British Government’s ‘fruit picker visa’ is low-hanging fruit in tackling post-Brexit migration challenges

Cities will be hit hardest by shortfalls in EU migration – the Government’s new immigration system needs to reflect this

Gabriele Piazza, Researcher//Last week the Government announced a new temporary visa scheme to help fruit farmers avoid labour shortages, by enabling them to recruit up to 2,500 agricultural workers from outside the EU each year.

Given that the seasonal workforce of British farms is almost entirely made of workers from Eastern Europe, the scheme suggests a recognition by the Government of the need to prepare for the fall in EU migration to the UK as we prepare for Brexit.

However, as the findings of our recent report With or Without EU suggest, this initiative will do very little to address the most pressing post-Brexit labour challenges that places and businesses face as we leave the EU.

In particular, the report highlights three issues which should be key considerations of the Government as it designs it’s post-Brexit immigration system:

1. EU migration to the UK is largely an urban phenomenon

While rural firms such as fruit-farms will be severely affected by a fall in EU migration, in aggregate it is businesses in cities that will face the greatest challenges when it comes to post-Brexit recruitment. As our report showed, more than two thirds of EU migrants are located in cities, with London alone accounting for 37 per cent of all EU migrants in England and Wales.

Migrants tend to come to our cities because of the economic opportunities these places provide. And if the numbers of EU migrants coming to the UK continues to fall, urban employers will face particularly severe labour shortages. For example, in cities, one in every ten workers in the hospitality sector comes from the EU and this is much higher in Cardiff, Cambridge and London.

2. A sectoral approach to migration does not take into consideration the variation across places

While nationally some industries rely on EU workers more than others, a sectorial approach does not take into consideration how the reliance on migrant labour varies across places. For example, in Cardiff, the hospitality sector is the most reliant on the EU workforce, which account for one every three jobs in the sector, while in Northampton it was logistics (one every six).Pickers gather grapes at a vineyard (John Giles/PA)

Urgent action is required to ensure foreign fruit and vegetable pickers can continue to work in the UK post Brexit, ministers have been warned. The farming industry and MPs have called for clarity on the rules that will apply to seasonal migrants after March 2019. An estimated 80,000 seasonal pickers came to work in the UK last year and the industry expects that figure to rise to around 95,000 by 2019.

Tory MP Kirstene Hair, during a Commons debate, called for the introduction of a seasonal visa scheme as a matter of urgency, warning ministers that the industry could spiral into “turmoil”.

In certain places, reliance on EU workers is spread more equally across sectors. In Cambridge, EU migrants account for more than 15 per cent of workers in four sectors: hospitality (22 per cent), finance (19 per cent), admin and support activities (17 per cent) and professional services (16 per cent). Similarly in London, three sectors — hospitality (20 per cent), admin and support activities (16 per cent) and construction (16 per cent) — rely heavily on the EU workforce.  These factors illustrate the inadequacy of a sectoral-focused approach to addressing the EU labour shortages that places could face post-Brexit.

3. EU migrants do not only work in low-skilled industries

It is not just predominantly low-skilled industries like farming that rely on EU workers. In London and Cambridge, one every ten workers in professional services come from the rest of the European Union and these tend to be high-skilled jobs. And this means that the new migration system after Brexit should recognize the economic importance of both high-skilled and low-skilled migrants.

It’s great that the Government has recognised the impact that immigration restrictions will have on fruit picking and has moved to address this. But the much bigger challenge is for businesses in UK cities.

Having acknowledged the role that migrants play, it needs to move to mitigate the impact of restrictions on economies of our cities too. Our report offers ideas on how to do this – from extending Freedom of Movement for the next two years at least, to removing current caps on both high-skilled and low-skilled workers. These factors need to be key considerations for the Government in its upcoming white paper on post-Brexit immigration.

©centreforcities

 

Tony Blair: ‘Brexit’s doomed coalition will burst’

Former prime minister Tony Blair. Photo: PA / Stefan Rousseau
Former prime minister Tony Blair. Photo: PA / Stefan Rousseau

Leading French journalist Marion Van Renterghem meets Tony Blair, one of Remain’s Don Quixotes suddenly realising their task might not be as futile as it first seemed.

AIWA! NO!//From my side of the Channel, I initially saw you Remainers as some tribe of Don Quixotes, at war with windmills, assigning yourselves a quite impossible mission: to bring your compatriots back to wisdom.

Yet as time goes by, it seems that Quixotism might turn into something more achievable. The lies behind Leave are blowing up, the nation’s mood is changing, the move for a People’s Vote is growing. And you, Remainers, have become like little mosquitos, tormenting the government, creating a constant, inescapable noise which is giving ministers sleepless nights.

As a spectator, I am fascinated to witness such a spectacle: the officers who set the course are leaving the ship one after another (Farage has become a radio entertainer, David Davis and Boris Johnson have resigned, Jacob Rees-Mogg and others have cynically transferred their investments out of Brexitland); the captain herself, Theresa May, remains on the bridge – but hardly in control. And yet the ship carries on.

The UK today reminds me of the Fellini film E la nave va (And the Ship Sails On). In it, the ocean liner Gloria N sinks and the passengers evacuate by singing opera arias, after having triggered the First World War. As I watch, I’m amused. As a European, I’m bemused. And scared. Because your story is ours.

But there are mutineers on board the UK’s ship, and in recent months, I have been meeting with many of them: brilliant debaters emerging out of nowhere like Femi Oluwole; previously unknown voices like Gina Miller; older hands putting all their energy to shift opinion, like Nick Clegg, Andrew Adonis, Peter Mandelson… and Tony Blair.

In Paris, Brussels and London, I’ve been meeting regularly with your former prime minister – the most intelligent and reformist politician you have had in recent times, and the man you hate the most.

At one meeting, he stares at me like a martian and dissolves into laughter when I tell him that Europe’s misfortune – Brexit – stemmed from the fact that Britain did not lose the Second World War. I insist: the arrogance of you British and your current teenage crisis over ‘independence’ results from the fact that you were able to stand up to Hitler. “You, the British, look down on Europe because it was defeated, while you weren’t,” I tell him. “As a result, you live under the delusion that the EU isn’t of any use to you, except possibly to facilitate your business affairs.”

He stops laughing and admits: “The British tend to forget the importance of their European heritage. They wanted to join the Economic Community in 1973 only, and they didn’t understand that they should have been a founding member in 1951 or 1957. This would have changed everything.”

He adds: “My vision of Europe has always been political as much as economic. We signed the European Social Charter and I personally laid the foundations for a European defence policy in 2000. Europe must not be only a market, but a broader project that takes into account the social dimension of the market.” The trouble is, even then, he was one of the only Britons to think so.

Years of criticism have given Blair the expression of a Hamlet haunted by some spectre. His hair has whitened, the forehead has darkened. Yet his courtesy and cheerfulness seem to have resisted all the blows.

Even in France, politicians of the left are careful not to mention his name publicly, even though some keep on having meetings with him and envy his exceptional career in power: elected three times for his visionary reforms in the NHS and education and for his humanitarian interventions in international crises.

When campaigning against the Conservative, Nicolas Sarkozy, in 2007, socialist Ségolène Royal was blamed by her own party for praising Blair’s policy. Sarkozy himself was more open about their friendship, and said recently that he and Blair might work on some projects together. Emmanuel Macron, when a candidate for the French presidency, said that he was not ashamed to be compared to Blair – he didn’t insist too much, however, knowing this statement would act like a scarecrow to his voters on the left.

Anglo Saxon politicians can’t easily provide a simple template for French ones, who traditionally tend to celebrate the role of the state in the economy. Blair will always be considered a man of the right by the French left – just as he has come to be seen on the British left, since Corbyn shifted it further to the extreme.

Then there is Iraq. His burden, the tragic mistake that has thrown him into hell. His deep motivation for following George W Bush in his Baghdad mission remains a mystery. Was it strategic loyalty to the Atlantic alliance, as he himself explained? Or a kind of a religious revelation? A journalist told me he was present for a telephone conversation in January 2001 in which Bill Clinton urged his friend Blair to be “as close to Bush” as he had been to himself.

According to a YouGov poll earlier this year, only 17% of Britons have a favourable image of Blair. The most smiling of all prime ministers has learned to live with this hostility. “I can’t prevent people from hating me nor can I force them to listen to me,” he says quietly. “But they can’t prevent me from speaking out what I believe in.”

One of the main reasons – apart from Iraq – why Blair irritates you British so much might be that, in one crucial respect, he is so different to you: he is viscerally European.

By European, I mean supporting a community of political, ethical and social values – not only a single market, for one’s own interest. In that sense, Blair is the first genuine European to have occupied Number 10 since Churchill, even if – paradoxically – he is blamed on my side of the Channel for being too British and not European enough. Wasn’t he the strongest supporter to the enlargement of the EU in 2004 and the man who favoured intra-European immigration, both of which have contributed to today’s populism?

“The context was different,” he answers. “In 2004, the economy was booming. If I had been in power for the last ten years, I would have hardened the rules on immigration. It remains desirable and necessary for the economy, but we must hear the anxiety it arouses and regulate it. As for enlargement, can you imagine the eastern countries left behind, with the emergence of Russian nationalism? They would have been more vulnerable, and so would we.”

He pauses, looks for words by looking up to the ceiling and concludes: “The irony is that the single market and the enlargement are British initiatives – Thatcher, then Major, then me. The Brexiters now blame Brussels for what Great Britain wanted and supported… They want to ‘take back control’, but I can’t remember one single law imposed by Brussels that I would have been forced to apply. They want a ‘global Britain’ whereas only the European Union can be global, facing the three economic giants – USA, China, India.”

