delivering the best of both British and international talent and access to the UK’s world-class university and research community.

So it is deeply troubling to watch the reckless ignorance of so many so-called leaders in the face of a predictable, potentially fatal but hopefully avoidable undermining of what this great nation has achieved by working together with our partner nations for the common good over the past 40 years – a period in which our peace, power and prosperity were enhanced and underpinned.

It is deeply troubling to watch the reckless ignorance of so many so-called leaders”

And I’m not so naive as to say the UK – and not least the City – is going to shut down tomorrow. The truth is that trade will of course continue but on materially lower returns to shareholders, to employees and to government, because the only thing that Brexit will do to their wellbeing is to reduce real incomes and increase real costs.

And, while the City and British industry and research institutions will still exist, I suggest that over the next ten years we will find ourselves looking back and noticing that we got no material new international investment once we chose to isolate ourselves and once the world saw better returns in more open markets elsewhere, and all the new investment ended up growing other trading nations, not ours.

And closer to home, Trade is one thing but Financial Services are surely another thing altogether. Britain’s biggest export sector is now at obvious risk on the technicalities of Brexit in terms of passporting and capital allocation and access to the skills it needs.

Britain’s biggest export sector is now at obvious risk

But look a bit deeper and you’ll not only see other centres vying to eat the City’s lunch, but you’ll also see that we’ve opened a Pandora’s Box where Brexit is causing global financial services players to “rationalise” a decision to move certain business to other centres, by saying they should have long ago avoided being too concentrated in a single centre like London anyway. And many, including some in the room here I’ve no doubt, are already well advanced in plans to de-risk their Brexit exposure by establishing elsewhere before it’s too late.

Now I know it’s tough being a politician – you have to do boring things like learn about the arcane world of different trade environments – all those initials like the WTO and the EEA and the EFTA – and you have to know the rules of different things like not being able to Have Your Cake and Eat It.

So you have to make choices and you have to say smarter things than “Brexit Means Brexit”, not to be popular but because people’s jobs depend on you actually knowing what you’re talking about.

People’s jobs depend on you actually knowing what you’re talking about

In the real world, you have no option but to tell the truth from learning and understanding facts and if they’re too complicated for you, then don’t worry because plain old common sense may be enough to get you through. So let’s try a bit of that here…

Suppose you fall out with your Golf Club. You’ve decided you just don’t get on with the Committee any more. You tell the Club Secretary you’ve had enough of the rules, you’ve decided you’re leaving and you won’t be paying your fees any longer.

Oh and by the way, you’d still like to play every Saturday morning at 10am…

I suspect the Club Secretary may ask you what you’re going to put on the table for the rest of the Members to give you at least a hearing…

The UK has an entirely democratic right to Leave the EU but, in exercising that democratic right, it would be sensible to have some specific understanding of the consequences.

And no matter how valued the UK’s Membership might be, it’s hard to expect the EU and its 27 other Member States to respond proactively to the UK’s request to stay engaged, without having yet – including this week – had a consistent proposal of exactly how.

Events this week show that, in politics, anything is possible among people who want to agree. But politics are fraught with danger too and so the voice of Business becomes all the more important now in helping to devise Trade-inspired Solutions to genuine political problems.

In politics, anything is possible among people who want to agree

That’s why the British Irish Chamber of Commerce, the trade organisation of which I am Patron, last week published a short set of key principles to break the deadlock between the UK and the EU. The Chamber’s “Big Principles for a Strong Brexit Partnership” set out a new narrative respecting both the outcome of the UK referendum in support of some form of Brexit, and equally the EU’s reasonable need to understand exactly what kind of Brexit we want.

These Big Principles provide a template capable of agreement by all the participants and I urge all of them – including you – to engage on them rapidly before the UK crashes deal-less out of the EU. The consequences of that would be disastrous, with by far the greatest damage being to the local jobs and wellbeing of families who depend on them throughout the UK. The EU of course will be seriously damaged too by the loss of its second largest member state and – for now – the sixth largest economy in the world. And given our exceptional interconnectedness, East/West as well as North/South, Ireland will be exceptionally impacted, deeply wounding a set of relationships that has delivered both peace and prosperity for decades. We must stop this happening, and now.

