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: ‘No preferential deal for EU citizens’

EU citizens will NOT get preferential treatment after Brexit, says Shadow Home Secretary Diane Abbott. Non-EU citizens, including those from Commonwealth nations, are treated as “second-class migrants” under the current system.  She said: “Once trade deals have been struck and established there will be no unequal treatment based on which countries people are coming from.‘No preferential deal for EU citizens’

British PM May says EU and non-EU nationals will have the same immigration rights after Brexit

AIWA! NO! //EU and non-EU citizens, including those from India and Australia, could have the same immigration rights after Brexit, British Prime Minister Theresa May indicated on Monday.
Asked whether the EU would get a preferential deal on immigration rights that would mean they would continue to be able to travel to the U.K. more easily, the Prime Minister told BBC Radio 4 in an interview that one of the messages from the referendum was that people “didn’t want a situation where they could see people coming having those automatic rights to travel to the U.K. and a set of rules for people outside the EU…”

“What we will be doing is putting forward a set of rules for people from the European Union and people from outside the EU.”

The issue of preferential rights for EU citizens has been a controversial issue throughout the referendum campaign and afterwards. During the referendum campaign, some politicians courted voters from the South Asian diaspora with promises that Brexit — by enabling Britain to restrict the rights of EU citizens to travel to the U.K. — could provide the government with the capacity to ease rules for those from non-EU countries.

Level playing field

Until recently, the Prime Minister had appeared to keep the possibility for preferential rights for EU citizens open. “We will decide who will come into this country,” she said on Monday.

In a recent interview with Sky News, International Trade Secretary Liam Fox said it was not a question of increasing immigration for non-EU citizens but to ensure that a “level playing field” was created to ensure that non-EU citizens would have a “better chance of getting access” to the U.K. within the government’s immigration targets.

The Prime Minister has faced growing pressure over her Brexit plan — which has come to be dubbed as the “Chequers Plan” (after the location at which it was forged) that would result in Britain maintaining a common rulebook for goods, including agricultural products, with the EU after Brexit. However, the plan faced criticism from within her own party, and triggered the resignation of Foreign Secretary Boris Johnson, who recently referred to her plans as a “suicide vest”.

The Prime Minister’s language had to be seen as nothing but rhetoric, says Lord Karan Bilimoria, a cross-bench member of the House of Lords, and a vocal critic of the government’s Brexit strategy, who is part of the growing push for putting the terms of the government’s Brexit deal to the British people in a second referendum.

He argues that the government will have little choice but to maintain preferential access for EU citizens, given the practical needs of the U.K. economy, while at the same time making concessions that would open up immigration policy to non-EU countries. “This has to be seen in the same light as the Ms. May’s wider approach to Brexit, and the so-called three lines she set, which are now looking decidedly faded pink.”

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.

Theresa May warns ‘rebellious’ Tories: ‘It’s my deal’ or ‘no deal’

BY CRIMSON TAZVINZWA//LONDON (Reuters) British Prime Minister Theresa May cautions Tory rebels that unless they support her potential Brexit deal with the EU then they will face a no deal.MAY AFRICAThe United Kingdom is due to leave the EU on March 29 and yet little is clear: There is, so far, no full exit agreement and some rebels in May’s Conservative Party have threatened to vote down a deal if she clinches one.

“I think that the alternative to that will be having no deal,” May told BBC TV.

The fate of May’s government and her Brexit plan is in doubt because it is unclear whether she could command the 320 votes she needs in the House of Commons, the lower house of the British parliament, to approve a deal.

Recent signals from Brussels have buoyed hopes that the United Kingdom and the EU can agree and approve a proper divorce agreement before the UK leaves on March 29, though the sides are still divided on about one fifth of the detail of a deal.

But many business chiefs and investors fear politics could scupper an agreement, thrusting the world’s fifth largest economy into a “no-deal” Brexit that they say would weaken the West, spook financial markets and block the arteries of trade.

As Britain now faces a choice between a bad Brexit deal or a damaging “no-deal” Brexit, voters should be given another referendum, London mayor Sadiq Khan said.

REVISED DRAFT

May’s former foreign minister, Boris Johnson, attacked May’s Brexit plans.