A silence again, eyes to the ceiling, then: “There are two irreconcilable groups among the Brexiters – those who are scared of globalisation and those who are scared of a too socialist Europe. If Brexit takes place, this coalition will burst.”

He adds: “The government wants to believe that this is a negotiation with the EU, but it is not. Either we stay close to the EU, then we wonder why there would be any reason to leave, or we leave the EU, then we accept to lose the benefits of the single market. There is no alternative.” The inevitable restoration of some sort of border between Northern Ireland and the Republic that Brexit will bring – an issue particularly pertinent for Blair, as an architect of the Good Friday Agreement – is, he says, a “metaphor of the impasse”.

The former prime minister was among the first to articulate calls for what is now called a People’s Vote. “We have the right to reconsider the issue once the deal between London and Brussels is known,” he told me, back in November 17. “It would not be a second referendum, but a new one, given the situation itself is all new. Brexit as it now looks like has nothing to do with what people have voted for. Until March 29 2019, it is not too late.” Back then, it was a fringe view. Not any more, if the polls are correct.

As a strong European myself, I couldn’t understand why you Remainers didn’t take the opportunity, at the last general election, to vote for one of the two only pro-European, UK parties you have: the Greens and the Liberal Democrats. Instead, you showed a Pavlovian link to the two-party system, and then blamed Jeremy Corbyn for his persistent silence on Brexit, despite his notorious, long-standing anti-European credentials.

Blair insists he voted Labour in June 2017 and pretends not to have given up hope that Labour will play the role of a centrist party – “but that looks increasingly unlikely,” he admits. As we would say in France, by the time Labour comes back to the centre hens will have teeth.

So does a new, centrist party remain a possibility for the UK? “The paradox,” Blair answers, “is that a majority of people would vote for a centrist policy – a strong market economy together with a liberal society, justice and mobility not for the few but for the many – while both the two main parties can only be taken over from outside the centre. That is why they both are disappointing and deceitful.” What happened in France with Emmanuel Macron, who broke through with a new political party, En Marche, by blowing up the old ones, can hardly be replicated in the UK’s parliamentary system. But old French politicians thought the same regarding French politics. And all laughed at Macron when he launched his attempt. So perhaps, with Brexit, it should be worth a try in the UK.

The countdown is running in the UK, and across Europe, towards March 29, 2019. Whatever the outcome will be, the anger that caused Brexit remains. As in all European countries, British society is cut in half. In my meetings with politicians from different parts of Europe in recent months, I have never heard such uncertainty. In such uncertainty, as regards Brexit and the possibility of a second referendum, Blair can find some optimism – or pessimism, depending on how you look at it. “Everything is possible,” he says

Marion Van Renterghem is a reporter-at-large and a writer. This article has been partly adapted from a piece published in Vanity Fair France online

BRITISH PRIME MINISTER Theresa May wrong to present UK’s choice as her deal or no deal

ANALYSIS by LUKE LYTHGOE |Crashing out of the EU with no deal is terrible. But the prime minister’s plan to turn us into a rule-taker is miserable. We can do better: cancel Brexit entirely.imf lagard
The latest stage in Theresa May’s battle with Boris Johnson – over the Irish “backstop” – is, as Nick Clegg told the BBC today, an “insult to the intelligence of British voters”. It ignores a perfectly good solution: if we stay in the EU, there don’t have to be customs checks between Northern Ireland and the Republic of Ireland, or in the Irish Sea.
Because the prime minister has failed to come up with a workable solution, the EU has devised its own compromise aimed at “de-dramatising” frontier controls between the EU and Northern Ireland. This would trust UK officials – rather than the EU’s – to carry out checks on goods moving from British ports to Northern Ireland, deploying technology such as tracking with barcodes and signing companies up to “trusted trader” schemes, according to the FT.

Petition: We, The People, demand a People’s Vote on the Brexit deal.2018-09-14 (5)

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But this is still in effect a customs border in the Irish Sea, with a different regime between Northern Ireland and the rest of the UK – albeit with checks happening in firms’ warehouses, at ports or on ferries. That’s exactly what the DUP, which props up May’s government, says it cannot abide. It’ll take quite the feat of de-dramatisation to convince it.

Meanwhile, Johnson is right to attack the prime minister’s Chequers proposal for turning us into rule-takers. He says in the Telegraph that this would be the “first time since 1066 our leaders were deliberately acquiescing in foreign rule”. This won’t just bother the former foreign secretary. It will stick in the craw of patriotic pro-Europeans too.

However, Johnson’s assertion that naive Brexiters such as himself were “taken in” by the December deal on Ireland, which he agreed to as a cabinet minister, is a bit rich. It looks more like he wasn’t on top of the detail.

The other problem Johnson has is that his own “solution” – which involves checking goods away from the border – will not work. May was right when she told the BBC: “You don’t solve the issue of no hard border by having a hard border 20km inside Ireland.” That’s still a hard border, with physical customs infrastructure – exactly what everyone has been trying to avoid to maintain Irish peace.

Given the bankruptcy of what hardline Brexiters have to offer, May says it’s either her deal or no deal. But of course there is a third way. Give the decision back to the UK public. If they don’t want to choose between either being rule-taker or jeopardising peace in Ireland, they should be given the chance to say so.

United Kingdom: Staff Concluding Statement of the 2018 Article IV Mission

Beyond Brexit, the UK faces a range of other economic challenges. These include persistently lackluster productivity growth, large public debt, and the wide current account deficit. The UK’s sound macroeconomic framework, regulatory environment, and deep capital and flexible labor markets will be advantages in implementing reforms to address them.

September 17, 2018

A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF’s Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.

The authorities have consented to the publication of this statement. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.

Outlook and Risks

Despite strong policy frameworks and implementation, growth has moderated since the European Union referendum in June 2016. Uncertainty over the terms of the EU withdrawal has weighed on private sector activity. Above-target inflation following the sharp post-referendum sterling depreciation has slowed real income and consumption growth. Business investment has been lower than would be expected in the context of robust global growth and favorable financing conditions. The softening of domestic demand was partially offset by a higher contribution from net exports, supported by weaker sterling and strong external demand. Overall, growth fell to about 1¾ percent in 2016-17, moving the United Kingdom from the top to near the bottom of the G7 growth tables. The employment rate, however, continues to reach record highs.

The UK is set to exit the EU in March 2019 and aims to reach a broad agreement with the EU on their future relations by the end of 2018. Our projections assume timely agreement on a broad trade pact covering goods and some services, and a relatively smooth Brexit process thereafter. Growth is expected to remain moderate in the near term under this baseline, averaging about 1½ percent this year and next. With the economy operating at very low unemployment and household saving already at a very low rate, consumption growth will be broadly in line with subdued real income growth. Investment is also likely to remain constrained as long as Brexit uncertainty weighs on firms. A more disruptive departure from the EU could lead to a significantly worse outcome, especially if it were to occur without an implementation period. By contrast, an agreement featuring fewer impediments to trade than currently expected could buoy business and consumer confidence, leading to faster growth.

Brexit negotiations have yielded agreement in principle on a 21-month implementation period. If ratified, this would allow important additional time to prepare for the new relationship between the UK and EU. However, fundamental questions—such as the future economic relationship between the two and the closely-related question of the status of the land border with Ireland—remain unanswered. Resolving these issues is critical to avoid a “no deal” Brexit on WTO terms that would entail substantial costs for the UK economy—and to a lesser extent the EU economies—particularly if it were to occur in a disorderly fashion. While all likely Brexit outcomes will entail costs for the UK economy by departing from the frictionless single market that now prevails, an agreement that minimizes the introduction of new tariff and nontariff barriers would best protect growth and incomes in the UK and EU. Over time, new trade agreements with countries outside the EU could eventually pare some of these losses for the UK. However, such agreements are unlikely to bring sufficient benefits to offset the costs imposed by leaving the EU.

The UK government has taken a number of steps to prepare for the administrative and legislative changes that Brexit will require. The government has committed to act in several areas to provide continuity at the moment of departure from the EU. Parliament is in the process of transposing into UK law the legislative framework currently encompassed in EU laws, and the government has guaranteed EU program funding committed to projects in the UK before the end of 2020 and is working to ensure that the UK maintains access to critical items like medicines. A budgetary allocation of £3 billion has been established to help fund the costs of Brexit preparation, and thousands of civil servants have been hired to help shoulder the workload. Brexit preparations are a shared responsibility of the public and private sectors. The government has begun publishing technical notices setting out information to allow private stakeholders to understand what they would need to do in a “no deal” scenario, so they can make informed plans and preparations.

Nevertheless, the range of remaining issues to prepare for Brexit is daunting, underscoring the importance of securing an implementation period. The UK will have to bolster human, physical, and IT resources in customs and other services, and establish domestic agencies to replace EU ones. In addition, the government will need to renegotiate the hundreds of bilateral and multilateral international agreements to which it is now party via its EU membership. Many of the required tasks cannot be initiated until there is greater clarity on the future trade relationship with the EU or even until Brexit occurs. The massive scope of work that remains and the limited time before the UK exits the EU would likely leave preparations incomplete on departure day despite even the most determined efforts. This risks serious disruptions without an implementation period in place. Coordination and cooperation between the EU and UK on priority issues, such as ensuring air traffic continues to flow, would be to the benefit of both parties. Joint technical discussions between UK and EU experts could facilitate this process.