That’s why so much attention has been paid to the consequences of Brexit for the future of Northern Ireland’s trade – and the peace and wellbeing which it sustains. And even now, the UK still needs to be much clearer on the exact principles underlying its intended form of Brexit – not just for Northern Ireland but for the whole of the UK.

The British Irish Chamber’s Big Principles give the UK and EU a clear strawman to negotiate before time runs out for both. And like any strawman, these Big Principles involve choices between competing ideals and specifically between controls on Free Movement and on independent Global Trade Deals.

These Big Principles involve choices between competing ideals”

On the latter, we should ask ourselves exactly which country does the UK government want to independently trade with that it doesn’t already, or soon will, through membership of the EU and that’s worth any money on terms we could agree?

The answer can hardly be the USA, whose Commerce Secretary, Wilbur Ross, recently made chillingly clear that “Even our Friends have to Play by the Rules” – so enjoy what may be the last of your chlorine-free chicken this lunchtime…

And of course we now clearly understand that President Trump will “put America first”!

And neither can the answer be India where Mr Modi wants British passports for every Indian; and it’s hardly Australia and New Zealand either because the EU is already developing an Agreement with them – and if you think China will have Britain’s best interests at heart in a non-EU deal, then you may need to see me after class…

So let’s get real here – if there was any other country that offers the UK a better economic partnership, we would already be negotiating it. So it makes no sense for the UK to demand freedom to deal independently, dragging us all over a cliff-edge if it can’t.

It makes no sense for the UK to demand freedom to deal independently

At the other end of the wish-list of what’s really important to the UK people, while I sadly regret it, I see no change since the referendum in the UK’s difficulties with Immigration. Free Movement is clearly a core tenet of the Single Market framework, so it’s naive to think the UK can retain membership of the Single Market given the gap between us on this defining issue.

So, what’s set out in the Big Principles initiative is a pragmatic recognition of the UK’s genuine predicament. The UK must now clearly choose whether control over Free Movement is more important to it than Freedom to Trade with some un-named low-value countries. The answer to that is obvious and it consequently defines the nature of the post-Brexit relationship that the UK actually wants to negotiate with the EU – the UK will leave The Customs Union of the European Union but will participate with the EU in A New Customs Partnership.

This will allow for continued trade of Goods with a comprehensive deal also for Services, and for co-development of new trade deals and rational cooperation in key common-interest areas. The EU already has a tailored bilateral customs arrangement with Turkey and, given the globally significant scale of the UK, it makes sense to include the UK in any future trade deals agreed by the EU given the UK’s attraction to third countries alongside the EU 27.

It makes sense to include the UK in any future trade deals agreed by the EU”

These Principles can only be high-level at this stage and they will need a Transition Phase of as long as it takes for the detailed implementation work. But they positively disrupt the current dangerous vacuum and they put a specific package of ingredients on the table that can deliver real practicable solutions, with the least amount of compromises for either the UK or the EU.

And what they can deliver is as follows –

  1. A trade relationship between the UK and the EU that is effectively borderless (including in Ireland and at UK ports) and free from tariff and non-tariff barriers and enabling trade in both goods AND SERVICES (where of course the EU has precedents of various success, such as CETA);Secondly they deliver …
  2. Effective regulatory equivalence and mutual recognition of qualifications and standards, with the UK as an associate member in Europe-wide regulatory bodies for closest cooperation in areas such as Education, Research, Safety, Aviation, Cyber, Digital and Energy;Third, they can deliver –
  3. An alignment of the UK’s tariffs with the established Common External Tariff and continued regulatory and standards alignment to protect the UK from an influx of cheaper, lower quality goods which would endanger citizen safety in manufacturing and food production;Fourthly –
  4. Access to EU labour for the skills that UK businesses need and likewise to UK resources for EU benefit;Fifth-
  5. Access for the UK to new global trade deals that are mutually beneficial by working independently of, but in parallel with, the EU;and lastly –
  6. An alternative model to the ECJ for dispute settlement, just as exists in other EU trade deals.

