Carmakers call for transitional EU deal

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The government must secure a transitional Brexit deal to protect the future of the UK car industry, a trade group has said.

The Society of Motor Manufacturers and Traders (SMMT) said Britain was highly unlikely to reach a final agreement with the EU by the March 2019 deadline.

That meant carmakers could face a “cliff edge”, whereby tariff-free trade was sharply pulled away.

It warned the industry would suffer without a back-up plan in place.

The EU is by far the UK’s biggest automotive export market, buying more than half of its finished vehicles – four times as many as the next biggest market.

UK car plants also depend heavily on the free movement of components to and from the continent.

The SMMT said any new relationship with the EU would need to address tariff and non-tariff barriers, regulatory and labour issues, “all of which will take time to negotiate”.

“We accept that we are leaving the European Union,” said chief executive Mike Hawes.

“But our biggest fear is that, in two years’ time, we fall off a cliff edge – no deal, outside the single market and customs union and trading on inferior World Trade Organization terms.

“This would undermine our competitiveness and our ability to attract the investment that is critical to future growth.”

He called on the government to seek an interim arrangement, whereby the UK stayed in the single market and customs union until a new relationship was brokered.

UK car manufacturing generated £77.5bn of turnover last year and accounted for 12% of all goods exports, according to the trade group.

It added that almost a million people were employed across the wider automotive industry.


Could EU citizens get better UK access?

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It has been said of the Prime Minister that it is as important to listen to what she doesn’t say as to what she does.

When I interviewed her yesterday, I asked about an issue that is a live debate in government. Yes, the Prime Minister has been very clear about what the UK doesn’t want in its negotiations with the European Union. No free movement of people. And no oversight of British laws by the European Court of Justice. But what about what it may offer to gain privileged access to the economically important single market? One issue where there appears to be some flexibility is the rules that will be put in place to control immigration into the UK. I asked Mrs May whether the government would consider allowing easier access for EU immigrants than those from outside the union. And in return gain better access to the single market than offered to non EU states. “When people voted on the June 23, they did vote for us to take control of our immigration laws for people coming from the EU into the UK,” she answered. “They want the British government to be the government that is making those decisions on their behalf, and that is what we will do. “At the moment the Home Office is looking at the various systems we could put in place, the various rules that we could put in place and in due course we will be deciding which route to go down.”

Control

So, it could be on the table, I asked. “We are looking at the various systems that are possible at the moment. The key issue for people here in the UK is that we have control – that it is the British government that is deciding our immigration rules.” Which, of course, is not a no. This morning the chancellor said that the issue of preferential access “could be a subject for negotiation”. He made it clear at the World Economic Forum that the government wanted to control the UK’s borders, not close them.

The debate, though live, is not yet settled. Another senior government figure I spoke to pointed out that a level playing field for immigration for all nations around the world could be an important part of “the offer” to countries outside the EU when it comes to negotiating free trade deals. I am told that Mrs May has not yet come to the point where the options are being “actively considered” by Number 10. The government is still in “looking at the alternatives” mode. But, given that the PM did not rule it out, what she didn’t say may speak volumes.

Kamal Ahmed


May’s ‘positive discussion’ with banks

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Prime Minister Theresa May has had “positive discussion” with big banks about how they might be encouraged to keep jobs in the City of London.

They talked about what had attracted them to London and “how we can continue to build on that for the future,” Mrs May told the BBC’s economics editor Kamal Ahmed, in Davos. Her remarks came as several big banks said they may move staff out of London. Both HSBC and UBS have said they could relocate about 1,000 jobs. Mrs May was asked if she was disappointed that it was becoming clear that there was a price to Brexit. “I want to negotiate a free trade agreement with the European Union which will give us the maximum access, the right deal for Britain, maximum access to the single European market for trading with and operating within that market for both goods and services,” she said. “I think that’s not just in the interests of the UK, I think that’s in the interests of the European Union as well,” she added. Mrs May said she had had a “very good positive discussion with banks about the benefits of the City of London, about what it is that has brought them to the City of London and how we can continue to build on that for the future”. There were “huge benefits” for investment in the UK, Mrs May added, which she said had a “fundamentally very strong economy”. She said the service sector was very important to the UK and that she believed that “truly global Britain can bring jobs and prosperity to the UK across the board, including in financial services”.

Privileged access?

Mrs May was asked if the government might be prepared to give preferential treatment to EU immigrants coming to the UK in exchange for privileged access to the single market. People who voted for Brexit were voting for “us to take control of our immigration laws for people coming from the EU into the UK”, she said. “We’re looking at the various systems that are possible at the moment. The key issue for people in the UK is that we have control, that’s it’s the government that is deciding our immigration rules,” she added.