Beyond Brexit, the UK faces a range of other economic challenges. These include persistently lackluster productivity growth, large public debt, and the wide current account deficit. The UK’s sound macroeconomic framework, regulatory environment, and deep capital and flexible labor markets will be advantages in implementing reforms to address them.

Monetary and Fiscal Policies

After a cumulative 50 basis point increase in Bank Rate over the last 12 months, further withdrawal of monetary stimulus should await clear confirmation of a durable rise in domestic cost pressures. The inflationary impact of the post-referendum depreciation of sterling should continue to fade. At the same time, domestic inflation is likely to firm as the tight labor market pushes real wage growth above productivity growth. If excess demand pressures persist after domestic inflation has approached a level consistent with the 2-percent target, further gradual tightening of monetary policy would be warranted. However, policymakers should respond flexibly to data developments in an environment of greater-than-usual uncertainty. If negative surprises depress domestic demand, accommodative conditions should be maintained for longer. The scaling down of the Bank of England’s balance sheet should await the return of Bank Rate to a level from which it could be cut materially in the event of a demand slowdown, consistent with the Monetary Policy Committee’s current plans. Transparent and timely communication to guide market expectations continues to be essential.

Steady fiscal consolidation remains critical to comply with the government’s fiscal framework and to put debt firmly on a downward path. Fiscal consolidation over the last decade has substantially reduced deficits, but public debt remains relatively high from a cross-country perspective. Bringing the debt ratio down is important to create buffers that will allow the public finances to weather future shocks, as noted in the authorities’ welcome report on Managing Fiscal Risks . Accordingly, the recently-announced increase in public health spending should be financed from new revenue sources and/or offsetting spending cuts elsewhere in the budget. In the absence of offsetting measures, the margin against the cyclically adjusted deficit ceiling of 2 percent in 2020/21 would be significantly reduced, and the debt ratio would not decline in the medium term.

Brexit-related effects could exacerbate existing fiscal challenges. Each 1 percentage point decline of GDP leads to about a 0.4 percentage point increase in the budget deficit. Most analysts project output costs relative to a no Brexit scenario to be well above this. If Brexit disproportionately affects relatively tax-rich sectors like finance, the revenue impact could be even larger. Reduced migration will also have a negative budgetary impact, as EU migrants tend to be both younger and better skilled than average, making them net contributors to the fiscal accounts. These factors exceed any savings from lower net EU contributions and will come on top of longer-term budget pressures that pre-date Brexit.

As in many advanced economies, population aging is likely to put considerable pressure on the budget over the longer term. The Office for Budget Responsibility estimates that public spending on health care and pension benefits will increase by a cumulative four percentage points of GDP between 2023 and 2043. Opportunities for further efficiency gains in the NHS should be explored, and the elimination of the “triple lock” could lead to important savings over time on pensions. While the government should continue to seek the best value for money in public spending, after several years of primarily expenditure-based consolidation identifying further efficiency gains could become difficult. Absent a fundamental rethinking of the size and role of the public sector, revenue measures will therefore need to occupy a more prominent place in deficit reduction efforts going forward.

More broadly, tax reforms can reduce economic distortions and increase fiscal space. Scaling back preferential VAT rates would increase tax neutrality. Better aligning the tax treatment of employees and the self-employed would improve fairness and bring the tax system in line with evolving employment practices. Financial stability could be enhanced by reducing the tax code’s bias toward debt, for example by adopting a tax allowance for corporate equity. Rebalancing property taxation away from transactions and toward values would boost labor force mobility and encourage more efficient use of the housing stock.

Contingency Planning

Under a disorderly Brexit scenario, policies should seek to safeguard macroeconomic and financial stability. In the event of sharp declines in sterling and other asset prices, the Bank of England would need to ensure that the financial system has adequate liquidity. The implications of Brexit for monetary and fiscal policy are uncertain: the response will depend on the relative shifts of supply and demand, as well as the extent of sterling depreciation. The fiscal framework provides flexibility to support the economy, for example through bringing forward infrastructure spending. However, the space to respond could narrow if the shock were to significantly raise interest rates on public debt. Any easing of fiscal policy should therefore be temporary and embedded in a credible medium-term fiscal consolidation plan. A permanent shock to output would require an eventual adjustment of revenues or spending.

Financial Sector Policies

Bank balance sheets have continued to improve. Capital, leverage, and liquidity positions are strong. The countercyclical capital buffer requirement will increase to 1 percent in November, reflecting the Financial Policy Committee’s view that apart from Brexit-related risks the financial sector is operating in a standard risk environment. The Bank of England’s 2017 stress tests indicate that the major UK banks are all sufficiently well-capitalized to withstand simultaneous UK and global recessions, large falls in asset prices, and stressed misconduct costs. Banks subject to the ringfencing requirements are on track to meet the January 2019 deadline. With the recent adoption of the MiFID II framework, investor protection has been strengthened and transparency increased.

