Brexit Bulletin: May Moves Along, Corbyn Sacks Rebels

  • May makes concession to avoid possible defeat
  • Labour in disarray over position on EU single market

Sign up to receive the Brexit Bulletin in your inbox, and follow @Brexit on Twitter.

Prime Minister Theresa May won parliamentary approval for her Brexit-heavy legislative program, although she had to make a concession on abortion rights to stave off a potential defeat.

In a sign of how fragile the government is, it won the backing of the House of Commons for its agenda by just 323 votes to 309. It also managed to defeat an amendment aimed at softening the departure from the European Union.

Theresa May leaves 10 Downing Street on her way to Parliament.
Photographer: Chris Ratcliffe/Bloomberg

The debate also revealed fractures over Brexit in the opposition Labour Party. Fifty-one of its lawmakers defied party leader Jeremy Corbyn’s orders to abstain on the amendment seeking to keep open the option of Britain remaining in the single market. The rebels instead voted for the amendment, prompting Corbyn to fire three of them from their roles in his core team. A fourth resigned.

Lingering Legal Ties?

The U.K. must comply with hundreds of EU regulations and European Court of Justice rulings even after its withdrawal from the bloc or face penalties, according to a series of negotiating documents under discussion by the EU’s 27 remaining member states.

The laundry list of demands includes provisions for the continuing application of EU law in areas ranging from data protection and immunity for EU civil servants, to goods placed on U.K. markets before March 2019. The request for full compliance with the legacy of European regulation may add to tensions in Brexit negotiations.

Meanwhile, German Chancellor Angela Merkel dismissed Britain’s decision to leave the EU, saying that the Germany-France axis will drive regional unity “regardless of Brexit.”

U.S. Trade Talks

The U.S. and U.K. will start trade talks on July 24, U.K. Trade Secretary Liam Fox told the BBC.

“There are some very, very big markets that we will be able to take advantage of,” Fox said. “I’ve got news for you — that we are beginning our actual discussions on July 24.”

The U.K. cannot sign any trade deal until after it leaves the EU, but discussions with the U.S. over an eventual plan will be an early test of May’s ability to deliver the “global Britain” she talks about, as well as the strength of her relationship with President Donald Trump.

President Trump shakes hands with Theresa May in the Oval Office on Jan. 27, 2017. 
Photographer: Olivier Douliery/Abaca

“We have actually got a lot of work to do to prepare to leave the European Union in terms of the agreements that we are party to as part of the European Union,” Fox said. “We have to turn them into agreements for the United Kingdom outside.”

On the Markets

The pound rose for a seventh day versus the dollar, set for its longest winning streak since April 2015 amid speculation the Bank of England may raise interest rates.

Despite Brexit, JPMorgan Asset Management said U.K. stocks represent “good value” given that the FTSE 100’s price-earnings ratio adjusted for inflation over the past 10 years is well below its long-term average and the global economy is expanding.

Brexit in Brief

  • Sentiment among U.K. households fell to its lowest level since the Brexit vote as the rising cost of living and inconclusive general election deterred Britons from spending on big-ticket items.
  • Spending power of British families falls 1.9 percent on year, their steepest decline since 2013, according to Asda
  • U.K. remains Europe’s top financial services location for investors, with the industry luring 99 foreign direct investment projects in 2016, the highest in a decade, according to EY
  • French Finance Minister Bruno Le Maire says that France will create a special court to deal with financial contracts concluded under British law as part of its effort to win banking business for Paris as the U.K. leaves the EU
  • Over two thirds of UK businesses are “not making adequate preparations” for Brexit, according to study by Interim Partners in the Daily Telegraph.
     
Bundestag's Hirte: Not Clear Article 50 Can Be Reversed

And Finally...

British lawmakers will enjoy a less rigorous dress code as they discuss Brexit in coming months.

Members of Parliament will no longer be required to wear a tie in the House of Commons. Speaker John Bercow decided MPs must wear “business-like attire” but that ties are no longer essential.

“It seems to me that as long as a member arrives in the House in what might be thought to be business-like attire, the question of whether that member is wearing a tie is not absolutely front and center stage,” the Speaker said.

“Do I think it’s essential that a member wears a tie? No.”

For more on Brexit follow Bloomberg on Twitter, Facebook and Instagram

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE