Brexit Bulletin: ‘The Row of the Summer’

  • Brexit Secretary picks a new fight over the timing of talks
  • Tories heading for landslide victory in June 8 election

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British officials aren’t yet giving an inch on Brexit.

Despite being outnumbered 27 to one, Brexit Secretary David Davis on Sunday predicted “the row of the summer” would be over the timetable for talks, while Foreign Secretary Boris Johnson stood firm over cash.

David Davis
David Davis, U.K. exiting the European Union (EU) secretary.
Chris Ratcliffe/Bloomberg

Davis still wants to debate the divorce and the terms of the future relationship in tandem, an approach the EU is refusing to countenance, preferring to deal with money, borders and citizens’ rights before trade.  

“It’s wholly illogical and we happen to think the wrong interpretation of the treaty,” Davis said on ITV’s “Peston on Sunday.” Britain is “very conscious of how they will use that time sequence to pressure us and we’ll avoid that at every turn.”

He also predicted arguments over EU citizens living in the U.K., saying Britain won’t agree to the EU’s demand that the European Court of Justice play a role in upholding their rights. 

“We will have an argument about that,” Davis said. “We’ve got very good courts – in fact, I take slight offense at the argument that the [U.K.] Supreme Court couldn’t oversee this.”

Instead Davis wants a deal that “effectively freezes” the rights of EU nationals.

His hard line echoes Prime Minister Theresa May’s effort to make Brussels the bogeyman in Britain’s ongoing election campaign. The problem for the U.K. is that the longer the squabble over the breakup, the less time available to debate a trade deal.

Johnson used an interview with the Daily Telegraph to accuse the EU of trying to “bleed this country white” and to suggest the bloc could end up owing Britain money rather than the other way around.

Taking on the EU seems to appeal to voters. The latest YouGov poll for the Sunday Times showed 49 percent support for the Conservatives versus 31 percent for the opposition Labour Party. Still, a survey for ITV showed the health service replacing Brexit as the most important issue to voters.

Elsewhere on the campaign trail:

Singapore Signpost

May could get a taste of what’s in store for Britain when the ECJ this week spells out how the EU should ratify a free trade pact with Singapore.

Judges will say on May 16 whether the Singapore deal must undergo a tortuous process of endorsement by national parliaments and regional assemblies on top of approval from the EU – a step that the U.K. would be anxious to avoid.

“May’s objective of a comprehensive trade deal being agreed within two years were never very realistic,” said Steve Peers, a professor of EU law at the University of Essex. “If it has to be ratified by all national parliaments, that’s even less realistic.”

A Company Town

As the U.K. is already learning to its cost, secrets in Brussels don’t stay secret for long in a city that plays host to tens of thousands of international diplomats, officials and journalists.

1494716963_GettyImages-585581292
Town Hall, Grand-Place, Brussels

After leaked tales of a dinner between May and European Commission President Jean-Claude Juncker made headlines in Britain and Europe, Bloomberg’s Ian Wishart and Viktoria Dendrinou take a snapshot of the town U.S. President Donald Trump once branded a “hellhole.”

“A lot of negotiations are informal and they take place outside the actual negotiating room,” former Finland Prime Minister Alexander Stubb, who lived in Brussels for nine years as a civil servant and lawmaker, said in an interview. 

Brexit Bullets

  • Economists at Commerzbank argue the EU’s position is not as strong as it seems, citing the need for a trade deal if Britain is to pay its bill
  • A poll by ORB found 44 percent backed May to get the right deal, up from 41 percent in April
  • Three quarters of British businesses say securing barrier-free trade with the EU is more important than curbing free movement of people, not-for-profit trade group GS1 found
  • Asset manager Jeremy Hosking tells the Observer he will fund election candidates trying to oust lawmakers who opposed Brexit
  • A survey by the Chartered Institute of Procurement & Supply finds 32 percent of U.K. businesses who use EU suppliers are looking for British replacements
  • Morgan McKinley reports a 16 percent decline in London finance in April from March 
  • Irish Central Bank Governor Philip Lane reckons banks seeking a hub inside the EU should focus more on the weather
  • Bloomberg View editorial: Britain has no right to insist that clearing stays in London, but maintaining stable financial infrastructure is in Europe’s interest.

On the Markets

When it comes to the U.K.’s peer-to-peer lending industry, institutional investors appear to be undaunted by uncertainty around Brexit.

Banco BNI Europa is providing £45 million ($58 million) to MarketInvoice Ltd., an online lending startup, to fund loans for British small businesses over the next 12 months, the Lisbon-based digital bank said Monday. 

The deal is the latest in a series of investments by overseas institutions in Britain’s burgeoning online lending market, Bloomberg’s Edward Robinson reports.

Meanwhile, the drop in the pound is pushing up the price of imported food in most U.K. supermarkets. 

And Finally…

Brexit supporters will have been heartened to discover the rest of the region didn’t try to punish the British in Saturday night’s Eurovision Song Contest.

The U.K. entry – Never Give Up on You – came 15th, trailing winner Portugal yet still ahead of Greece, Germany and Spain.

Still, Harry Styles of One Direction told the Sunday Times that pulling out of the EU represents the “opposite’’ of the world he would like to live in. He said he is “probably going to vote for whoever is against Brexit” in the election.

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