Without continued supervisory vigilance, relatively easy financing conditions could lead to increasing prudential risk. Household and corporate leverage have started to edge up, although they remain below pre-crisis levels. Total lending is growing broadly in line with GDP. However, consumer credit—the quality of which is more sensitive to income and interest rate shocks—continues to rise much faster than income, despite recent tightening of underwriting standards. Further policy action may be needed if high rates of growth persist, including additional increases in bank-specific capital buffers and steps to enhance the oversight of nonbank financial institutions. Other areas of potential vulnerability include the valuation of commercial real estate and to some extent housing. CRE prices remain high and have continued to rise after a short-lived dip following the EU referendum. The ratio of new mortgage loans at relatively high loan-to-income ratios has increased somewhat in the last two years, although the share of highly indebted households remains low. Supported by strong risk appetite in global markets, market-based corporate borrowing has expanded rapidly, with significant foreign investment in CRE and leveraged loans. The authorities’ effort to collect information on leverage outside the banking system and assess potential vulnerabilities is welcome. More broadly, the commitment of the FPC and Prudential Regulation Authority to continue to implement robust prudential standards that would maintain a level of financial sector resilience post-Brexit that is at least as great as that currently planned is commendable.

The UK’s current account deficit has narrowed, but it remains large in absolute terms and financing trends are a potential concern. Higher returns on UK-owned assets held abroad and higher revenues from net trade led to a narrowing of the current account deficit to 3.9 percent of GDP last year. This is a significant improvement over the deficits of around 5 percent of GDP that prevailed in recent years. However, the share of external financing that is short-term and therefore subject to financing risks—such as wholesale deposits in banks—has risen. Associated stability risks are limited by the strong capital and liquidity positions of UK banks, as well as the high credibility of the fiscal and monetary policy frameworks. Nevertheless, this trend should be monitored carefully, especially in an environment where rising US interest rates and concerns about the UK’s long-term growth potential may affect refinancing prospects. Continued fiscal consolidation should help further reduce the current account deficit over time.

The UK has taken a proactive approach to supporting the Brexit preparations of regulated financial institutions and mitigating financial stability risks. Potential risks include disruptions to the provision of financial services, shifts in asset prices and liquidity conditions, and a deterioration of balance sheets from macroeconomic shocks. The Bank of England has stated that its 2017 annual cyclical stress test suggests the major UK banks are sufficiently well-capitalized to withstand a range of macroeconomic risks that could be associated with Brexit. The UK government is focused on identifying and mitigating potential stability risks that could arise during the Brexit transition. For example, legislation is being prepared to create temporary permissions and recognition regimes to allow EEA financial services firms, funds, and central counterparties to continue their activities in the UK for a time-limited period after the UK has left the EU, providing a backstop in case a Brexit agreement is not ratified.

Regulatory and supervisory cooperation between UK and EU authorities will be crucial to maintaining the integrity of cross-border financial transactions . A technical working group, chaired by the heads of the Bank of England and the European Central Bank, has been established to discuss Brexit-related risk management. As suggested in the recent Euro Area FSAP, the EU and UK authorities should work together to ensure legal continuity in insurance and derivative contracts and proper data sharing to avoid cliff-edge effects, which could potentially be highly disruptive.

Structural Policies

Over the long run, UK living standards will predominantly depend on productivity growth. Productivity levels and growth in the UK lag those in peer economies, meaning that output growth has depended largely on increases in employment. The scope for substantial future employment gains is limited, as the unemployment rate is around historic lows and the rate of net immigration of workers from the EU is already falling. Therefore, economic performance will increasingly depend on the ability of firms to raise output per worker. Here, too, the implications of Brexit are largely negative: reduced migration will result in less efficient matching of jobs and workers, while a more closed UK economy will be less competitive and a less attractive environment for foreign direct investment.

Further sustained policy efforts are needed to support productivity and help reduce income inequality and regional disparities. Inequality has declined since the crisis, but remains high compared to other advanced economies, and intergenerational income mobility is low. At the regional level, disparities are large: the UK has some of the most productive regions in any advanced economy, but also some of the least productive. Several initiatives have been announced in recent years to improve infrastructure and human capital. The introduction of T-level qualifications and the apprenticeship levy aim to raise job-specific skills and to promote higher level technical skills and reduce regional disparities in skills provision. It will be important to monitor and evaluate the effectiveness of these programs once they have been in place for some time. A £31 billion National Productivity Investment Fund has been created, which targets investments in transport, housing, digital, and research and development. Infrastructure investment is targeted to increase by over 50 percent from 2012/13 to 2020/21, and the fiscal remit for the National Infrastructure Commission aims for sustained public infrastructure investment of 1 to 1.2 percent of GDP over the long-term. An expert review will examine competition challenges in the digital economy and recommend appropriate policy responses by early 2019.