“If the Brexit negotiations continue on this path they will end, I am afraid, in a spectacular political car crash,” Johnson wrote in the Daily Telegraph newspaper.

May’s proposals, named for a country house where they were hashed out in July, call for free trade of goods with the EU, with Britain accepting a “common rulebook” that would apply to those goods.

“The whole thing is a constitutional abomination, and if Chequers were adopted it would mean that for the first time since 1066 our leaders were deliberately acquiescing in foreign rule,” Johnson said, referring to the 11th Century invasion which established Norman rule over England.

Johnson scolded May for her handling of the Brexit negotiations on the future of the border between Northern Ireland and the Irish Republic, the only land border between the EU and the United Kingdom after Brexit.

The Times newspaper reported that the EU’s chief negotiator, Michel Barnier, is working on a new protocol text outlining how to use technology to minimize checks on the border.

Under the EU plan, goods could be tracked using barcodes on shipping containers under “trusted-trader” schemes administered by registered companies, the Times reported.

Reuters reported on Sept. 12 that EU officials were working on a sensitive Irish protocol to the draft Brexit treaty with Britain, as part of what Barnier has called efforts to “de-dramatize” the issue and get a deal.

The proposals are to be circulated to European governments after the Conservative Party conference which starts on Sept. 30, according to the Times.

The “revised draft of the Northern Ireland protocol”, according to a diplomatic note of talks between EU ambassadors, will propose that most new checks would not happen at any border, the Times said.

‘No-deal’ Brexit would complicate driving, data and roaming, UK says

But if there really is a general realisation among the EU27 that a no-deal Brexit on March 29 is possible – 50/50 or even 60/40 – and that this would be very bad for everyone, then the suddenly-important Salzburg summit next Thursday might yield hope for Theresa May.

© Reuters. Pro-EU demonstrators protest outside parliament in Westminster London
© Reuters. Pro-EU demonstrators protest outside parliament in Westminster Londo
By Andy Bruce and Kylie MacLellan

LONDON (Reuters) – Leaving the European Union without a divorce deal could increase Britons’ mobile phone roaming charges, upset data sharing and force motorists to get an international licence to drive in Europe, the government said on Thursday.

Recent signals from Brussels have buoyed hopes that the United Kingdom and the EU can agree and approve a proper divorce agreement before the UK leaves on March 29, though the sides are still divided on about one fifth of the detail of a deal.

But many business chiefs and investors fear politics could scupper an agreement, thrusting the world’s fifth largest economy into a “no-deal” Brexit that they say would weaken the West, spook financial markets and silt up the arteries of trade.

Britain has stepped up planning for the effects of such a departure and on Thursday published 28 technical notices covering the impact on areas ranging from environmental standards to certification for manufacturers.2018-09-14 (4)

A “no-deal” Brexit, the government cautioned, would make life for UK citizens and businesses more complicated, more expensive and more bureaucratic.

British businesses, for example, would have to rush to ensure they could still receive personal data about European customers, while many manufacturers would need to have their exported products retested by EU safety regulators.

Brexit minister Dominic Raab said a no-deal Brexit was unlikely, but that the United Kingdom would manage the challenges and eventually flourish.

Still, the notices offer a glimpse of just how complicated the government believes the divorce could become after 46 years inside the European club.

The notices, often a few pages per sector, also covered the implications for space programmes, trading in drug precursors and reporting CO2 emissions for new cars.

“YET ANOTHER WAIT”

The British Chambers of Commerce welcomed the notices as providing more clarity but said businesses needed more precision from government in order to plan for a no-deal Brexit.

“Businesses now face the frustration of yet another wait for further answers,” BCC Director General Adam Marshall said.2018-09-14 (3).png

“Many companies tell us they are deeply concerned by the impression that key information they need in order to prepare for change is being held back due to political sensitivities.”

For the public, Thursday’s notices covered more mundane issues; the government said British drivers might need to obtain an international driving permit to drive in the EU.

And it said surcharge-free roaming for mobile users could no longer be guaranteed after a no-deal Brexit, meaning consumers could be hit with higher charges to make calls, send texts and use mobile data when travelling in the European Union.

At a ministerial meeting to discuss the preparations, Bank of England Governor Mark Carney warned that British house prices would fall by 35 percent over three years in the event of a chaotic no-deal Brexit, The Times newspaper reported.

Carney said he would not be able to cut interest rates in such a scenario whilst finance minister Philip Hammond warned that he would not be able to use tax cuts to boost the economy due to the hit to the public finances, the paper said.

The BOE declined to comment.

Both sides need a broad overall agreement to keep trade flowing between the world’s biggest trading bloc and the United Kingdom, home to one of the world’s top two financial capitals.

A senior EU diplomat told reporters that EU leaders will discuss next week whether to hold a special summit on Brexit in November to give extra time to negotiate the deal with Britain.

He also said, when asked, that the EU was continuing contingency preparations for the event there was no deal.

Raab said the government would pay “substantially” less than the roughly 39-billion pound ($51 billion) Brexit bill if there was no agreement but that getting a deal was “still by far and away the most likely outcome.”2018-09-14 (5).png

But Moody’s Investor Service said the probability of a “no-deal” had risen and such a scenario would damage the economy, especially the automotive, aerospace, airline and chemical sectors.

The other 27 members of the EU combined have about five times the economic might of Britain. They also have a strong incentive to deny the UK a deal so attractive it might encourage others to follow the British example.

DEAL OR NO DEAL?

As May tries to clinch a deal with Brussels, she is facing rebels in her Conservative Party who say they will vote down any deal that fails to deliver a sharp break with the EU.

Raab told BBC radio he did not believe May’s government would lose a vote in parliament on the deal.

Michel Barnier, the EU’s chief negotiator, said on Monday that a Brexit deal was possible “within six or eight weeks” if negotiators were realistic in their demands.

Last month, the government published 25 technical papers out of a total of more than 80, which detailed how tariffs, financial services, state aid and pharmaceuticals would operate if Britain departs without a divorce deal.

Ever since the shock 2016 Brexit vote, major companies have been planning for Brexit, but chief executives say the scale of disruption from a disorderly Brexit is such that it is hard to prepare for.

Profit at Britain’s biggest department stores group, John Lewis Partnership, was wiped out in the first half as it was forced to match discounting by its struggling rivals on a fiercely competitive high street.

“With the level of uncertainty facing consumers and the economy, in part due to ongoing Brexit negotiations, forecasting is particularly difficult,” John Lewis said.

Brexiteers accept there is likely to be some short-term economic pain but say Britain will thrive in the longer term if cut loose from what they see as a doomed experiment in German-dominated unity and excessive debt-funded welfare spending.

Opponents of Brexit fear that leaving the bloc will weaken what remains of Britain’s global influence, further undermine its reputation as a haven for investment and hurt the economy for years to come.

Exchange Rate ($1 = 0.7629 pounds)

UNITED KINGDOM – Russia President Putin ‘ultimately’ to blame for Skripal, daughter Julia poisoning

Metropolitan Police Service/AFP / HOLondon has accused two members of Russian military intelligence for using Novichok to try to kill former Russian spy Sergei Skripal and his daughter Yulia

Britain said Thursday that Russian President Vladimir Putin had “ultimate” responsibility for a nerve agent attack on a former Russian double agent in England, as it prepared to brief the UN Security Council.

London has accused two members of Russian military intelligence of using Novichok to try to kill former Russian spy Sergei Skripal and his daughter Yulia in the southwestern city of Salisbury. Security Minister Ben Wallace said Putin bore ultimate responsibility for the poisoning. “Ultimately he does in so far as he is the president of the Russian Federation and it is his government that controls, funds and directs the military intelligence, the GRU, via his ministry of defence.” He told BBC radio: “I don’t think anyone can ever say that Mr Putin isn’t in control of his state…. And the GRU is without doubt not rogue.

“It is led, linked to both the senior members of the Russian general staff and the defence minister, and through that into the Kremlin and the president’s office.”

AFP / Laurence CHUFallout of nerve attack in Britain

Britain has previously pointed the finger at Moscow for the March 4 attack, sparking furious denials.

In the aftermath, Britain and its allies expelled dozens of Russian diplomats, prompting Russian to respond in kind. The United States also imposed fresh sanctions over the attack.