And to those of you ask “is this not having our cake and eating it” and “Why would the EU agree to such a relationship?”… in the real world neither side of any negotiation gets everything they want and, in these proposals, the UK gets to manage its own migration to get the skills it wants, but there are controls then on UK people entering the EU;

In the real world neither side of any negotiation gets everything they want

In these proposals, the UK recognises it does better by tracking future EU trade deals rather than going out shopping to get worse value on its own;

And in these proposals, the UK gets the benefit of EU standards and regulations so it can trade on similar terms even if its role is as an Inputter rather than as final arbiter.

And the UK gets to participate as a valuable member in key EU groupings in such common-interest areas as Education, Aviation, Energy and Security. That, together with a strong post-Brexit relationship with the UK, is good for what the EU itself wants to do in the future too.

It’s worth noting also that many if not all of these elements have been variously hinted at in various UK discussion documents. But what has been missing is the aggregating of them into a single template that not only breaks the critical deadlock on Northern Ireland’s border but goes on to solve almost all issues with the least compromise for either the UK or the EU.

With the clock counting down to success or failure and with Investment in the UK already slowing, the weakened Pound already raising UK prices and key talent already leaving the UK well before any actual Brexit, a hard Brexit will be disastrous for us all and inexcusable for those who permit it.

I earnestly hope that the work started in relation to Northern Ireland will be quickly transposed, as it must, to the future relationship of the whole of the UK with the whole of the EU.

Our approach shows a clear way forward. Founded equally on democratic respect and common sense, constructive Principles of the type I’ve outlined will be better for growth and for the future of Europe, the UK and Ireland.

It’s time for business voices to make a difference in the course of events now. We need urgently to stop the shadow boxing and to support all sides to commit to Principles such as these or prove to us why they won’t deliver a better future for all those they represent.”

An interview with Niall FitzGerald appears in the new book, “Ireland Inc: A History of Irish Business” available to buy now

 

, , , , ,

UK economy beats 2017 third-quarter expectations

graph-163509_1280
The British economy grew by 0.4% in the third quarter but difficulties still lie in the current Brexit landscape.

Gross domestic product (GDP) grew 0.4% from the period July to September, which is up from the 0.3% of the last quarter and 0.1% higher than initially expected, according to the Office for National Statistics figures.

This small growth will boost the chances of the Bank of England’s Monetary Policy Committee raising interest rates when members meet next week.

However, the economy is growing at a slower pace than it was last year. Manufacturing had a slow second quarter but jumped to boost third-quarter figures even with construction slumping to a second-quarter loss in a row. But the greatest contributor to growth during this period was the service sector, which expanded by 0.4% in itself.

Last quarter’s 0.3% growth was only half that of the 19-member eurozone and the lowest amongst the G7 nations.

The new figures shed light on the potential to a rise in rates which, if to occur, would be the first time a rates rise has happened in the UK since July 2007.

, , , ,

Brexit on agenda as British Irish Chamber meets Brokenshire

IMG_5657
UK secretary of state for Northern Ireland James Brokenshire discussed Brexit with chambers of commerce from across Ireland at a British Irish Chamber of Commerce working lunch at KPMG in Dublin yesterday.

The UK/EU departure talks were top of the agenda, with Brokenshire reiterating the UK government’s commitment to “frictionless trade on the island of Ireland” as he explained his government’s negotiating position.

“The British Irish Chamber is delighted to be hosting secretary of state Brokenshire in Dublin today,” said director general John McGrane. “Given the number of political engagements the secretary of state has to keep while in town, I think his availability to meet with business groups shows the importance of maintaining the vital trade network that exists on the island.

