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When is the real Brexit deadline?

Less than 180 days to go and the pressure is on. Talks between the UK and the EU are at deadlock, with the intractable Irish border problem the biggest stumbling block. But here’s the catch: they must also set aside time for the deal to be reviewed and ratified by both sides.

In the United Kingdom, parliament must vote through the withdrawal agreement into law, while on the European side, it must receive the support from member states and the European parliament.

We all know that the clock is ticking. But political process on both sides means the real deadline is not 29 March itself. So just how much time is there?

On the EU’s side, Danuta Huebner, who chairs the European Parliament’s Brexit committee, has suggested that approval could be granted as late as the 11 March 2019. Meanwhile, the fact that the EU commission has continually updated EU capitals and institutions throughout the negotiations means that they would be unlikely to reject the agreement – even if it were presented to them as late as March.

But there are several reasons why delaying the vote until March would be politically problematic. First, although national parliaments in the EU will not be voting on the withdrawal agreement, some heads of governments may still be still required, in line with their own parliamentary traditions, to discuss the deal before and after the vote takes place. The Danish parliament’s European committee, for example, has a strong tradition of organising hearings ahead of EU votes and, in some cases, has even managed to influence the government’s position.

Second, the EU is conscious that the longer it discusses the terms of the UK’s exit, the less time it will have to discuss the future trade and security relationship. The way negotiations are organised means that discussions about the future can only take place once a withdrawal agreement has been reached. Many predict these discussions to be far more complex and question whether a future deal can be reached during the transition period which, providing it goes ahead, will end in December 2020.

Third, businesses on both sides are demanding greater clarity on the UK’s position after March 2019. For them, the longer the talks last, the less time they have to draw up new plans.

For all these reasons, the EU has provisionally set the date of 17 November to vote on the withdrawal agreement. But it is also in the UK’s interest to reach a deal by the end of the year.

For starters, there is actually a UK legal requirement that the government reach an agreement with the EU by 21 January 2019. In the absence of an exit deal, the UK parliament could put pressure on the government to change course – it is not clear how the prime minister would survive such a vote.

But even if the UK and the EU did reach an agreement by January 2019, there is no guarantee that the UK parliament would support it. Worse still, if it did reject the deal, it is hard to see how both sides could negotiate and ratify new exit terms by March 2019. Faced with such a dilemma, is it time to be thinking about extending talks beyond March 2019?

Legally speaking, this could be possible. According to Article 50, talks can be extended beyond the two-year negotiating framework, although this would require the approval of all 27 member states as well as the UK. But politically, this might prove complicated.

First, it is unclear how long talks would be extended for. The EU parliament elections are planned for May 2019, so a Brexit vote would need to take place either before the elections or after a new parliament is in place. The elections will also lead to the appointment of a new commission in the autumn, possibly even a new president. The EU may be reluctant to vote before the end of the year.

Second, it is unclear what would happen to the transition period. Currently, the transition is due to end at the end of 2020, at the same time as the current EU budget. During this time, the UK would continue to be part of the single market and customs union – although it would have no formal say or vote over new EU legislation. As a consequence, the UK may be asked to contribute to the new EU budget if it wanted to continue accessing the single market and customs union beyond 2020. It is hard to see how UK politicians would accept this.

When voting takes place depends largely on how quickly the UK and the EU reach an agreement. If they fail to reach a deal by 21 January 2019, or if the UK parliament rejects it, then frankly, all bets are off.

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Assets worth $1tn to shift from UK to EU due to Brexit

Assets worth nearly £800 billion ($1 trillion) are being moved from Britain to new financial hubs in the European Union ahead of Brexit, consultancy EY said on Monday.

Britain, which is due to leave the bloc in March, has yet to approve a deal to avoid an abrupt severing of ties with the EU. Although the British parliament is due to vote on a proposed settlement next week, it is unclear if it will be approved.

“The closer we get to March 29th without a deal, the more assets will be transferred and headcount hired locally or relocated,” Omar Ali, UK financial services leader at EY, said.

EY has been tracking the Brexit plans of 222 financial firms since Britain voted in June 2016 to leave the EU. In its latest update to the end of November 2018, it said that 80 firms are considering or have confirmed relocating assets and staff.