Britain will brief the UN Security Council later Thursday on its latest findings, with the meeting due to open around 11:30 am (1530 GMT).

Moscow on Wednesday again denied involvement in the case, accusing Britain of “unfounded accusations”.

“Instead of conducting an independent, objective and transparent investigation… London continues to engage in anti-Russian megaphone diplomacy, continuing its propaganda show,” the foreign ministry said.

– Cyber-war? –

The US ambassador to London, Woody Johnson, and the Australian government have offered their support for Britain’s stance against Russia.

Wallace said his government would seek to “maintain the pressure” on Russia “to say that the behaviour we’ve seen is totally unacceptable”.

Options include “more sanctions — we are obviously taking it today to the UN to present our case”.

AFP / Daniel LEAL-OLIVASA police officer stands outside the City Stay Hotel, where Russian suspects Alexander Petrov and Ruslan Boshirov put up in east London

However he noted that Russia would be there and would likely use its veto on any statement that might arise.

Amid reports that Britain was planning a response in cyber-space, Wallace said the Russians were the main operators behind attacks on British networks.

“We retaliate in our way… within the rule of law and in a sophisticated way, that they know the cost of what they do,” he said.

The Skripals survived the poisoning but remnants of Novichok found in a fake perfume bottle were picked up by a local man weeks later.

Charlie Rowley gave it to his girlfriend, Dawn Sturgess, who later died.

British prosecutors said Wednesday they had enough evidence to charge the two men identified as Alexander Petrov and Ruslan Boshirov with conspiracy to murder Skripal, attempted murder and the use of a banned chemical weapon.

They said they would not formally demand their extradition, as Russia does not extradite its citizens, but have obtained a European Arrest Warrant for the pair.

AFRICA – British Prime Minister Theresa May to outline ‘unashamed’ boost to Africa investment

by CRIMSON TAZVINZWA//Theresa May is to make an “unashamed” vow to ensure overseas aid spending benefits UK interests while also seeking to give private firms greater confidence to invest in Africa.

Theresa May said the UK could make a success out of leaving the EU without a deal
Photograph: POOL/Reuters

The Prime Minister will use a speech to outline her ambitions for the continent after arriving as part of a three-day trade mission to South Africa, Nigeria and Kenya.

Mrs May is expected to declare her desire for the UK to overtake the United States to become the G7’s leading investor in Africa by 2022, amid warnings of “greater conflict and an increased susceptibility to extremism” emerging if jobs are not created.

Downing Street believes helping young people in Africa secure jobs will stabilise the economy of their country while also reducing the likelihood of them undertaking risky journeys to Europe.

The PM is also expected to reassert the UK’s shift in strategy over aid spending – using the trip to encourage private sector investment alongside efforts to alleviate extreme poverty.

Britain’s overseas aid budget totalled £13.9 billion in 2017, an increase of £555 million in 2016 and in line with the legal commitment to invest 0.7% of national income in this area.

It has proven a controversial pledge among some Tory backbenchers, with successive international development secretaries vowing to use the cash to help develop trade against the backdrop of Brexit.

Mrs May is expected to use her speech to outline investment in Britain’s diplomatic network in Africa, with the use of trade experts to help encourage investment, amid growing influence on the continent from other countries including China.

G7 ambition

Speaking at the First National Bank in Cape Town on Tuesday, Mrs May is expected to say the private sector is key to driving growth in labour markets and “unleashing the entrepreneurial spirit” in Africa.

She will say: “However, for a variety of reasons the private sector has not yet managed to deliver the level of job creation and investment that many African nations need.

“So I want to put our development budget and expertise at the centre of our partnership as part of an ambitious new approach – and use this to support the private sector to take root and grow.”

Mrs May will add: “I am unashamed about the need to ensure that our aid programme works for the UK.

“So today I am committing that our development spending will not only combat extreme poverty, but at the same time tackle global challenges and support our own national interest. This will ensure that our investment in aid benefits us all, and is fully aligned with our wider national security priorities.”

Mrs May will outline her ambition for the UK to be the G7’s “number one investor in Africa” by 2022, adding Britain’s private sector should invest the billions that will see “African economies growing by trillions”.