Brexit Bulletin: Fox Goes Hunting for U.S. Trade Deal

  • U.K. trade chief makes case for deal with Trump administration
  • IMF cuts U.K. growth forecast, citing weaker first quarter

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U.K. officials are touring the world in a bid to line up post-Brexit trade deals.

Trade Secretary Liam Fox will meet with his U.S. counterpart in Washington on Monday after acknowledging it will be a “difficult discussion.” He will then travel to Mexico and Texas.

Liam Fox, U.K. international trade secretary.
Photographer: Chris Ratcliffe/Bloomberg

Fox reckons removing commercial barriers with the U.S. could generate an additional £40 billion ($31 billion) in trade with the U.K. by 2030. He will tell American lawmakers that 700,000 U.S. jobs are supported by trade with Britain.

Still, U.S. negotiators have more experience and could bulldoze the U.K. on issues such as agricultural and financial regulation. There is already a split in Prime Minister Theresa May’s cabinet about allowing imports of chlorine-washed chicken from the U.S., according to Monday’s Daily Telegraph.

Speaking on Sunday, opposition Labour Party leader Jeremy Corbyn questioned why the U.K. is so willing to strike a trade deal with the U.S. when President Donald Trump intends to withdraw from the Paris climate agreement. In an interview with the BBC’s Andrew Marr, Corbyn also ruled out continued British membership of the EU single market after Brexit.

With Fox in the U.S., Foreign Secretary Boris Johnson, who visited Japan last week, will be in New Zealand and Australia. 

Under EU rules, member states are not allowed to negotiate free-trade agreements, so the preliminary talks will only lay the groundwork for any pact after the U.K. leaves.

Transition Talk

In case you missed it, Tim Ross’s story of Friday afternoon outlines how May’s advisers now see a fuller, more wide-ranging transitional phase following Brexit.

Fox, one of the most ardent fans of Brexit in the Cabinet, on Sunday backed away from his recent position that he would be “very happy” with an implementation period lasting just “a few months.”

“I don’t think that there’s any great ideological blockage on the concept of a transition or an implementation period,” Fox told the BBC. It could be as long as 25 months, he said, and the U.K. should be allowed to negotiate new trade deals during that time.

IMF Cuts Forecast

The International Monetary Fund has cut its growth forecast for the U.K. this year to 1.7 percent from 2.0 percent, figures released overnight show. May’s government sought to look on the bright side.

The revisions “underscore exactly why” the U.K. needs to “get the very best deal with the EU,” a Treasury statement said, noting that unemployment is currently at its lowest since the 1970s.

The IMF cited “weaker-than-expected activity in the first quarter” for the downgrade. It left its forecast for 2018 at 1.5 percent.

Brexit in Brief

  • The U.K.’s Brexit bill shouldn’t derail negotiations, according to Bloomberg View
  • Frankfurt’s victory in the race for banking business is a hollow one, Lionel Laurent writes for Bloomberg Gadfly
  • Euro clearing could stay in the U.K. after Brexit, Irish central banker Philip Lane tells The Times
  • MarketAxess picks Amsterdam as its EU base for after Brexit, Chief Executive Rick McVey tells the Financial Times
  • Most Conservatives want Brexit Secretary David Davis to replace May as leader, a survey of more than 1,000 party members for the Observer shows. Some 21 percent backed Davis while 17 percent chose Boris Johnson
  • Bank of America chooses Dublin to locate its main EU base in preparation for Britain quitting the bloc
  • U.K. Transport Secretary Chris Grayling says there’s no chance that planes will be grounded when Britain leaves the EU
  • 54 percent of business leaders lack confidence in the government and most want Brexit talks focused on trade, according to survey of 3,900 firms by MarketInvoice
  • Pharmaceutical companies may stockpile drugs in European warehouses as a precaution against a hard Brexit, the Sunday Times says
  • The private bank divisions of UBS, Credit Suisse and Societe Generale plan to accelerate investments in the U.K. by hiring more staff or opening regional offices, according to the Financial Times.

And Finally…

Boats moored on the harborside as a river ferry passes by in Bristol, U.K.
Photographer: Chris Ratcliffe/Bloomberg

Bloomberg’s Matthew Campbell returns to Bristol, the city that hates Brexit the most, as part of our series on the front lines of the breakup.

He’s following software startup Boxarr, which is doing its best to get on with Brexit but frustrated by some of the obstacles being thrown up.

“The uncertainty of the whole thing has been damaging,” said Alasdair Pettigrew, the chief executive officer. “And I think that damage, not just for us but the whole economy, will start to manifest itself as we go forward. We would be further on in our growth if the politicians had done a better job.”

Read more: These are the companies Bloomberg is following through Brexit.

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