Brexit Bulletin: Boris WatchBy
Can May hold on to the leadership and deliver on her Florence pledges?
Hammond addresses Tory Conference today; May on Wednesday
With the Conservative Party conference under way in Manchester, two questions are front and center: can Prime Minister Theresa May cling on to the leadership, and will she say anything to worry Brussels while playing to her base?
May goes into conference facing calls to fire Foreign Secretary Boris Johnson for undermining her on Brexit—most recently with a weekend interview in The Sun. Asked on Sunday if Johnson was unsackable, May just laughed and dodged the question. Johnson, who is pushing for a quicker, no-compromises split from Europe in favor of closer ties to new allies, in line with the pledges he made on the campaign trail, expects May to be gone in a year, The Sunday Times reported. According to May’s allies, Johnson is just “posturing,” the Telegraph reports today.
And it’s not just Boris. Brexit Secretary David Davis has also undermined May, striking a more belligerent tone over the divorce since May’s big Florence speech than the premier did herself.
The trouble for May is that she needs to placate the party, and somehow silence the noise from the pro-Brexit camp, without scaring off Brussels. Her Florence speech won plaudits from EU leaders and chief negotiator Michel Barnier for creating a new dynamic in the talks. She spent much of Friday schmoozing EU leaders at a summit in Estonia, including efforts to convince Chancellor Angela Merkel that the two-year transition deal she wants after 2019 is a good idea.
While the Europeans understand May’s delicate position, she made pledges in Florence to settle the U.K.’s exit bill and abide by EU rules during a transition. They won’t have much patience for anything that looks like back-peddling on her part.
May doesn’t give her big conference speech until Wednesday. But Monday will bring plenty of contrasting Brexit views: Chancellor of the Exchequer Philip Hammond gives the centerpiece speech, while arch-Leavers Jacob Rees-Mogg, John Redwood and Steve Baker are due at events on the sidelines.
Bank Exodus | Banks poised to move employees out of the U.K. expect their Brexit bills to reach $500 million or more each, according to people with knowledge of firms’ contingency planning. That’s more than the banks initially expected and stems in part from the fact that plenty of bankers don’t want to move.
Relocation Relocation | The bidding war for hosting rights for U.K.-based European regulators is heating up. On Saturday the European Commission published an assessment of the various bids for the European Medicines Agency and the European Banking Authority. Haggling between EU governments will lead to a decision in November.
Defiance on Ireland | The U.K. and the Republic of Ireland should simply refuse to build a border after Brexit, Conservative lawmaker Jacob Rees-Mogg said in Manchester. “I don’t care if a few hundredweight of beef is smuggled across the Irish border,” he said.
Trade Plans | The U.K. reckons its first trade deals after Brexit will be with the U.S., Australia and New Zealand, Trade Minister Liam Fox said on Sunday. The U.K. also wants to adopt about 40 trade deals that it’s now party to as a member of the EU, for example with Switzerland and South Korea. Fox wants that set up before the U.K. leaves.
Hard Brexit Risk | Britain’s automotive, technology, health-care and consumer goods sectors may lose £17 billion ($22.8 billion) a year in export revenues when the U.K. leaves the single market and customs union, according to a report Monday by Baker & McKenzie LLP and Oxford Economics Ltd. Those sectors account for 42 percent of the U.K.’s manufacturing GDP.
Helicopter Money? | Willem Buiter, chief economist at Citigroup Inc. and one of the original members of the Bank of England’s Monetary Policy Committee, said on Friday that a “hard Brexit, a chaotic Brexit,” could bring helicopter money to the U.K. as the central bank’s response to a deep recession.
On the Markets | Investors are watching May and Johnson. The party conference “will be watched to see if May has the ability to pull the party behind her,” said Jane Foley, head of currency strategy at Rabobank. Any challenge to May’s leadership could send sterling lower, she said.
Jacob Rees-Mogg is having a good conference so far, at least if rapturous applause and snappy soundbites are the measures to go by. The crowd at a fringe event went wild for the Conservative lawmaker’s Brexit vision, reports Bloomberg’s Rob Hutton, cheering as Rees-Mogg declared that nothing is “better than being out of the EU, so I don’t see how we can get a worse deal than we’ve got.”
And one more gem: “If an organization that you’re leaving decides to kneecap you if you leave, it’s usually the mafia.”