Brexit Bulletin: Deja EU?
Donald Trump won the race to become the next U.S. president, and back in Britain, interim U.K. Independence Party leader Nigel Farage is presumably enjoying a feeling of deja vu.
Farage tweeted he was handing “over the mantle” of “Mr. Brexit” to Trump, having described 2016 as “the year of two big political revolutions.”
The parallels are clear: A nasty campaign in which questionable promises were made by both sides ended with equities and the currency rallying on the assumption that the status quo would win.
Then, on election night, the anti-establishment ticket was handed a comfortable victory by older, white, working class voters who feel punished by globalization, the financial crisis and multiculturalism.
Pollsters were left to wonder how they got it wrong and financial markets turned turbulent before calming a little on hope the economy may prove more resilient than predicted beforehand.
“2016 has proven decisively that populism is a good political strategy – whether it proves to be good for long-term economic fortunes is another question entirely,” said David Kelly, chief global strategist at JPMorgan Asset Management.
The good news for Prime Minister Theresa May is that Trump endorsed the result of the June referendum and rejected President Barack Obama’s warning that the U.K. would be at the “back of the queue” for a trade deal with America. In a a statement on Wednesday she congratulated the president-elect, saying: “We are, and will remain, strong and close partners on trade, security and defence.”
The bad news is that Trump may remember the condemnation he faced for his pledge to ban Muslims from entering the U.K. and his claim that parts of London are “so radicalized” that the police avoid them.
May then called him “plain wrong.” Boris Johnson – then London mayor and now foreign secretary – said “the only reason I wouldn't go to some parts of New York is the real risk of meeting Donald Trump.”
With little known about what exactly a Trump foreign policy will look like, Marc Champion and Nick Wadhams take a look at whether the incoming president (and Brexit) threaten a new world disorder.
In the U.K., Brexit Secretary David Davis will offer the first ministers of Scotland, Wales and Northern Ireland monthly meetings and access to his department’s analysis in an effort to secure their support for Brexit negotiations.
The promise came just after the Scottish government said it would seek to join the legal challenge to the Brexit process. The U.K. Supreme Court is scheduled to hear the cases in December.
Elsewhere, Britain and business continue to evaluate the Brexit effect.
Private equity firms invested $86.6 billion into deals completed in the U.K. and Ireland in the first three quarters of the year, down 34 percent from the same period in 2015, according to a report from PitchBook Data.
The decrease can be partially attributed to the decline of the pound following June’s Brexit vote, PitchBook said. Meanwhile, the Boston Consulting Group said today that companies in the gambling and drinks industries could consolidate.
Banks again sought to underscore their importance to the U.K. economy. An industry group estimated they paid 9 percent more tax in 2015 than in 2014.
Banks paid £34.2 billion ($43 billion), reflecting an increase in the levy on their balance sheets, the British Bankers' Association said.
"It is more important than ever that the U.K. remains a competitive place to do business for both domestic and foreign banks," BBA Chief Executive Officer Anthony Browne said.
- Bank of England says business investment may stagnate at best over next year
- Noonan says more than 100 firms are collecting information on Dublin
- Goldman's Barroso says London will remain an important center after Brexit
- EU single market rules need to remain consistent, Villeroy says
- Denmark would oppose "unfair" EU market deal for U.K., Premier says
- U.K. must have degree of influence post-Brexit, says Financial Conduct Authority’s Bailey
On the Markets
Yes, the world will be preoccupied with the U.S. election today, but Brexit rumbles on. An analysis of options pricing showed the outlook for sterling versus the dollar has become less pessimistic since last week’s High Court ruling made it harder for May to begin the Brexit negotiations.
It turns out the U.K. can still sometimes win in Europe. May’s government yesterday prevented its offshore territories from being automatically included in a planned EU tax haven blacklist. It fought off an attempt by a France-led group of countries to denounce territories with a zero percent rate of corporation tax as potentially “non-cooperative.” That would have collared its islands like Jersey, Bermuda and the Cayman Islands, which attract hundreds of businesses because of their generous taxation regimes.