The latest estimate from EY says that £800 billion in assets would move, a fraction of Britain’s £8 trillion banking sector.

Frankfurt Main Finance, which promotes the German financial centre, has said it expects €750 to 800 billion of assets to transfer there alone, largely during this quarter.

Around 2,000 new European roles have been created by financial services companies in response to Brexit, with Dublin, Luxembourg, Frankfurt and Paris the most popular locations, EY said.

Forecasts of hundreds of thousands of UK financial jobs moving to the EU have not materialised, and the Bank of England expects about 4,000 jobs to have moved by March 29.

“Whilst roles will no doubt move from the UK, many firms are only moving those employees deemed essential and are hiring locally given the expense of relocation,” Ali said.

Moves so far would be only the “tip of the iceberg” if there is a no-deal Brexit, EY said.

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Brexit has already created 3,500 technology jobs in Brussels

Thousands of tech jobs have moved to Brussels from the UK due to Brexit with expectations of more to come once Britain leaves the EU, according to a sector leader.

As many as 3,500 roles have already been relocated to the Belgium capital, said Juan Bossicard, president of Microsoft’s Innovation Centre in the city.

The stream of tech workers leaving the UK began in the summer of 2016, Mr Bossicard told the New Statesman.

“Since Brexit began, 3,500 jobs have moved here from the UK and we expect far more to come after Brexit officially happens,” he said.

Mr Bossicard said Brexit offered a “huge opportunity” for Brussels, and added the city has a lot of offer UK companies, including single market access and good links to other European countries.

Ahead of the EU referendum, job losses linked to Brexit were forecast to be in the hundreds of thousands but since the vote these projections have been curtailed.

However, the Bank of England has said that Britain is set to lose 5,000 financial services jobs by 29 March next year, a prediction backed by the Treasury.

MPs are set to begin debating Theresa May’s Brexit deal, with a vote on the agreement due to take place in the coming days.

On Tuesday, an official at the European Court of Justice said Article 50 could be unilaterally revoked, sending the pound up against the dollar and the euro.

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Brexit negotiators have agreed on a deal

The United Kingdom and European Union negotiating teams have agreed on a Brexit withdrawal deal which Prime Minister Theresa May will present to her Cabinet on Wednesday.

The UK government confirmed reports that May’s most senior ministers would read the details of the draft agreement on Tuesday evening before a special Cabinet meeting at 2PM on Wednesday.

An agreement between the UK and EU over how to prevent a hard border on the island of Ireland as a result of Brexit was reached during intensive negotiations held on Monday and Tuesday, sources told Advisory Excellence.

Brexit talks had for weeks been at an impasse over the question of how a hard border between Northern Ireland and the Irish Republic could be avoided no matter the outcome of negotiations.

UK and EU negotiators agreed that there would be a UK-wide “backstop” if they fail to negotiate a trade deal that negates the need for border checks on the island of Ireland before the end of the two-year Brexit transition period.

The backstop will take the shape of a UK-wide customs union with the EU, with Northern Ireland sticking to some of the European single market. This would guarantee no border checks between Northern Ireland and the Republic.

However, the backstop is set not to come with a fixed end date, as demanded by pro-Brexit MPs, but with a “review clause” for deciding when it can come to an end.

Brexiteers are concerned that this arrangement will leave the UK trapped in a customs union with the EU for years to come, unable to sign new free-trade deals. The UK would also have to continue following numerous EU rules in areas like the environment, employee protections and state aid.

Jacob Rees-Mogg, the leader of the European Research Group of pro-Brexit Conservative MPs, said the deal amounted to a “failure to deliver on Brexit” and would make a “vassal state” of Britain. His Conservative colleague Boris Johnson, the former foreign secretary, described the draft deal as “unacceptable,” adding, “For the first time in a thousand years, this place, this Parliament will not have a say over the laws that govern this country.”

Labour leader Jeremy Corbyn said his party would “look at the details” of the deal, “but from what we know of the shambolic handling of these negotiations, this is unlikely to be a good deal for the country.”

