Brexit Bulletin: Bad Apple?
British consumers got bitten by Brexit as Apple quietly raised the cost of some of its products in the U.K. by 20 percent.
The computer-maker overnight began charging £2,999 ($3,650) for its “Mac Pro” desktop machine, the latest blow to shoppers after the decision to leave the European Union sent the pound sliding to a three-decade low.
The price hikes came days after supermarket giant Tesco battled with supplier Unilever over the cost of goods in “Marmitegate” and Microsoft also yanked prices. With inflation already accelerating at the fastest in two years, price pressures are likely to mount.
Separately, Elextrolux Chief Executive Officer Jonas Samuelson said he needs to “compensate by raising prices” by up to 10 percent. British Airways owner IAG also cut its earnings outlook for the second time since the Brexit vote in part because of sterling.
Highlighting the concerns for the economy, separate reports from Gfk, YouGov and Asda all showed consumer confidence falling and household spending power weakening as inflation accelerates. That’s a test for the Bank of England as its officials prepare to meet next week with traders not expecting an interest-rate cut.
How Much For May’s New Nissan?
Prime Minister Theresa May’s office contends there was “no special deal” given to Nissan ahead of its announcement yesterday that despite Brexit it will build new versions of two sports utility vehicles in its U.K. plant, safeguarding 7,000 jobs.
The Japanese carmaker, which built one in three of the vehicles Britain produced last year, noted “support and assurances” from the government had persuaded it to stay. That prompted some to ask if the company had received a sweetheart deal.
The Times reports today that Business Secretary Greg Clark told the Nissan board in writing that it would ensure its U.K. operations “remain competitive” after Brexit, while the Guardian said the government privately advised auto executives it’s confident the sector can retain tariff -free access to the single market.
It was clearly a good news day for May that will allow her to quell criticism of her Brexit strategy. But if speculation grows that she’s picking winners, other industries will undoubtedly lobby for similar support.
“Nissan may be the first to get this treatment, but it seems inconceivable that it will be the last,” Jonathan Portes of the National Institute of Social and Economic Research wrote on the think tank’s blog. “The U.K. car industry is almost entirely foreign-owned, and it is hardly likely that other firms will not seek similar treatment.”
Portes also noted the announcement may complicate negotiations with the EU and then the World Trade Organization, both of which regulate “state aid.”
High Noon in Irish Court
A Northern Irish judge rejected a pair of challenges to the Brexit process, removing at least one obstacle to May’s plan.
Justice Paul Maguire said on Friday that it was beyond the power of the Belfast court to interfere in the process of triggering Article 50 to leave the EU. He dismissed claims related to lawmakers votes and the Good Friday Peace accord in Ireland.
The decision in Belfast comes as a panel of three senior judges in London considers a similar case. It is likely both of the cases will be swiftly appealed to the U.K. Supreme Court for another hearing.
- Blair says U.K. should keep Brexit options open in talks
- Irish Central Bank’s Lane says must assume worst case for Brexit
- UBS's Ermotti says may not "move anybody" from London
- CEO of Denmark’s biggest pension fund preparing for a “hard Brexit”
- Macquarie CEO Moore says Brexit vote doesn’t change positive view on U.K.
- London Mayor sees businesses moving to New York or Asia if Britain fails to get a “good Brexit deal,” FT says
- JCB boss Bamford says Britain “better off” outside single market, Telegraph reports
- Ireland draws over 100 inquiries from companies considering move
- Fifth of EU citizens in U.K. polled by FT plan to leave in two years
On the Markets
The pound’s decline on Thursday despite the economy’s acceleration underscores how the currency is tending to shrug off good economic news. Instead it’s declining on political concerns. A Citigroup index shows that economic reports have generally beaten forecasts since the vote, yet the U.K. currency has tumbled 18 percent.
Jill Ward details the pound’s fall and what it means for the economy in Bloomberg Businessweek.
Meantime, U.K. gilt yields rose to their highest level since the referendum.
Scottish First Minister Nicola Sturgeon said yesterday that her Brexit negotiator discovered a “hot line” to Brexit Secretary David Davis was, announced this week by Theresa May, was not as hot as hoped-for.
“He called it just before midday on Tuesday, it took until after 6 p.m. yesterday to actually get David Davis on the hot line,” Sturgeon said.
“That’s 36 hours. So yes, there is now a telephone line we can call, it’s just currently not very hot.”
And Finally, pt.2
A fine British watch has been made more affordable by Brexit. Unfortunately for Britons, £20,000 still means £20,000.