Boosting economic opportunities for women would promote growth and equity. The female participation rate in the UK, at 74 percent, is already relatively high by advanced economy standards. Recent government initiatives have sought to increase it further by improving government support for childcare costs and doubling the free childcare available to 3- and 4-year-olds of eligible working parents. The government has also introduced free childcare for disadvantaged children aged 2. Nevertheless, fully closing the participation rate gap would boost output by around 5 to 6 percent in the long run. Policies to facilitate job sharing and compressed work schedules could be helpful in this regard. Efforts should also focus on measures to close the gender pay gap (which stands at 10 percent on average for full-time employees) and to increase representation of women in senior positions and in corporate boards, where they remain relatively few in number. Recently-enacted legislation requiring larger firms to make public data on gender pay gaps has helped focus attention on pay disparities.

Brexit will lead to important shifts in the structure of the UK economy and policies could play a role in facilitating the transition. Changes in the trade and migration regimes are likely to vary in effect across industries and regions. Government policies could help smooth the flow of workers both geographically and across economic sectors. In particular, the increased use of active labor market policies, including support for re-training such as the National Retraining Scheme, policies that promote entrepreneurship, higher investment in research and development, and reforms to promote housing supply and mobility could facilitate the transition and reduce the associated costs. Policies should seek to support workers and not particular jobs or sectors.

Corporate transparency has further strengthened. Measures to verify beneficial ownership information of UK companies in the People with Significant Control register continue to be developed and implemented. Financial institutions should be required to report discrepancies in the PSC register. The proposal for a register for foreign owners of UK real estate is also welcome and should include verification measures. The new Office for Professional Body Anti-Money Laundering Supervision is expected to improve consistency of professional body AML supervision in the accountancy and legal sectors, especially firms that provide trust and company services. Continued exchange of ownership information on companies and trusts among the UK authorities, Crown Dependencies, and British Overseas Territories is important.

Britain won’t pay £39bn Brexit ‘divorce’ bill if there is no deal, Raab insists as he ramps up pressure on Brussels

a man in a suit standing in front of a building
© Provided by Independent Digital News & Media LimitedBritain will not pay its £39billion “divorce” bill if a Brexit deal is refused, Dominic Raab has insisted as he stepped up pressure on Brussels to accept the Chequers plan
AIWA! NO!//The Brexit Secretary’s tough talking comes after Prime Minister Theresa May made clear that without a deal the UK’s “position changes” on the exit settlement.

Ramping up the pressure further on the bloc, Mr Raab said “there is no deal without the whole deal” ahead of his crunch talks with Michel Barnier later on Thursday.

Writing in the Daily Telegraph, he said the Government wanted to reach a good agreement, but added: “It will require our EU friends to match the ambition and pragmatism we have demonstrated.

“If that doesn’t happen, the UK will manage the challenges of no-deal, so we make a success of Brexit.”

The Brexit Secretary also accused people who warned about shortages of food and medicines after a no-deal withdrawal of “scaremongering”.

ERG chair Jacob Rees-Mogg earlier described the proposal as a “dying duck in a thunderstorm” in an interview with Channel 4 News.

Theresa May in a blue shirt: theresa-may234a.jpg
© Provided by Local News RSS EN-GB theresa-may234a.jpg

The move to release a fresh raft of technical Brexit papers comes amid speculation leaving the EU without a solid agreement could see the return of levies for using mobile devices on the continent.

The pro-Europe Best for Britain campaign said the re-imposition of roaming charges could cost business people visiting the EU up to £778 a month.

Other areas covered by the documents will include the impact of a no deal scenario on standards relating to the environment and vehicles.

a man sitting at a table: boris-234a.jpg
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The papers will be published after a special meeting of the Cabinet focused on how a no deal outcome could be handled. It comes after Boris Johnson, centre, launched a fresh attack on Mrs May’s Brexit plan

Mr Raab, who will hold talks with EU chief negotiator Michel Barnier in Brussels on Friday, said: “With six months to go until the UK leaves the European Union, we are stepping up our ‘no deal’ preparations so that Britain can continue to flourish, regardless of the outcome of negotiations.

“These technical notices are part and parcel of our sensible, pragmatic approach to preparing for all outcomes.

“Getting a deal with the European Union is still by far and away the most likely outcome, and I will continue to champion our Chequers proposals with Michel Barnier as the best way of securing the deep and special partnership we want with the EU.”

Liberal Democrat MP and Best for Britain supporter Layla Moran said: “The cost of a hard Brexit on British travellers is becoming abundantly clear.

“Millions of people are facing higher costs to make calls and texts abroad because of the Prime Minister’s botched Brexit plans.”

