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No ‘rationalisation’ at Vauxhall, says Business Secretary

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UK Business Secretary Greg Clarke has claimed that GM-owned carmaker Vauxhall’s UK future is secure.

“There is some way to go in discussions between GM and PSA but I was reassured by GM’s intention, communicated to me, to build on the success of these operations rather than rationalise them,” he said having met General Motors president Dan Ammann amid reports of a sale of Vauxhall and Opel to the parent company of Peugeot and Citroen.

“We will continue to be in close contact with GM and PSA in the days and weeks ahead,” said Clark.

GM was more cautious in its announcement: “While we have no definitive news to report at this time, we can affirm that our objective in exploring opportunities with PSA Group is to build on the success of Opel Vauxhall and to put the business and the operations in the strongest possible position for the future. We look forward to engaging with our stakeholders as part of these ongoing discussions,” it said.

The proposed deal is facing union opposition and political uncertainty, with details of the plan still thin after news of takeover talks emerged earlier this week.

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IFS predicts more spending cuts and low growth

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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.”

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Britain “open for business” says May at Davos

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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.

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Theresa May’s speech: five things we learned

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The UK prime minister’s Brexit details have been vague and limited to the “Brexit means Brexit” soundbyte – until she stood up at Lancaster House and made what is expected to be the only major policy explanation before Article 50 is triggered.

 

1: Brexit means out of the single market

“I want to be clear – what I am proposing cannot mean membership of the single market,” May confirmed: here comes the hard Brexit.

2: And no more Customs Union

“Full Customs Union membership prevents us from negotiating our own comprehensive trade deals,” she also said. “I do not want Britain to be part of the Common Commercial Policy and I do not want us to be bound by the Common External Tariff. I do want us to have a customs agreement with the EU.”

3: Ireland will get special treatment

What to do about the UK’s only land border – with the Republic of Ireland – has been unclear to this point. “We will work to deliver a practical solution that allows the maintenance of the Common Travel Area with the Republic, while protecting the integrity of the United Kingdom’s immigration system,” May announced. “Nobody wants to return to the borders of the past, so we will make it a priority to deliver a practical solution as soon as we can.”

4: Parliament will vote on the deal

“I can confirm today the government will put the final deal… to a vote in both Houses of Parliament before it comes into force,” May announced. Brexit minister David Davis has predicted that this will be a rubber-stamp operation: “They won’t vote it down. This negotiation will succeed,” he said.

5: Reaction: the pound rises, Europe laughs and the opposition are angry

Markets like certainty, and sterling enjoyed its biggest one-day jump since 1998, to $1.23, although the FTSE dropped significantly. The political reaction, on the other hand, has been mixed. The European media was hostile, with Die Welt just one of the outlets that interpreted the speech as “leading Great Britain into isolation”. Back in the UK, Labour and the Liberal Democrats went on the attack.

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“She only makes the tea”: 10 reasons why employers don’t pay the minimum wage

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The Department for Business, Energy & Industrial Strategy has published a list of the most bizarre excuses why businesses refuse to pay the minimum wage.

It is topped by “The employee wasn’t a good worker so I didn’t think they deserved to be paid the National Minimum Wage,” followed by “It’s part of UK culture not to pay young workers for the first three months as they have to prove their ‘worth’ first,” and in third place was “I thought it was ok to pay foreign workers below the National Minimum Wage as they aren’t British and therefore don’t have the right to be paid it”.

The move comes as the government launches a £1.7m awareness campaign aimed at educating workers regarding their entitlements.

“There are no excuses for underpaying staff what they are legally entitled to,” explained Business Minister Margot James. “This campaign will raise awareness among the lowest paid in society about what they must legally receive and I would encourage anyone who thinks they may be paid less to contact Acas as soon as possible.

“Every call is followed up by HMRC and we are determined to make sure everybody in work receives a fair wage,” she said. The National Living Wage will increase to £7.50 per hour this spring, with the National Minimum Wage ranging from £4.05 to £7.05.