“The chamber welcomed the publication of last week’s papers and especially the commitment shown by the UK government to borderless trade on the island of Ireland and the continuation of the Common Travel Area,” he said. “While we are happy to see suggestions put forward to maintain both of these, we are still cautious about the feasibility of these proposals and will continue to positively engage with governments on both sides to ensure that a solution is found that works for all concerned.”

Trade between Ireland, Northern Ireland, Scotland, Wales and England is wroth €60bn per annum and supports 400,000 jobs according to the chamber, which represents businesses and employers with interests in both islands.

Shaun Murphy, managing partner of KPMG noted that “there is an urgent need to forge both practical and realistic solutions to address the Brexit issues of relevance to Ireland – North and South – and we welcome all efforts to resolve these matters in the interests of business across the island.”

, , , ,

Inflation at 2.6% as Bank of England leaves rates untouched

pound-414418_1920
The Bank of England has decided to leave interest rates at 0.25% in a 6-2 split decision, and announced that inflation is at 2.6% for June, up from 2.3% in March.

Governor Mark Carney also outlined an analysis of Brexit and options available to the bank’s Monetary Policy Committee (MPC). “The UK economy is beginning the process of adjusting to a new, as yet uncertain, economic relationship with the European Union,” he said today.

“Monetary policy cannot prevent the weaker real incomes likely to accompany the move to new trading arrangements with the EU, but it can influence how this hit to incomes is distributed between job losses and price rises. And it can support UK households and businesses as they adjust to such profound change.”

Carney also said that markets, households and businesses reacted in different ways to the referendum outcome, with markets expecting poorer UK economic performance, households being slow to react but eventually slowing their spending, and businesses investing “less aggressively”.

“In the MPC’s central projection, GDP growth remains sluggish in the near term as the squeeze on households’ real incomes continues to weigh on consumption,” he said. “Growth then picks up to just above its reduced – or modest – potential rate as net trade and business investment firm up and consumption growth gradually recovers in line with modestly rising household incomes.”

The MPC expects inflation to peak around 3% in October and to remain around 2.75% until early next year, Carney also predicted.

“Conditional on the current market curve, which implies that bank rate will rise by half a percentage point over the next three years, inflation is projected to remain a little above the target at the end of the forecast period – an overshoot that reflects entirely the effects of the referendum-related fall in sterling.”

 

, , , , , ,

Britain ‘weary’ of austerity, says Hammond in Mansion House speech

pexels-photo
British voters have tired of austerity and the health of the UK’s economy depends on the outcome of Brexit negotiations, UK chancellor of the exchequer Philip Hammond said in his Mansion House speech on Tuesday.

The annual event, delayed due to last week’s Greenfell Tower disaster, saw the chancellor lean towards a ‘soft’ Brexit with economic matters to the fore.

“Britain is weary after seven years of hard slog repairing the damage of the great recession,” said Hammond. “Funding for public services can only be delivered in one of three ways: higher taxes; higher borrowing; or stronger economic growth. And only one of those three choices is a long-term sustainable solution for this country in the face of the inexorable pressure of an ageing population.”

Hammond addressed Brexit in milder terms than he did on the BBC’s Andrew Marr Show in which he said “no deal would be a very, very bad outcome for Britain” on Sunday.

“The future of our economy is inexorably linked to the kind of Brexit deal that we reach with the EU,” he said yesterday.

“Our departure from the EU is underway. But ensuring that it happens via a smooth pathway to a deep and special future partnership with our EU neighbours, one that protects jobs, prosperity, and living standards in Britain, will require every ounce of skill and diplomacy that we can muster.

“Yesterday was a positive start. It will get tougher. But we are ready for the challenge,” he said.

Brexit negotiations, led by Brexit secretary David Davis and EU negotiator Michel Barnier, opened in Luxembourg on Monday.