‘Difficult’

Earlier, Mrs May told leaders at the World Economic Forum in Davos that the UK will be a “world leader” on trade. But the prime minister also warned that inequality blamed on globalisation was aiding the “politics of division”. Her speech to business leaders and politicians in Switzerland came after EU leaders said a post-Brexit trade deal with the UK would be “difficult”. The prime minister promised that the UK after Brexit would take on a “leadership role as the strongest and most forceful advocate for free markets and free trade anywhere in the world”.

Globalisation

She argued for reforms so the global economy created wealth for all, rather than a “privileged few”, and “centre-ground mainstream politics” could “work for everyone”. Mrs May said the world was enjoying an “unprecedented level of wealth”, but many people felt this was “not working for them”. Global elites needed to tackle the backlash against globalisation, liberalism, and free trade because leaders who “embrace the politics of division and despair” were working to exploit the situation. Mrs May said: “Talk of greater globalisation can make people fearful. For many it means their jobs outsourced and their wages undercut. It means having to sit back as they watch their communities change around them. “And in their minds, it means watching as those who prosper seem to play by a different set of rules, while for many life remains a struggle as they get by, but don’t necessarily get on.”


Theresa May: UK will be a global leader on trade

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Theresa May has told leaders at the World Economic Forum in Davos that the UK will be a “world leader” on trade.

But the prime minister also warned that inequality blamed on globalisation was aiding the “politics of division”. Her speech to business leaders and politicians in Switzerland comes after EU leaders said a post-Brexit trade deal with the UK would be “difficult”. The European Commissioner for Economic Affairs, Pierre Moscovici, said Brexit would be bad for the UK and the EU. In her speech, Mrs May said the world was enjoying an “unprecedented level of wealth”, but many people felt this was “not working for them”.

Global elites needed to tackle the backlash against globalisation, liberalism, and free trade because leaders who “embrace the politics of division and despair” were working to exploit the situation. The prime minister promised the UK, after Brexit, would take on a “leadership role as the strongest and most forceful advocate for free markets and free trade anywhere in the world”. She argued for reforms so the global economy created wealth for all, rather than a “privileged few”. Ahead of the speech European Commissioner for Economic and Financial Affairs, France’s Mr Moscovici, told the BBC that Brexit was not a positive move. “You cannot have all the advantages of being the member of the club when you’re out of the club,” he said. “I think that our British friends, who invented clubs, can understand that.”

Meanwhile, Chancellor Philip Hammond warned the EU that the UK would have to find ways to stay competitive if there was no “comprehensive trading relationship” post-Brexit. He said: “Our first obligation of government is to make sure that our people are able to maintain their standard of living.”

 


London will remain ‘financial lungs’ of Europe, says Jes Staley

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barclays mis selling

London can breathe easy – it will continue to be the financial lungs of Europe, according to Barclays chief executive Jes Staley

While he admits the bank may have to move some activities to bases in Dublin or Germany, he believes that most of their European banking business can continue to be done from the UK. “I don’t believe that the financial centre of Europe will leave the city of London. There are all sorts of reasons why I think the UK will continue to be the financial lungs for Europe” He admitted that other European capitals had been heavily courting the bank to move operations their way. “It’s very interesting that one minute no-one wants bankers in their back yard, the next they are inviting you over to a barbecue.”

His commitment to the UK will be welcomed by the Prime Minister, Theresa May, and the Chancellor, Philip Hammond, who will address delegates at Davos today. It comes 24 hours after HSBC said it would move 1,000 jobs to Paris and UBS said it would shift up to 1,000 jobs to Europe after the government resolved it would be leaving the European single market. Theresa May will be meeting big Wall Street bosses while here today, including Lloyd Blankfein of Goldman Sachs and Larry Fink of giant asset manager Blackrock – both card carrying members of the “global elite” she has been so scathing about. Barclays is the world’s biggest underwriter of European government bonds and it seemed to many watchers that it might be difficult to continue that activity outside the European single market.

Mr Staley said he believed that changes in the legal structure of the bank – by opening a German branch of its Dublin operations for example – would be enough to satisfy European and UK regulators and be in the interests of European governments. He was upbeat about the prospects for banks in general. saying that the prospect of stronger economic growth in the US under Donald Trump and an associated rise in interest rates would boost bank profitability. The bank still has an unfinished battle with US legal authorities after it balked at demands from the Department of Justice to pay what it considered unreasonable fines for its role in the subprime mortgage crisis. It is choosing instead to fight the US government in court. Mr Staley insisted that the change in administration (and a new attorney general) in the US was not part of their strategy. “We will still be facing the same prosecutors but we believe in the US justice system to deliver a fair outcome.”You don’t take the US government to court unless you think they are being very, very unreasonable.

 


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