That list in full:
  1. The employee wasn’t a good worker so I didn’t think they deserved to be paid the National Minimum Wage.
  2. It’s part of UK culture not to pay young workers for the first 3 months as they have to prove their ‘worth’ first.
  3. I thought it was ok to pay foreign workers below the National Minimum Wage as they aren’t British and therefore don’t have the right to be paid it.
  4. She doesn’t deserve the National Minimum Wage because she only makes the teas and sweeps the floors.
  5. I’ve got an agreement with my workers that I won’t pay them the National Minimum Wage; they understand and they even signed a contract to this effect.
  6. My accountant and I speak a different language – he doesn’t understand me and that’s why he doesn’t pay my workers the correct wages.
  7. My workers like to think of themselves as being self-employed and the National Minimum Wage doesn’t apply to people who work for themselves.
  8. My workers are often just on standby when there are no customers in the shop; I only pay them for when they’re actually serving someone.
  9. My employee is still learning so they aren’t entitled to the National Minimum Wage.
  10. The National Minimum Wage doesn’t apply to my business.

Five things you need to know about the new UK ambassador

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The appointment of Sir Tim Barrow as the UK’s ambassador to the EU comes as Theresa May’s government attempts to move on from the fallout over his predecessor’s departure.

But who is Sir Tim Barrow, and what are the implications of the furore?

  1. Sir Tim is not Sir Ivan

The resignation of Sir Ivan Rogers earlier this week saw the government scramble to limit the damage. Rogers, the UK’s senior diplomat in the EU, quit over “muddled thinking” and a need to “speak truth to power” as the UK prepared for Brexit, and he warned that “serious multilateral negotiating experience is in short supply in Whitehall”. His resignation was jumped upon by the anti-Brexit side, and Theresa May’s first priority will have been to appoint a figure her government can work with.

  1. Sir Tim Barrow is an EU-experienced diplomat

Warwick- and Oxford-educated Barrow joined the Foreign & Commonwealth Office in 1986 and has served in Kiev, Moscow and Brussels. He has also been first secretary at UKRep, effectively the UK’s Brussels embassy – his strong EU experience making him an obvious candidate for the new role.

  1. He was knighted as ambassador to Russia

Barrow served as UK ambassador to Russia from 2011-2015, and was knighted in the 2015 new year honours for services to British foreign policy and interests in Russia.

  1. His appointment came through the normal civil service route

As the anti-Brexit side saw the Rogers controversy as evidence of the government’s mismanagement, May’s supporters saw Rogers as half-hearted towards Brexit and raised questions about the non-political status of the civil service. As a career diplomat, Sir Tim Barrow has come up through the ranks as usual, in a manner that suggests that the furore over civil service impartiality will recede.

  1. His appointment has largely been welcomed

Reaction to Barrow’s elevation to ambassador has mainly been calm. Sir Simon Fraser, former head of the Foreign Office, told the BBC: “I think what we need in Brussels is somebody who has experience, who’s going to be a real professional negotiator, who will be sitting in a room with lots of other very experienced and knowledgeable negotiators, and who will be able to hold his or her own in that negotiation.” Meanwhile, UKIP figures have criticised the appointment.

UK and China agree long-term ambitions for education plans

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UK-China agreement will see an upturn for both countries in basic education; higher education, training and assessment

The UK Secretary of State for Education, the Rt Hon Justine Greening MP, has agreed a joint ‘Action Plan’ on UK-China education collaboration with her counterpart Mr Chen Baosheng, China’s Minister of Education, at the ninth annual UK-China Education Summit in China, convened jointly by the British Council, the Department of Education, and China’s Ministry of Education.

The Action Plan sets out the priority areas of UK-China education collaboration beyond 2016 with the objective of supporting a golden era in UK-China relations.

The agreement will see both countries working together across basic education; higher education, including quality assurance; technical and professional education and training; sports education and training; language teaching and assessment; and two-way exchanges among students and education practitioners.