, , , ,

Are businesses turning away from Theresa May?

westminster-347971_1920
Katya Puyraud of Euro Start Entreprises interprets the mood in advance of election day.

Think Conservatives and you think business. The current governing party has always been inextricably tied to the interests of commerce in the UK, back to Thatcher and beyond. Their policies of privatisation, corporation tax cuts and red tape reduction have developed an image of economic competence that has seen businesses back them to the hilt. A combination of vocal support and party funding has formed a significant part of the last two Tory electoral victories.

Recently, however, this cast-iron support has come under question. An apparent move away from the party’s favoured free market economic model has left businesses lukewarm and wondering where the Tories are headed. While it’s debatable whether the opposition’s vision is more palatable to business, the fact that this debate is even being had may worry the current government in the run up to June 8th.

Manifesto malaise
The Conservative manifesto has been a difficult sell for many groups, but the most unusual dissent has come from business interests. Analysis by the Telegraph of small business leaders suggests that the reaction on social media has been almost overwhelmingly disapproving: over 50% of responses were negative, and only 8% were clearly positive. Larger businesses have not taken it much better, with Morrisons boss Andy Higginson calling their policies an “attack on business.”

Chief among the complaints is the lack of costing throughout the manifesto, making up 34% of complaints logged by the Telegraph. This is thrown into particularly stark relief by the ‘fully costed’ Labour manifesto, though there are indications that this was rushed and is not entirely accurate. Still, combined with the recent U-turn on the cost of social care, May seems to have undermined the ‘strong and stable’ slogan that has been the bedrock of her campaign.

It is the general willingness to complain that might hurt May the most. The manifesto pledges are only the latest in a line of decisions that have tested the resolve of the business community; these include raising the minimum wage, a controversial apprenticeship levy and a flagship policy to cap energy prices. With the additional burden of slowing consumer spending and political uncertainty, business leaders say they are struggling to shoulder these burdens.

Deal or no deal
Dwarfing these, however, is the thorny issue of Brexit. Businesses have put a brave face on things, and most feel confident of pulling through what will be a challenging period. But they still face a significant instability, not least because of the government’s insistence on a ‘hard Brexit’, and an unwillingness to clarify its negotiating position this early on.

For businesses contributing to the UK’s £14.3bn trade deficit, import costs have risen thanks to the weakened pound sterling. These now have to be passed on to consumers who are spending less, contributing to the recent fall in growth. And the future of exporters remains uncertain, with 44% of UK exports going to other EU countries.

It’s notable that in the weeks since the manifesto launch, Theresa May has moved away from domestic policy issues and back towards Brexit. While she notably did not support it, her apparent willingness to leave negotiations with ‘no deal’, as opposed to ‘a bad deal’, has won plaudits.

Whether this is an economically sensible approach is questionable; any deal involving billions of pounds in settlements is likely to be seen as a bad deal. But what some would see as stubbornness, many see as strength – a quality that the more demure Jeremy Corbyn sometimes is perceived to lack.

Opinion still varies on Brexit when it comes to ideological grounds, as well as other political factors, but it did not represent the pragmatic choice. The ability to acquire the best person for the job and trade freely only benefits business, and these abilities remain under direct threat. The last thing SMEs want from the government at this uncertain juncture is policies that upset the status quo.

Labouring the point
On these grounds at least, Labour do not present a particularly credible alternative. Jeremy Corbyn has proposed a tax rise for the top 5% of earners in order to pay for massive public expenditure, as well as nationalising certain keystone industries; none of this plays particularly well to larger businesses. Questions have also been raised of Corbyn’s leadership qualities following Labour infighting, something that may inhibit his influence on the global stage.

But smaller enterprise will not be hit by these tax cuts, and big business is hardly in favour of the Tories’ move to give employees more power in the boardroom. While its position on Brexit has been muddled, Labour also represents the most likely choice to pursue a softer approach to negotiations, and would do so without the dubious services of Boris Johnson.

