Brexit Bulletin: Stop Meddling, May Tells Brussels

  • Theresa May accuses EU officials of interfering in U.K. election
  • EU hardens rhetoric and warns Brexit talks won’t be fast or easy

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Prime Minister Theresa May turned up the temperature surrounding the Brexit talks even higher by accusing European Union officials of meddling in Britain’s election.

A day after warning she could be “bloody difficult,” May on Wednesday took aim at leaks from her dinner last week with European Commission President Jean-Claude Juncker, which claimed he was anxious about her level of her ambitions for Brexit.

“The events of the last few days have shown that – whatever our wishes and however reasonable the positions of Europe’s other leaders – there are some in Brussels who do not want these talks to succeed, who do not want Britain to prosper,” May said.

Assuming there is a political motive, painting the EU as a bogeyman offers May a chance to drive even more voters to her side at a time when an air of apathy surrounds an election that polls suggest is a foregone conclusion. Advisers are already worrying about a low turnout.

Theresa May, U.K. prime minister, leaves number 10 Downing Street to greet Ukraine President Petro Poroshenko in London, U.K., on Wednesday, April 19, 2017.

Theresa May

Photographer: Simon Dawson/Bloomberg

“There is a concern that Tory voters will stay home because they think it’s all decided,” said John Curtice, professor of politics at the University of Strathclyde.

It also allows May to draw a greater distinction with opposition Labour Party leader Jeremy Corbyn, over whom she enjoys a 20 point lead in most surveys. Her argument is EU officials are nefarious and only she is strong enough to take them on.

Europe Minister Alan Duncan hailed a “genius moment to make her case.” Corbyn accused her of “playing party games.”

The tougher rhetoric also may resonate particularly well with those who backed Brexit last year and the 3 million people who supported the U.K. Independence Party in 2015, again pushing up her Conservative Party’s vote tally.

Pro-Brexit tabloids were already following May’s lead on Thursday, with the Daily Mail front page trumpeting her “hands off our election” stance.

Even those Tories who wanted to remain in the EU will likely vote for May anyway, Bloomberg’s Charlotte Ryan reports on Thursday. An early insight into how well the Conservatives are doing will come later today in local elections across the country.

The risk the prime minister runs is that she has toxified the Brexit talks once the election is over, increasing the likelihood that they collapse without a divorce deal or new trade pact.

“The aggressive, adversarial style will be helpful for her in the election, although probably not in Brussels,” said Mark Goodwin, professor of politics at Birmingham University.

On the Continent

Meantime, the battle lines for Brexit are hardening across the English Channel too.

EU negotiator Michel Barnier laid out the region’s tough stance on money, trade, sovereignty and citizens’ rights. He warned Brexit would not be easy, swift or painless.

Juncker said he regretted that details of the dinner entered the public domain, although aide Martin Selmayr, who some see as a potential source of the leaks, said “Brexit will never become a success.”

Eric Feferberg

Emmanuel Macron before the start of a live televised debate on May 3.

Photographer: Eric Feferberg/AFP via Getty Images

Emmanuel Macron, the front runner for France’s presidency, said Britain would likely be presented with a bill between 60 billion euros and 100 billion euros.

Angela Merkel’s spokesman said the German chancellor’s warning last week to the British against harboring “illusions” about the Brexit talks wasn’t inspired by complaints from Juncker.

There were also calls for calm ahead of the talks, which a Spanish government document said would take place in monthly rounds.

“There is much rumor, but actually the positions the British government and the EU are committing to paper, and what they are saying at the senior level, is very positive,” said Dara Murphy, Ireland’s minister of state for European affairs.

More Banks Moving

Another day, another relocation plan.

Standard Chartered became the latest bank to detail its strategy to protect business in the EU. Chairman Jose Vinals said it had picked Frankfurt as its main EU base, although he said only a small number of London staff would be affected.

Tradition, one of the world’s largest inter-dealer brokers, is also looking more closely at continental locations because of the unpredictable regulatory and political environment triggered by Brexit, said its global head of strategy and business development, Dan Marcus.

Bloomberg Gadlfly’s Marcus Ashworth warns a clash over euro-clearing is a portent for the City of London.

Irish central bank governor Philip Lane said his institution was discussing Brexit moves with a “wide” range of companies and is boosting staff numbers.

Still, Deutsche Bank’s asset-management unit agreed to buy two office buildings in London for about 400 million pounds.

Businesses on Brexit

Brexit is unsurprisingly cropping up in a string of earnings statements. On Wednesday alone:

  • Grocer J Sainsbury said it’s cutting costs in an effort to avoid raising prices as a result of a falling pound
  • Broadcaster ITV shook up its executive ranks amid a Brexit-derived advertising slowdown
  • Software company Sage Group flagged the U.K.’s withdrawal from the EU as a risk to hiring
  • Tim Martin, chairman of pubs chain JD Wetherspoon, attacked the business lobby for its position on Brexit
  • The oil and gas lobby wrote to May asking her to guarantee access to markets and labor in the Brexit talks

In a boon for business, the Institute for Government said the U.K. may have to accept free movement of workers from the EU for years beyond Brexit.

Bloomberg’s Jill Ward writes on Thursday how services, rather than manufacturers, have the most to worry about with Brexit given the hurdles it could pose to their trade with the European market.

Still, nobody seems to have told Europe’s power industry about the breakup. There are at least 12 projects worth more than €10 billion combined in the works to expand the island nation’s connection to the surplus generating capacity on the continent.

On the Markets

The pound fell against the dollar amid signs of a rocky start to Brexit negotiations.

Such concerns may still not boost the U.K.’s bond market as the fastest inflation since 2013 erodes returns, according to Bloomberg’s John Ainger. The Bloomberg U.K. Sovereign Bond Index has retreated 4.5 percent from a record high in August.

And Finally…

It’s going to be potentially costly for those Standard Chartered bankers who do move to Frankfurt.

Among the five cities which are most likely to benefit from the U.K.’s exit from the European Union, Germany’s financial capital saw its rent prices increase the most this year, according to a Deutsche Bank study.

The monthly cost of a mid-range two-bedroom apartment in Germany’s financial capital rose 20 percent in 2017 from a year earlier, while the cost of an equivalent living space in London fell by 8 percent.

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