Tag Archives: brexit

Brexit Brings Billions in Losses All Round

Rising trade costs in both Britain and the other 27 EU countries mean that Brexit will cause considerable economic damage. In Britain this damage will exceed any savings made on its net contribution to the EU budget. If future trade were to be conducted on the basis of WTO rules, this would still cost Britain an annual 16 billion euros, even if it were to pay nothing into the EU budget. For the EU, the losses generated by the absence of a net contribution from Britain and rising trade costs amounts to around 44 billion euros per year. “Everyone stands to lose out from Brexit,” said ifo President Clemens Fuest citing a paper published by the European research network EconPol, which is coordinated by the ifo Institute.

A free trade agreement could more than halve the additional costs arising from constraints on trade,” added Fuest. The EU’s total losses would drop to 27 billion euros, while for Britain its savings on contributing to the EU budget would more or less offset rising trade costs. “Negotiations consequently need to focus on minimising economic losses through trade barriers and a comprehensive free trade agreement,” noted Fuest.

The EconPol paper is available online at:  http://www.econpol.eu/publications/policy_report_20171203

Ifo Institute http://www.cesifo-group.de

Brexit: negative impact on aviation and tourism

Top airline and airport executives warned for the negative consequences of Brexit on aviation and tourism in a transport committee hearing on Tuesday.

Airlines will need to make business decisions about where to fly well before the March 2019 deadline, the CEOs warned. They highlighted the benefits that the single market has brought in terms of travel opportunities and jobs and economic growth and the large flows of tourists between the UK and the other 27 EU countries. Passengers will lose out and the EU27 tourism industry stands to lose some €21 billion in business from the UK following Brexit, especially in Malta, Cyprus and Portugal, they warned.

They stressed the need for certainty and said aviation needed to be dealt with as a priority in the negotiations on a future relationship, especially as there is no “fall back” option, which other sectors may have in the form of WTO rules. No deal could mean no flights between UK and EU-27 immediately after Brexit, warned Michael O’Leary of Ryanair.

MEPs asked the CEOs if they thought the UK should continue to follow the EU rules in the field of aviation following Brexit and if there are current agreements with third countries that could serve as a blueprint for a future relationship. They asked if they are preparing contingency plans in case the negotiators do not reach a deal by the March 2019 deadline.

Brexit 'divorce' bill premature


German and Italian officials back Brexit chief negociator Michel Barnier over ‘divorce’ costs of 60 billion euros ($63 billion), first articulated by the Austrian Chancellor Christian Kern, becoming the first EU leader to put a value on the size of th, U.K.’s Brexit bill. The expert see the amount as a ‘punishment’ of the EU27 block for the UK departure.

“There will be a lengthy debate about the check that has to be paid by the U.K., because 60 billion euros is a significant amount of money,” – Kern said.

However the future of the bill is unclear due to the upcoming elections in a number of the EU key countries, including The Netherlands, France, Germany and Italy. The ‘cost’ of #Brexit might significantly differ, derriving form the political decisions of forces accending power. Moreover, in case Dutch nationalist politician Geert Wilder will get an overwhelming number of seats in the Parliament in upcoming elections on the 15th of March, he would push the referendum agenda for the membership in the EU. The similar promise made French candidate for presidency Marine Le Pen.

The current assessemnts are made in bona fide there will be no major changes in the organisation within next two years, preceeding the UK exit. Subseuqently the discussions of the  Brexit ‘divorce’ bill are  premature – nobody knows how the EU project will look like by the end of 2017.

Polls: Scottish independence at raise


Support for Scottish independence rose after the British Prime Minister came out in favor of the UK making a clean break with the European Union, a confirmed BMG survey for Herald Scotland .

The survey indicated 49 % of Scots support independence with 51% opposing it, after “don’t know” votes are removed, the newspaper said.

A similar survey conducted last month showed roughly the same result as the 2014 Scottish independence referendum, with 45.5 percent in favor of independence and 54.5 percent against, the newspaper said.

 Scotland’s devolved parliament rejected British leader Theresa May’s plan to exit the European Union in a symbolic, non-binding vote on Tuesday.


UK: set to Brexit with or without a deal


Britain will not seek further talks with the European Union if the Parliament rejects the divorce deal with the EU27, the government said on Tuesday, as ministers defeated attempts to give lawmakers more say on the terms of the final agreement.

The statement, which echoes Prime Minister Theresa May’s stance that “no deal for Britain is better than a bad deal for Britain” came as Parliament debated a law that would give  the power to PM to begin Brexit negotiations.

Last month, May promised to ask parliament to approve the final exit terms in 2019, but added  Britain would leave the EU with or without a deal.

The City moves to Ireland?


Many of British-based financial services firms have already decided to relocate at least part of their operations to Ireland, and others are expected to follow in the first half of this year, Ireland’s minister for the sector said this week.

Speaking at an event hosted by the London Irish Business Society, Eoghan Murphy said Britain’s decision to trigger #Brexit at the end of March had been a catalyst for these moves.

“With the time horizon we now have around Article 50, some decisions have already been made for relocation,” Murphy said, declining to name the companies, or give a number.

Earlier this month Irish finance minister Michael Noonan confirmed Irish central bank had received over 100 inquiries from British-based financial firms considering a move.


May bets on talks with Trump


Bmay-smileritish Prime Minister Theresa May  will be the first foreign leader to meet new U.S. President Donald Trump, launching talks on renewed ‘special relationship’ between two countries. Reportedly a free trade deal is high on the agenda,  allowing May to strengthen her position during Brexit at home and towards EU27, shifthing trade vector from the EU to the US.