He added: “Labour has been clear from the beginning that we need a deal to support jobs and the economy — and that guarantees standards and protections. If this deal doesn’t meet our six tests and work for the whole country, then we will vote against it.”

The breakthrough in negotiations means EU leaders might be able to ratify the deal at a summit in Brussels later this month. EU ambassadors are set to meet on Wednesday to discuss the next steps in the Brexit process.

What’s next?

Brexit Secretary Dominic Raab reportedly belongs to a handful of Cabinet Brexiteers who are prepared to resign from the government if the Brexit withdrawal agreement doesn’t meet their demands.

Advisory Excellence reported last month that the Cabinet members Andrea Leadsom, Penny Mordaunt, and Esther McVey were all prepared to resign if May accepted a backstop with no fixed end date.

Leadsom said on Sunday that MPs would not accept a backstop which the UK cannot leave without the EU’s permission. She told the BBC: “I don’t think something that trapped the UK in any arrangement against our will would be sellable to members of Parliament.”

Downing Street understand that ministers could quit their positions over the details of the deal.

However, the prime minister has pressed on despite the high-profile resignations of former ministers like Johnson and David Davis and would be likely to do so again.

The European Research Group of pro-Leave Conservative MPs met following the news. A Tory MP who attended told Advisory Excellence the group was “absolutely shell-shocked” because none of May’s “promises” to it had been kept.

Trade Secretary Liam Fox, Leadsom, and Mordaunt “all campaigned with us for Brexit and need to stop this from ever reaching the Commons,” the MP said.

The biggest challenge facing May will come in the House of Commons’ vote on the deal.

Most Labour MPs are set to vote against it, as well as Conservative MPs from the pro-Brexit and pro-EU wings of the party, and possibly the 10 MPs from the Democratic Unionist Party which props up May’s government.

The DUP’s Nigel Dodds said the party “couldn’t possibly vote for” the deal. Pro-Brexit Conservative MP Iain Duncan Smith said May’s days are numbered as prime minister if she goes ahead with it.

Owen Smith, a champion of the anti-Brexit group Best for Britain, said the deal would leave “the British people worse off, and our country weaker as a whole” and urged May to put it to another referendum.

He added: “It’s not enough for May to secure support for her deal from Cabinet, or even from Parliament. This deal will dictate the course for our country for generations to come, and it must be put to the people for their approval or rejection.”

The leaders of the four main opposition parties, including Corbyn and The Liberal Democrats’ Vince Cable, have jointly written to May demanding a “truly meaningful vote” on the deal.

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EU business leader ‘optimistic’ Britain will strike Brexit deal

Christoph Leitl, President of Eurochambres (European Chambers of Commerce and Industry), wants the UK to remain tied to the Customs Union once it leaves the single bloc.

Mr Leitl warned that EU countries would need to recruit thousands of extra customs officers to beef up border security if Britain leaves the union.

He said: “If there is no customs union, that will mean that we will need 10,000 extra customs officials in Europe.

“Huge waiting times, huge traffic measures to handle the traffic jams, so to speak. Those who initiated it really did not think things through and act irresponsible in my view.

He added: “I say, stay inside the Customs Union, in the single market.”

The EU and Britain’s current Brexit position was “completely confusing”, Mr Leitl believed, but he was “optimistic that they can find an agreement”.

And with negotiations between Theresa May and the EU negotiating teams reaching deadlock, Mr Leitl admitted the current economic outlook was “insecure”.

But he warned Theresa May that failing to strike a trade deal with the EU would harm British business more than the 27 other EU states’ economies.

“If there is no customs union, we will need 10,000 extra customs officials. I say, stay inside the Customs Union, in the single market.” ~ Christoph Leitl

Mr Leitl said: “Fifty percent of all UK exports go to the markets of the European Union, but only five percent from the markets of the European Union to Great Britain.

“It must be in the vital interest of Great Britain to get out of politics, but to stay in business economically.”

The Austrian president of Eurochambres called for a “transitional regime for he issue of migration that concerns you so much.”

He added: “As always in such negotiations, it’s a poker game till the end, as solutions are being sought.

“Then, at some point the clock is stopped, and a solution is announced.”