What this shift represents remains uncertain. It is entirely possible that business interests will continue to simmer, aware that there are few options other than to quietly lobby government. But the outcome of the election could prove decisive.

A more likely scenario than a Labour victory would be a coalition government. This would have the potential for more balanced policymaking, involving both sides of the spectrum – and both sides of the Brexit vote – in decisions with decades of consequences. But it could also descend into unwelcome chaos and uncertainty, given the polarised opinions on each side. It would also throw doubt on Theresa May’s mandate to continue as both prime minister and party leader.

As ever, British enterprise will try to adapt to the hand it’s given. Brexit is not an immediate positive or a long-term one, but enough remains to be negotiated that businesses can be optimistic. While social issues have altered the momentum of the election campaign, the battle for Brexit is probably where the war will be won.

Katya-Puyraud-293x300[1]

 

 

 

 

Former journalist Katya Puyraud is the co-owner of Euro Start Entreprises, specialising in company formation in France and the rest of the EU. Since 2007 Euro Start Entreprises has helped budding digital nomads, entrepreneurs and expanding SMEs to open their companies in over 30 countries worldwide.

,

Mayor of London announces Paris-London Business Welcome programme

paris london business welcome
A new Paris-London partnership announced a day ahead of triggering Article 50

Just one day before the triggering of Article 50, Mayor of London Sadiq Khan, and the Mayor of Paris, Anne Hidalgo, have announced a new agreement between Paris and London, aimed at supporting start ups.

The Paris-London Business Welcome programme will aid growing companies to jointly domicile in the two cities, with help to set up including accessing co-working space, local tech ecosystems and discounts on accommodation. Eurostar have committed to providing preferential rates on their services to entrepreneurs.

The programme will also jointly showcase the two cities to overseas investors.

The announcement comes just over seven months after Khan’s deputy mayor for business Rajesh Agrawal revealed that talks on collaborative deals between the two capitals were underway.

JOINING FORCES

Announcing the deal today alongside Paris mayor Anne Hidalgo, Khan said: “London and Paris are two of the greatest cities in the world and we have so much to gain from joining forces.

“Never underestimate the incredible benefits to be found when major cities do business together. Our great friends in Paris and across the continent are well aware that working closely together remains to our mutual benefit.”

The Mayor of Paris, Anne Hidalgo, said: “Paris and London share common values and willpower. We want to be attractive to companies all over the world. Since the election of Sadiq, our two cities have been working better together. We are developing new exchanges and new projects. All these initiatives will create employment, activity and economic growth. It is a very positive dynamic that the Brexit will not change.”

The announcement was made as  part of Khan’s visit to Paris and Brussels, with the London mayor meeting European parliament president Antonio Tajani and European commission president Jean Claude-Juncker today.

As part of the Mayor’s International Business Programme, Sadiq was accompanied on the Paris visit by a trade delegation of 15 fast growing London companies. The companies had the opportunity to showcase their innovations, meet with top investors and explore export opportunities in Paris.

 

, , , ,

IFS predicts more spending cuts and low growth

background-20126_1920
The Institute for Fiscal Studies has announced its Green Budget, with predictions and analysis highly critical of the UK economy.

The London-based think tank predicts that sharp spending cuts are due to arrive before the next election, with tax rising to a greater proportion of national income than has been seen since the mid-1980s: the IFS says that spending cuts and tax rises will continue into the 2020s.

The report was compiled with analysis from Oxford Economics, which expects a “relatively disappointing” 1.6% GDP growth this year, and 1.3% growth in 2018, with wages almost static.

“For all the focus on Brexit the public finances in the next few years look set to be defined by the spending cuts announced by George Osborne,” explained IFS director Paul Johnson. “Cuts to day-to-day public service spending are due to accelerate while the tax burden continues to rise. Even so, the new chancellor may not find it all that easy to meet his target of eliminating the budget deficit in the next parliament. Even on central forecasts that is going to require extending austerity towards the mid-2020s. If the economy does less well than hoped then we may see yet another set of fiscal rules consigned to the dustbin.”