Trump underlined a deal can be done “very quickly”, but he added that the US interest goes first . Trade experts wonder how the two leaders will overcome disagreements over GMO food, meat production and public-sector procurement, and fear that U.S. companies might want to buy into its prized public health service.

May will meet Trump in Washington on Friday after stopping off in Philadelphia to meet senior Republican leaders from Congress ahead of the meeting in White House. Even a warm welcome, and a promise on patching the differenced between two allies can give May a stong hand in Brexit talks with the EU.





May to deliver Brexit speech


On Tuesday 17/01/2017 Prime Minister Theresa May will deliver a speech setting out her 12 priorities for upcoming Brexit talks with the EU.

Those 12 priorities will include leaving the European Union’s Single Market. May will be also  describing future of the Customs Union, but she alredy confired that  UK will be no longer a member.

The control of the UK’s borders will be the major focus of May’s Brexit concept, the one that makes many observers think that the leaving EU member will go for ‘Hard Brexit’ full force.

(Source: Telegraph)

'Leave' activists push for hard #Brexit


The ‘Leave Means Leave’ group co-chairs Richard Tice and John Longworth launched an appeal for ‘hard Brexit’ in a letter sent to chambers of commerce in the EU member-states, urging businesses of Europe to encourage their national governments for a ‘sensible agreement’, ensuring smooth, uninterrupted transition in mutually beneficial trade.

“Many EU member states export significant amounts of goods to the UK  and the erection of barriers to this trade by the European Commission will have a detrimental effect on jobs and prosperity in a number of EU states, some where unemployment is already unacceptably high,” – says the joined letter singed by  Richard Tice and John Longworth. “It is therefore in all of our interests that trade is not interrupted and that the EU and U.K. secure a trade deal that has close to zero tariffs as is possible.”

The co-chairs pointed at “detrimental effect” of trade barriers for the regular Europeans from both side of the Channel, promoting symbolical near-zero tariffs.

“Businesses across Europe will want trade with the UK to continue as usual after Brexit and any hint of trade barriers by the European Commission will be rejected,” – the authors of the letter insist.

“It is vital that these business leaders make representations to their national governments to ensure that the EU is open for business.”

In this action, as previously the ‘Leave means leave’ activists regret the dogmatic approach of the European Commission towards the free movement of goods and people as inseparable conditionality. The major argument for changing the dogma is the priority of well-being of people of Europe over the rules conceived in the other political context more than half a century ago.

(Source: UK news agencies, Leave means leave group)

After Brexit: losses in financial sector, safe havens benefit


Equity markets have reacted negatively to the UK’s vote in favour of exiting the European Union. The biggest loser was the financial sector, while defensive stocks like consumer staples and healthcare benefited from a withdrawal to quality, indicate Guy Wagner, Chief Investment Officer at Banque de Luxembourg, and his team, in their monthly analysis, ‘Highlights’.

Equity markets have reacted negatively to the UK’s vote in favour of exiting the European Union. However, after 2 days of losses, the markets stabilised in anticipation of support from the central banks, which are likely to step in to support the financial markets if the negative reaction persists. The biggest loser was the financial sector, while defensive stocks like consumer staples and healthcare benefited from a withdrawal to quality. “Although the Brexit vote has not triggered a general meltdown on the equity markets, it reflects a steady erosion of confidence in public institutions among a large segment of the population”, says Guy Wagner, Chief Investment Officer at Banque de Luxembourg and managing director of the asset management company BLI – Banque de Luxembourg Investments. “If this loss of confidence extends to the central banks, equity markets could correct sharply. Between now and then, given the lack of alternatives, equities could continue to rise despite there being no sign of any improvement in economic fundamentals.” And he continues: “In an environment characterised by prolonged uncertainty, investors usually value quality and visibility. Within equity markets, these attributes are generally not found within sectors that are very cyclical or within the financial sector.”

Federal Reserve and ECB do not change their monetary policy

At the FOMC (the Federal Reserve’s monetary policy committee) meeting in June which took place just a few days before the Brexit referendum, Chairman Janet Yellen left interest rates unchanged given that a vote in favour of the UK’s exit from the European Union could have unfavourable economic and financial consequences worldwide. In Europe, the European Central Bank (ECB) did not react to the result of the British poll. It is continuing to execute its planned programme of buying up debt securities from corporate and public issuers in the eurozone. The Bank of England announced its intention of easing monetary policy during the summer to offset the unfavourable economic and financial effects of the British referendum.

Global economy is continuing to generate stable, moderate growth

In the meantime, the global economy is continuing to generate stable, moderate growth. “In the United States, the economy is being driven by domestic consumption, while corporate investment is weak”, underlines the Luxembourgish economist. In Europe, political uncertainties have not so far led to an economic slowdown; growth is weak but positive. In Japan, the government is delaying the implementation of further stimulus measures despite ongoing economic stagnation. “In China, fiscal stimulus is cushioning the economic slowdown at the cost of adding to the country’s debt.”

Government bonds are playing their role of safe haven despite the weak yields on offer

Bond yields continued to decline in June. Over the month, the 10-year government bond yield dropped in Germany, in Italy, in Spain, and in the United States. Guy Wagner: “With growing political uncertainty, government bonds are playing their role of safe haven despite the weak yields on offer.” Even negative yields do not seem to be putting investors off maintaining or increasing their positions. “As the probability of monetary tightening in the United States is now diminishing, the US yield curve should continue to flatten.”

Source  Banque de Luxembourg Investments


Universal Press