Examples of work that will be pursued in these areas include:

  • boosting business-education links to accelerate the development of skills and qualifications in priority industry sectors;
  • increasing collaboration on innovation and entrepreneurship in higher education, including the creation of subject excellence clusters and regional partnerships;
  • working together on school curriculum development, such as by supporting and placing language assistants in schools to support the learning of Chinese Mandarin in the UK and English in China.

Furthermore, it was agreed to continue the UK-China Mathematics Teacher Exchange Programme for a further two years. This will see up to 140 maths teachers from England spending time in Shanghai to support their professional development and the translation of Shanghai’s high-quality approach to mathematics teaching into a meaningful model for schools in England.

Various other agreements were signed during the two-day visit, representing both countries’ commitment to expanding collaboration across higher and school education, including languages, and to working closely together in supporting student mobility in both directions.

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Strategic approach to regulation could boost exports

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Government standards and regulations can help or hinder SMEs’ export prospects

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Governments have a massive opportunity to boost national trade if they think strategically about how standards and regulations help or hinder SMEs to export, the Geneva-based International Trade Centre (ITC) said in a report published on Thursday.

“If you want to maximise your chances of getting your share of international trade, you need to be very strategic about where is the potential that you are not tapping into,” the ITC’s Executive Director Arancha Gonzalez told Reuters.

“The government has a possibility to open the door for businesses to follow, rather than the government following the regulatory framework of businesses that are trying to swim in this current by themselves.”

The ITC, a joint agency of the United Nations and the World Trade Organization that helps SMEs to trade, says its 300-page report, “Meeting the standard for trade”, offers a guide for small businesses and an action plan for governments.

Standards and regulations are key to competitiveness and one of the defining elements of trade in the 21st century, Gonzalez said, as consumers become more and more savvy and picky about where products come from and what they contain.

“Consumers are asking for more sophisticated standards. This is a huge challenge for SMEs, for governments, and for institutions. The option of no standards or lower standards is not an option,” Gonzalez said.

Standards are diverse. They determine whether a plug fits into a socket, whether a medicine can be sold, and whether we can understand foreign traffic signs. Regulations can mean safety rules for food or cars, or privacy rules for data storage. In all cases governments need to back the rules up with testing and certification.

The report identifies areas where countries are underperforming their export potential, which standards and regulations they should target to meet that potential, and what investments are needed.

There is an opportunity for trade in processed and fresh food within the Middle East and North Africa, for example, where the number of technical regulations for fresh food imports is four times higher than in other regions, Gonzalez said.

“There is no internal trade because the manner in which they are regulating is hugely burdensome. So they don’t trade with each other, they only trade with the rest of the world.”

Countries in the region could increase food exports to each other by $7.6 billion and to developing countries in Asia by $16.5 billion, the report said.

The Asia-Pacific region could export $400 billion more in IT and consumer electronics, and $1.7 trillion more overall, and had strong potential to diversify into chemicals exports, the report said.

Meeting standards can open markets and raise prices, but Gonzalez said governments should “craft” regulation with SMEs in mind, since smaller firms make up 98 percent of businesses and their ability to trade suffers disproportionately from red tape.

“A 10 percent increase in the regulatory burden means 1.6 percent less trade for large companies but 3.2 percent less trade for SMEs,” she said.

(Reporting by Tom Miles; Editing by Toby Chopra)

Copyright(c) Thomson Reuters 2016.

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Scotland threatens to push for another referendum if there is a “hard Brexit”

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Scottish minister worries hard Brexit imminent after negotiation meetings

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PARIS, Sept 26 (Reuters) – Britain appears to be heading for a “hard Brexit” under which links to the European Union would be reduced to little more than trade agreements, Scotland’s external affairs minister Fiona Hyslop said on Monday, citing “mood music” from recent talks.

Pro-EU Scotland’s Brexit representative, Michael Russell, has had the first of a series of meetings with British Brexit minister David Davis, Hyslop told Reuters.

The talks are part of efforts to establish a common United Kingdom position for divorce discussions with the country’s European Union partners, as British Prime Minister Theresa May has promised.