UNITED KINGDOM – Britons would vote to stay in EU: Poll

Pro and anti Brexit demonstrators face off outside the Houses of Parliament in central London on September 5, 2018. (AFP photo)
Pro and anti Brexit demonstrators face off outside the Houses of Parliament in central London on September 5, 2018. (AFP photo)

bY CRIMSON TAZVINZWA//Most Britons would choose to stay in the European Union if given the option again, according to a new opinion poll. 

The poll, released on Wednesday, showed 59 percent of voters would now vote to remain in the EU bloc, versus 41 percent who would opt to leave. The findings were published in an academic-led report by research bodies NatCen and the UK in a Changing Europe.

This latest poll showed a six-point swing away from Brexit, and the highest support for EU membership in any survey conducted since the Brexit referendum was held in 2016. That poll resulted in 52% of Britons voting to leave and 48% voting to stay.

However, despite the new poll, the country remains deeply divided over the issue.

Deborah Cairns, the Chair of the Enfield and Haringey pro-Brexit United Kingdom Independence Party (UKIP), told Press TV: “I believe, in fact, that it is very much the other way around, people having seen the high-handed tactics of the EU. This poll was skewed and included people that didn’t even vote in the original 2016 referendum.”

No country has ever left the EU bloc since its inception, so the effects Brexit will have on the UK’s economy and society are open to debate.

Even those who want to leave the EU are divided between those who favour a “hard-Brexit,” which would see the UK leave without having any formal legal relationship with Europe, while Theresa May’s government is veering towards a “soft Brexit”, which would see the UK maintain ties to the EU economic bloc.

Opposition Labour leader Jeremy Corbyn made his views clear on Wednesday, telling Prime Minister Theresa May that her Brexit negotiation plan was “dead, already ripped apart by her own MPs.”

Opposition Labour leader Jeremy Corbyn

Meanwhile, former UK Foreign Secretary turned Conservative backbencher, Boris Johnson, also attacked May’s plan, claiming Britain is waving a “white flag” with the EU and that talks with Brussels are a “fix.”

The UK’s Brexit negotiator, Dominic Raab, has been engaged in lengthy talks with EU chief negotiator Michel Barnier since last week hoping to reach an agreement before the deadline in March 2019.

Raab will hold further talks on Thursday following comments made by Barnier over the weekend that he “strongly opposes the British proposal,” raising further doubts over May’s strategy.

U.S., EU Warn Ukraine Ruling Endangers Press Freedom, Corruption Fight


Ukrainian journalist Natalya Sedletska (file photo)
Ukrainian journalist Natalya Sedletska (file photo)
AIWA! NO!//The United States, the European Union, and international media watchdogs have expressed concern over a Ukrainian court ruling that gives the authorities access to the cellphone data of an RFE/RL investigative reporter spanning a period of 17 months.

The court decision could have “a chilling effect on press freedom and anticorruption efforts in Ukraine,” the U.S. Embassy in Ukraine said in a tweet on September 5, after a Kyiv court approved the prosecutor-general’s request to allow investigators to obtain information from mobile service providers about calls to and from Natalya Sedletska.

Last Month’s court ruling stems from a criminal investigation into the alleged disclosure of state secrets to journalists in 2017 by Artem Sytnyk, director of the National Anti-Corruption Bureau of Ukraine.

Sedletska is the host of Schemes, the award-winning anticorruption TV program by RFE/RL’s Ukrainian Service and Ukrainian Public Television.

‘Very Serious Questions’

The program reported on several investigations involving senior Ukrainian officials, including Prosecutor-General Yuriy Lutsenko.

Maja Kocijancic, the spokeswoman for EU foreign policy chief Federica Mogherini, said that the court ruling “raises very serious questions.”

“No decision should violate basic freedoms of the media nor international journalistic standards such as the protection of sources of journalists,” Kocijancic said, adding that investigative journalism “contributes significantly to the fight against corruption in Ukraine.”

In Vienna, the Organization for Security and Cooperation in Europe’s (OSCE) media-freedom representative, Harlem Desir, said that investigative journalism“plays the essential role of a watchdog in societies and journalists must be able to protect their sources.”

Earlier, the New York-based Committee to Protect Journalists (CPJ) called the court’s ruling “an affront to the principle of press freedom that the Ukrainian government purports to uphold.”

Meanwhile, Ukrainian journalist Kristina Berdynskykh said on September 5 that a court had also granted Ukraine’s authorities access to nearly a year-and-a-half of her cellphone data.

“Escalating the situation further, a Ukraine court granted the prosecutor-general’s office access to phone records of another journalist Kristina Berdynskykh. This must stop,” CPJ tweeted.

The media watchdog Reporters Without Borders (RSF) ranked Ukraine 101st out of the 180 countries in its Press Freedom index.

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