Andrew Goodwin, Oxford Economics’ lead UK economist, said that the UK economy has thus-far achieved solid growth – but that it has been almost entirely reliant on the consumer. “With spending power set to come under significant pressure from higher inflation and the welfare squeeze, the consumer will not be able to keep contributing more than its fair share. Exports should be a bright spot, but overall a slowdown in GDP growth appears likely.”

“If the government is able to agree a transitional arrangement with the EU and make progress on a free-trade agreement then the impact of Brexit is likely to be fairly modest within our forecast horizon of 2021. However, the negative effects of leaving the single market and the customs union are likely to become clearer over time and we estimate that the new trading arrangements could reduce UK GDP by around 3% by 2030, compared with remaining in the EU. Should we fail to secure a free-trade agreement then the outcome is likely to be worse still.”

, , ,

Parliament to vote on Article 50, Supreme Court rules

gavel-1017953_1920
The Supreme Court has handed down its ruling on the government’s Article 50 obligations, with Parliament being given a vote to trigger the Brexit process.

The 11-judge court’s majority ruling was led by its president, Lord Neuberger, and has established that “the change in the law required to implement the referendum’s outcome must be made in the only way permitted by the UK constitution, namely by legislation,” the judges said in the summary of their judgement.

“The Supreme Court holds that an act of parliament is required to authorise ministers to give notice of the decision of the UK to withdraw from the European Union.” The Scottish, Welsh and Northern Irish devolved assemblies will not be given a say in matters.

Attorney general Jeremy Wright said that the government is “disappointed” but will comply, while Downing Street reacted: “The British people voted to leave the EU, and the government will deliver on their verdict – triggering Article 50, as planned, by the end of March. Today’s ruling does nothing to change that.”

Labour leader Jeremy Corbyn says that his party will work to amend the Article 50 Bill but not block it, while the Lib Dems will not vote for it without a referendum on the final deal.

, , , , ,

Britain “open for business” says May at Davos

five-pound-note-1775779_1920
UK Prime Minister Theresa May addressed trade, globalisation and Brexit at Davos this morning in a keynote World Economic Forum speech.

May, who set out a Brexit strategy for the first time earlier this week, used the opportunity to speak in more general terms about the issues of the day – particularly globalisation and the UK’s place in the world.

“The United Kingdom – a country that has so often been at the forefront of economic and social change – will step up to a new leadership role as the strongest and most forceful advocate for business, free markets and free trade anywhere in the world,” she said.

May also said that the Brexit vote was a choice on the part of voters “to build a truly global Britain” and said that critics and said that international critics have failed to understand voters’ motivation.

She also focused on the pressures facing international institutions. “I believe strongly in a rules based global order. The establishment of the institutions that give effect to it in the mid twentieth century was a crucial foundation for much of the growing peace and prosperity the world has enjoyed since. And the tragic history of the first half of the last century reminds us of the cost of those institutions’ absence,” she said.

May said that Britain is “open for business” but set out a need for better corporate governance and social responsibility if globalisation is to attract popular support. “That is why I have talked a great deal about our country delivering yet higher standards of corporate governance, to help make the UK the best place to invest of any major economy.

“That means several things,” she said. “It means businesses paying their fair share of tax, recognising their obligations and duties to their employees and supply chains, and trading in the right way; companies genuinely investing in – and becoming part of – the communities and nations in which they operate, and abiding by the responsibilities that implies; and all of us taking steps towards addressing executive pay and accountability to shareholders.”

The prime minister concluded by referring to “that great Conservative principle – change in order to conserve”. “I am determined to make sure that centre-ground, mainstream politics can respond to the concerns people have today. I am determined to stand up for free markets, free trade and globalisation, but also to show how these forces can work for everyone,” she said.

This year’s Davos conference concludes tomorrow.