Brexit Bulletin: Victory, But at What Price?
Theresa May was celebrating on Wednesday night as the House of Commons voted overwhelmingly to approve starting the Brexit process.
Not only that, but the government managed to avoid any amendment to its 137-word bill, leaving it on track to invoke Article 50 by the end of March. The unelected House of Lords will now debate the legislation, but doesn’t have the authority to derail it.
Brexit Secretary David Davis hailed the 494-122 vote as “historic” and said it was time for the county “to unite to make a success of the important task at hand.” Former UKIP leader Nigel Farage was exultant, as was one-time Tory leadership hopeful Andrea Leadsom.
While May managed to quell rebellions in her own party, opposition Labour Party leader Jeremy Corbyn proved less successful; Clive Lewis quit as shadow business secretary rather than follow orders to vote for the measure.
One question remains: Did the prime minister’s victory come at a price? To pacify critics, she agreed that Parliament would have an early vote on the draft Brexit pact with the European Union.
The government warned that would not serve as a veto, as any defeat would see the U.K. leave the bloc without a deal, finding itself subject to World Trade Organization tariffs. May wouldn’t return to the negotiating table, said Brexit Minister David Jones.
Opponents, however, think they got a significant concession. They reckon if the deal is poor or the economy is suffering then a parliamentary defeat would prove impossible for May to ignore.
“Given strong desire in the U.K. to avoid hard and disorderly Brexit, strenuous efforts to find an alternative would follow any parliamentary vote against the deal,” said Alan Renwick from the Constitution Unit at University College London.
For now, May is one step closer to engaging with the EU. She does so confident of getting a good agreement. As she said in an interview with Britain’s New Statesman published late on Wednesday:
“I don’t feel I have a weak hand. If you look at the issues around trade, they will have interests in that, as well. If you look around some of the other aspects of the strategic partnership we want and the cooperation we want, they will have interests in this, as well.”
Brexit may be about to make some of Britain’s chief executive officers even richer.
Even as businesses begin to suffer from the decision to quit the EU, soaring stocks may boost the pay packages of many FTSE 100 bosses, Bloomberg’s David Hellier reports.
That could lead many under pressure to forgo rewards if they want to dodge the scrutiny of shareholders and May, whose government is intensifying a campaign to rein in executive excesses and narrow the pay gap with ordinary workers.
Brexit-inspired equity gains will pour “petrol on the fire” of the issue of executive pay, said Steve Varley, chairman and managing partner for the U.K. and Ireland at Ernst & Young.
Not Going Nuclear
Brexit is threatening to disrupt the flow of atomic fuel across international borders, raising risks for 66,000 workers in the nuclear power industry, reports Bloomberg’s Jonathan Tirone.
In leaving the EU the government also plans to pull out of a 60-year-old nuclear safety and research organization, according to a Feb. 2 policy paper. Industry officials say leaving the European Atomic Community (Euratom) would require the U.K. to spend years replicating rules and international agreements needed to trade radioactive materials with other nations.
On the Markets
Currency analysts remain unconvinced by the pound’s rebound over the past month.
Sterling has climbed more than 4 percent since May laid out her plan for Brexit. Still, strategists expect the bounce to be short-lived, with the currency predicted to drop to $1.20 by mid-2017 from the current $1.25, according to the median forecast in a Bloomberg survey.
Elsewhere, a gauge of U.K. homebuilder stocks is now back at its highest level since before last June’s referendum. Gold is also benefiting from geopolitical concerns.
- Poland is seeking to limit the role of Brussels and strengthen national parliaments after Brexit
- Elections mean European auto market faces “ongoing uncertainty” and drawn-out Brexit negotiations, Daimler CEO says
- Brexit and global economic uncertainty are clouding the outlook for Swiss power grrid-maker ABB
- WPP’s Martin Sorrell says budgets are better than expected post-referendum and he would like a fast, soft Brexit
- Institute for Public Policy Research report suggests 55,000 care workers in the U.K. are EU nationals facing an uncertain future. Britain needs 1.6 million more health and social care workers by 2022
- Mayor Sadiq Khan will visit European capitals to discuss what London needs from Brexit
- Moving euro clearing from London is the best option, the head of the French Treasury said. Talks may start soon on relocating the European Banking Authority away from London, he said
- Former Novo Nordisk CEO Lars Rebien Sorensen will head Denmark’s bid to lure Europe’s drugs agency from London
- Half of organizations polled by Acritas Research are changing their corporate structure because of Brexit
The man running Svenska Handelsbanken, one of Sweden’s biggest banks, sees no reason to let Brexit upend his expansion plans in the U.K.
Anders Bouvin, chief executive officer of the Swedish bank, says his strategy is proving especially effective in attracting small U.K. businesses looking for funding. And despite Brexit, Handelsbanken is adding branches in Britain.
“As our reputation grows in the U.K., business opportunities grow also,” said Bouvin, who took over as CEO in August, in an interview in Stockholm.