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Saturday, July 02, 2016


There Could be Trouble Ahead………..

EU Trade Commissioner: No trade talks until full Brexit.

The European Union's top trade official says the UK cannot begin negotiating terms for doing business with the bloc until after it has left. "First you exit then you negotiate," Cecilia Malmstrom told BBC Newsnight. After Brexit, the UK would become a "third country" in EU terms, she said - meaning trade would be carried out based on World Trade Organisation rules until a new deal was complete. A recent trade deal with Canada took seven years to negotiate. The Canadian agreement will also require ratification by all EU countries, adding another one to two years before it takes effect. Ms Malmstrom, the EU Trade Commissioner, underlined that detailed talks to shape the UK's new trading relationship with the EU should not start until after the process of leaving politically, under an Article 50 process lasting up to two years. "There are actually two negotiations. First you exit, and then you negotiate the new relationship, whatever that is," she said. "The referendum - which of course we take note of and respect - has no legal effect. First there has to be notification, which the next prime minister will do, I hope swiftly. And then that process can start."

Pound falls as Bank of England hints at fresh stimulus measures.

The pound has fallen by more than 1% after Bank of England governor Mark Carney hinted at fresh economic stimulus measures. He said it was likely "some monetary policy easing" would be required in response to the Brexit vote. A deteriorating economic outlook means action from the Bank is likely during the summer, Mr Carney said. The Bank's key interest rate - currently at a record low of 0.5% - is its chief tool of monetary policy. A cut in interest rates would have a knock-on effect on savings rates, and makes the pound a less attractive currency to hold and do business in. Mr Carney was speaking to business leaders in his second speech since the UK's vote to leave the EU. "In my view, and I am not pre-judging the views of the other independent Monetary Policy Committee (MPC) members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer," he said. This points to the likelihood of a cut to interest rates from their already record low. It also creates the distinct possibility of further quantitative easing over the summer.

Airport expansion decision on hold.

A decision on airport expansion in south-eastern England is to be delayed until "at least October", Transport Secretary Patrick McLoughlin has said. The move follows the UK's Brexit vote, which triggered a leadership contest in the Conservative government. Heathrow and Gatwick airports have been vying with each other over building an extra runway. Heathrow boss John Holland-Kaye said expansion "must be a key building block in the government's Brexit plan". "It will allow British exporters to trade with all the growing markets of the world, strengthening Britain's position as one of the great trading nations," he said. "And at a time of uncertainty, a £16bn privately funded infrastructure investment will create jobs and growth across the UK."

Scottish independence 'simplest EU option'.

Independence would be the "simplest and most obvious way" for Scotland to remain in the EU, MSPs have heard. The European and External Affairs Committee heard evidence from four experts on the possible options for Scotland in Europe. There was broad consensus among the experts that it would be extremely difficult for Scotland to be a member of both the UK and the EU after Brexit. And they agreed the EU currently had "goodwill" towards Scotland. Last week's referendum saw Scotland vote by 62% to 38% in favour of remaining in the EU - but it faces having to leave the union after the UK as a whole voted in favour of Brexit.

Brexit vote leads S&P to cut European Union credit rating.

Ratings agency Standard and Poor's has cut its credit grade for the European Union after the UK's Brexit vote. S&P said the cut from AA+ to AA came after reassessment "of cohesion within the EU, which we now consider to be a neutral rather than positive". The UK's Brexit vote had triggered "greater uncertainty" over long term economic and financial planning. On Monday, S&P cut the UK's top AAA credit rating, saying Brexit could hit the economy and financial sector. S&P said the change to its EU rating was because the previous assessment was based on all 28 states remaining in the bloc.

Osborne abandons 2020 budget surplus target.

Chancellor George Osborne has abandoned his target to restore government finances to a surplus by 2020. In a speech he said, given the effects of the referendum vote, the government had to be "realistic about achieving a surplus by the end of the decade". The target had been the chancellor's most prized goal and had been driving austerity measures in previous budgets. But he said the economy is showing "clear signs" of shock following the vote to leave the European Union. Giving a speech in Manchester, Mr Osborne said: "The referendum is expected to produce a significant negative economic shock to our economy. How we respond will determine the impact on jobs and growth. We must provide fiscal credibility, continuing to be tough on the deficit while being realistic about achieving a surplus by the end of the decade."

[So, hardly good news for the Brexit camp as both the Tory and Labour parties tear themselves apart in the aftermath of the Referendum. It even looks like a Remain candidate could win the Tory leadership contest now that Gove has killed off Boris – the only good thing Gove has ever done? – and probably killed his own political career in the process…. And who said that British politics is dull? Certainly not at the moment!]

All details above from BBC News website.

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