Last week’s Brussels summit failed to break the deadlock with Mrs May accused of offering “nothing new”.

EU leaders and the British negotiating team remain divided over as solution to the Northern Ireland backstop to ensure a free-flowing border.

Theresa May has vowed not to accept a deal that keeps Northern Ireland tied to EU customs rules while the rest of the UK leaves.

At last week’s talks, she admitted she could seek an extension of a few months to a December 2020 transition date.

A showdown summit planned for November may now be pushed back to December.

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Chaotic Brexit will ‘hit property market for six’

The average house price across the UK inched up in September according to a leading survey, but experts are stepping up their warnings that a chaotic Brexit will hit a weak property market ‘for six’.

Property values rose by 0.3 per cent on August, according to figures by Nationwide, to reach on average £214,922 – although that disguised significant regional disparities with the capital again experiencing falling values. Annual price growth remained stable at 2 per cent, unchanged from the August rate which was the slowest in five years.

Jonathan Samuels of property lender Octane Capital said that despite a rising average price, the property market is ‘sterile at best’.

‘The little annual house price growth there is, is being driven as much by the lack of supply as it is demand,’ he added. ‘A strong jobs market and continued low borrowing rates are keeping transactions ticking over despite pressure on household finances, interest rate uncertainty and the ever-present threat that is Brexit.

‘Few would bet against the market staying in the same supply/demand rut for the rest of the year and well into 2019. A chaotic Brexit has the potential to hit confidence and the property market for six.’

That sentiment was echoed by Jonathan Hopper of Garrington Property Finders, although he noted that, while prices in the capital are still falling and have now notched up five straight quarters of decline, the slide is slowing.

‘For London house prices, there may be light at the end of the tunnel,’ he added. ‘The only problem is no-one is yet sure if the light is a Brexit-shaped train.

‘While many regional markets are relatively insulated from Brexit concerns, in London and the South East these fears are a real threat to the market.’

Lucy Pendleton of independent estate agents James Pendleton said that people are ‘waiting to see whether the Brexit gods deliver us a very bad Brexit or just a tumultuous one’.

Like other recent surveys, the Nationwide report showed that prices in London and the outer commuter belt continued to fall, while Yorkshire and Humberside and the East Midlands saw the strongest growth in the country.

Robert Gardner, chief economist at Nationwide, said overall national growth was stable in September, but said future developments depended on how broader economic conditions evolved, especially in the labour market, but also with respect to interest rates.

The Bank of England raised interest rates to 0.75 per cent from 0.5 per cent in August, but is not expected to make the next hike until next year.

‘Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low,’ Gardner added.

‘Overall, we continue to expect house prices to rise by around 1% over the course of 2018.’

Yorkshire & Humberside was the best performing region for the first time in more than a decade with a 5.8 per cent rate of growth, while the North saw the biggest annual price fall of 1.7 per cent.

In London, prices fell by 0.7 per cent last month – the fifth quarter in a row of declines, Nationwide said.

However, if we look at the change in prices since the peak of 2007 just before the credit crunch, the picture is reversed, according to the report.

Prices in London are still over 50 per cent ahead of its 2007 figure, while Wales, Scotland and the three regions of northern England are largely unchanged over the past decade.

Nationwide found that the East Midlands continued to see ‘relatively strong growth’, with prices up 4.8 per cent year-on-year, followed by Northern Ireland, which saw a pick up in annual price growth to 4.3 per cent and was the best performing amongst the home nations.

Wales saw a slight softening in growth, with prices up 3.3 per cent year on year. Price growth also slowed in Scotland, from 3.1 per cent in the second quarter to 2.1 per cent. England was the weakest performing nation, with prices up 1.4 per cent year on year.

It comes as Theresa May announced at the weekend plans for foreign buyers to be charged a higher stamp duty rate when they buy property in the UK.

The move will be seen as an attempt to neutralise the success of Jeremy Corbyn’s drive to attract young voters with pledges to provide more affordable housing and target high earners.

Mr Murphy at the CML said: ‘Any impact that the potential introduction of additional Stamp Duty on overseas buyers on investment property is likely to be more keenly felt in the capital, however how much of a bearing it will have in real terms is potentially up for debate.’