Russell will be lobbying for a “soft” exit “that looks as much like remaining in the EU as possible,” ideally including continued free movement of capital and labour, she said.

“They’ve met within the last 10 days. The process for those internal negotiations is currently being established,” Hyslop told Reuters in Paris after a meeting with France’s European Affairs Minister Harlem Desir.

“I’m worried just now that the UK looks as if it’s heading to a hard Brexit. However those internal discussions with Scotland, Wales and Northern Ireland have only just started, so we will try and shift that position,” she said.

“That’s the mood music,” she added, “but (British Prime Minister) Theresa May is keeping everything very close to her chest and is very much determining the UK position,” Hyslop said.

Some 62 percent of Scottish voters opted to remain in the EU in the June 23 referendum, in which 52 percent of Britons overall voted to leave.

Russell and his fellow representatives from Wales and Northern Ireland have no power of veto in their talks with Davis, Britain’s Secretary of State for Exiting the European Union.

However, Scotland has threatened to push for a referendum on independence if the Brexit terms are not to its liking.

A ‘hard Brexit’ would be entirely unacceptable, Hyslop added.

“We’re looking to either influence the UK position or have a position that recognises the differences within the UK, including Scotland. But we have also said that if required we are prepared to look at a referendum on independence again.

That’s not our starting point, but it’s there should it be needed.”

Britain’s vote to quit the EU has sent shockwaves through the country and the EU, where it is one of the three main economies. Economists are concerned the divorce will hurt economic growth and pro-EU politicians fear it will weaken the union.

May has repeatedly said that Article 50 will not be triggered before the end of the year, and that Britain will not get a bad deal.

Although Scots had decided in a 2014 referendum on independence to remain in the United Kingdon, Scottish First Minister Nicola Sturgeon has said the Brexit vote meant that the country was now being taken out of the EU against its will and this could justify a second referendum.

(Reporting by Andrew Callus; editing by Michel Rose)

Copyright(c) Thomson Reuters 2016.

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May rebuffed calls to play bigger role in EU referendum campaign

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Image courtesy of DonkeyHotey

 

Two new books shed light behind the scenes of the lead up to the Brexit vote

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LIVERPOOL, England, Sept 25 (Reuters) – Prime Minister Theresa May repeatedly failed to back her predecessor David Cameron in his fight to keep Britain in the European Union and hampered his attempts to rein in migration, according to extracts from two books about the referendum.

May, who served as interior minister under Cameron and succeeded him as prime minister when he resigned after Britain’s vote to leave the EU, backed staying in the bloc but was largely absent from the campaign.

The two books come as May faces the complex task of leading negotiations over Britain’s EU divorce, having divulged little on her intended strategy.

Extracts from a book by Sunday Times political editor Tim Shipman said that May refused to support Cameron in seeking to take a harder line on immigration in his deal with Brussels to reform Britain’s relationship with the EU.

May told Cameron that he should not press ahead with demands for an “emergency brake” to limit the number of EU migrants coming to Britain because Germany would not back it, the newspaper reported.

A separate book written by Cameron’s former head of communications Craig Oliver details more than 10 occasions when May declined to back Cameron during the referendum campaign.

Cameron’s team dubbed her “Submarine May” for disappearing when she was needed, Oliver said.

“Her sphinx-like approach is becoming difficult, with the press questioning which way she will jump,” Oliver wrote in the book, extracts of which were published in the Mail on Sunday newspaper.

Oliver said that Cameron had asked May to back his plan to crack down on migrants coming to Britain to claim social security payments but she issued a statement describing it simply as “the basis for a deal”.

The author also said that Boris Johnson – a leading “out” campaigner and now foreign minister – “wobbled” over backing a Brexit and told Cameron that he would be supporting the leave campaign only nine minutes before announcing it to the media.

In his text message to Cameron, Boris made clear he did not expect to win, saying Brexit would be “crushed”, Oliver said.

(By Kylie MacLellan. Editing by David Goodman)

Copyright(c) Thomson Reuters 2016.