Brexit Bulletin: We Know What EU Did This SummerBy
U.K. government outlines aim to strike interim customs deal
British Brexit positions taking shape ahead of August talks
With British Prime Minister Theresa May back at work, the Brexit Bulletin also returns from its summer break.
It’s a timely moment. Perhaps chastened by pre-holiday criticism from Brussels that its approach has been sluggish and opaque, May’s government will on Tuesday publish the latest in a string of position papers aimed at fleshing at its ambitions for future relations with the European Union.
Today’s topic? Customs arrangements. The paper will state an intention to seek a “close association” with the EU’s tariff-free, bureaucracy-light customs union for an “interim” period after the U.K. leaves the bloc in March 2019, with a view to striking a permanent deal that potentially preserves much of that relationship.
The proposal was cheered by lobbying groups for business, which is keen to avoid the duties, paperwork and regulatory uncertainty that life outside the customs union threatens, though those representing services want help in securing access for their industries. A continued customs arrangement would also help resolve the matter of how to police the Irish border, the subject of a position paper coming on Wednesday.
Yet the U.K. is also hoping to start sealing trade deals with other countries, something full membership of the customs union prevents. That will raise eyebrows in the EU, which has warned against cherry-picking and says that the U.K. won’t be able to enjoy “frictionless” commerce outside its ranks.
The paper starts to flesh out what May wants from a transitional period. That now seems to be the government’s approach to Brexit, although there is still debate over length and form. After a summer of cabinet rivalry over Brexit tactics, the embrace of transition can be read as a victory for Chancellor of the Exchequer Philip Hammond, who spent the summer advocating the case for a smooth Brexit.
The EU has been open to a stopgap arrangement, but will argue that other matters such as citizens’ rights and the Brexit bill need to be resolved first. That will take until October at the earliest.
The publication of the position papers comes two weeks before divorce talks resume. To update your end-of-summer diary here’s a reminder of key dates. May’s office says she’ll travel to Japan next week, just weeks after a trip by Foreign Secretary Boris Johnson.
Where is Boris, anyway? | Johnson has been oddly quiet on Brexit lately. Bloomberg’s Svenja O’Donnell explores the possible reasons for his silence.
While you were away | Bloomberg reporters stayed busy, outlining how broadcasters are concerned about their post-Brexit businesses and also how demand for HSBC’s foreign currency accounts has spiked. Deutsche Bank insiders said they envisioned shifting almost half its U.K. positions to the continent, while Amsterdam is already luring talent from London.
No City break | Headhunter Morgan & McKinley reported a one percent increase in available financial services positions in July, a month that typically sees a decline in job traffic. This suggested a volatile market as Brexit looms.
Pound parity | HSBC and Morgan Stanley are predicting that the euro will attain and even go beyond parity with the pound for the first time in the next year. Meanwhile, ING warned the pound is set for a bout of volatility, having already slipped to its weakest level against the euro in 10 months.
Bank of England on hold | The case for the Bank of England to start raising interest rates soon is weakening. As Brexit nears, the U.K. economy will lose more momentum this year than previously forecast and inflation’s peak may be shy of 3 percent, according to a Bloomberg survey of economists. The latest CPI figures are released this morning at 9.30 a.m. in London.
Hammond challenged | Pro-Brexit campaign group Vote.EU said it will write to voters in the Chancellor’s constituency to urge them to deselect him because of his stance on Brexit. Home Secretary Amber Rudd will also be targeted.
When May began the Brexit process in March an aide told reporters that Britain would be out of the EU when “Big Ben bongs midnight” on March 29, 2019. It turned out he was an hour wrong – it’s midnight Brussels time that will actually count.
But it’s a moot point anyway: Yesterday it was revealed that Big Ben, the 13.7-ton bell in Parliament’s Elizabeth Tower, will fall silent this month for four years to protect workers carrying out restoration work. It will chime again next when the U.K. is no longer in the EU.