Brexit Bulletin: Government Seeks to Charm BusinessBy
Hammond promises to listen to business over Brexit
Business leaders want greater influence, and more clarity
Prime Minister Theresa May’s government is turning on the charm with British business.
Chancellor of the Exchequer Philip Hammond will use a speech to executives in London on Monday night to promise that he and other officials will listen to the concerns of companies regarding Brexit.
A week since establishing a new advisory panel of industry lobby groups, some executives have also been invited to talks with Brexit Secretary David Davis at Chevening, the country estate he splits with Foreign Secretary Boris Johnson.
The outreach suggests May’s government is changing its tone on Brexit to make it more focused on the needs of the economy rather than reclaiming sovereignty over immigration and law-making. Business leaders have long complained they have not been given enough opportunity to advise the government.
However, Hammond will also call on firms to do more to seize opportunities from Brexit and not to use the looming divorce as an excuse to delay investment or stop investing in workers.
For all the increased communication, some business leaders still want their own separate group, and long for the setup under former Prime Minister David Cameron, who created a panel of 20 company heads and met with them regularly.
Businesses need a way to provide an “enduring constant connection that will last far longer than Brexit,” said Steve Varley, chairman and managing director for the U.K. and Ireland at EY. “We need to do something of more industrial strength.”
The Financial Times said businesses are lobbying for a visa system that allows unrestricted entry for talented overseas entrepreneurs and tech experts.
Separately, May and Hammond are coming under mounting pressure from lawmakers to ease U.K. austerity policies and abandon a cap on public-sector pay.
It’s hard to tell just what Brexit will look like based on weekend newspaper reports, suggesting some post-election confusion within government.
The Sunday Telegraph quoted a Downing Street official as telling business leaders to prepare for May walking away from the negotiations in September, while the Guardian said the government increasingly accepts there will need to be a painful trade-off between market access and political control.
The Guardian said the U.K. is also examining associate membership of the European Free Trade Association as a shortcut to lining up trade deals. The Financial Times said a delegation from the City of London will travel to Brussels this week with a secret blueprint for a post-Brexit free-trade deal on financial services.
James Chapman, a former adviser to Brexit Secretary David Davis, told the BBC that May’s “absolutist” approach to Brexit, especially her red line on the European Court of Justice, had “hamstrung” British negotiators. Former Brexit minister David Jones said recent departures from the government had created a “problem,” according to the FT.
The Financial Conduct Authority is already being excluded from Brexit-related discussions, its head, Andrew Bailey, told the FT.
An Opinium poll for the Observer found support for the opposition Labour Party at 45 percent, six points ahead of the Tories. The same newspaper reported Brexit Minister Steve Baker is under pressure to clarify his relationship with an organization that donated £435,000 to the Democratic Unionist Party.
The Sunday Times said Chubb is considering relocating more of its European business to Dublin from the U.K., as part of its preparations for Brexit.
Brexit in Brief
- Six out of 10 Britons want to keep EU citizenship after Brexit, according to research by the London School of Economics
- Thirteen companies decide to move to the Netherlands or expand in the country as a result of Brexit, generating 730 jobs, Dutch Economy Minister Henk Kamp tells the Volkskrant
- Sumitomo Mitsui Financial Group decides to set up banking and securities units in Frankfurt
- May will pull Britain out of the 1964 London convention that allows European fishing vessels to access waters as close as six to 12 nautical miles from the U.K. coastline
- The Association for Financial Markets in Europe releases a report that concludes European businesses are not yet prepared for any change in the wholesale banking landscape
- Almost half the risks identified by FTSE 100 U.K. companies in annual reports were related to politics, according to a Global Counsel study
On the Markets
Strategists aren’t racing to raise the forecasts for the pound despite last week’s gain. Goldman Sachs Group is sticking to its call for the pound to fall to $1.20 in the next 12 months, while HSBC still predicts a depreciation to reach that level by December.
Corporates have raised more than £19 billion issuing sterling bonds this year, four times the volume raised during the first half of 2016, according to data compiled by Bloomberg. About two-thirds of that came from non-U.K. companies including Anheuser-Busch InBev, which raised £2.25 billion pounds across three maturities in May, and AT&T, selling £1 billion pounds of 20-year notes on June 15.
French schoolchildren are already being taught that the EU only has 27 member states.
While the U.K. isn’t due to leave the bloc until March 2019, it has been removed from a map of the union in a textbook published by Aedia, according to the Independent. It shows every other member shaded with the color of its flag, but Britain is left blank.
The guide to the EU was first published in January 2007 but was updated two months ago, apparently to reflect Britain’s departure, the newspaper said, citing the publisher’s website.