Britain’s financial sector needs stability to secure its future, along with deeper access to the European Union market after Brexit than what non-EU countries normally get, a senior industry official said on Wednesday.
Britain is due to leave the bloc on March 29 but has yet to agree the terms of its divorce after parliament two weeks ago rejected the deal negotiated by Prime Minister Theresa May with the EU. On Tuesday parliament told May to renegotiate aspects of her deal, though the EU has ruled out any changes.
“We want markets to continue to operate smoothly, without disruption,” said Paul Manduca, chairman of TheCityUK’s advisory council told the promotional body’s annual dinner.
“As we get closer to March 29 the need for clarity is becoming ever more urgent.”
Manduca, who also chairs insurer Prudential, said the financial sector wants market access for both Britain and the EU that has more “depth and certainty” than the bloc’s existing “equivalence” trading regime.
The EU is Britain’s biggest financial services customer.
“Any new arrangements should be as robust as the EU regime that we have helped build as members. But we must also have the flexibility to ensure our regulatory system reflects the unique aspects of the UK economy and the global opportunities ahead,”Manduca said. TheCityUK had proposed “mutual recognition”, a broad form of EU market access based on each side accepting each other’s rules.
Brussels rejected this proposal and instead offered equivalence, a patchier, less predictable system of market access whereby the EU alone decides if a foreign financial firm can serve customers on its turf in limited areas of finance.
Many banks, insurers and fund managers in London have instead opted to open hubs in the EU by March to avoid potential loss of access to continental clients.
Manduca said that creating a stable and welcoming business environment and a globally competitive tax system will provide firms with the confidence they need to invest in Britain.
“We know markets take a long time to move elsewhere, but alongside the risks associated with Brexit, the large financial centers in Asia are rapidly emerging as genuine contenders to compete with us and New York,”Manduca told the event, which was attended by British finance minister Philip Hammond.
The prime minister will make a powerful speech on Monday – in the heart of Brexit UK, Stoke-on-Trent – that MPs “all have a duty to implement the result of the referendum”, because failure to do so would wreak “catastrophic harm” on “people’s faith in the democratic process and their politicians”.
Coming as it does from the most important and powerfully elected politician in the UK, this dramatic claim is worthy of careful consideration. What is it based upon?
Well it is founded on the premise, in her words, that “on the rare occasions when Parliament puts a question to the British people directly we have always understood that their response carries a profound significance”.
That is an uncontroversial statement – though it is worth adding the rider that under the UK’s unwritten constitution, referendums have “advisory” status, they do not mandate governments or Parliament in a binding way.
But May also points out that when her predecessor David Cameron wrote to voters just before the referendum campaigns began, he said “this is your decision; the government will implement what you decide”.
It is on those foundations that she argues that a vote against her Brexit plan on Tuesday night would be a betrayal of the British people.
But is that the inescapable logical conclusion?
The PM marshals as further evidence that “as we have seen over the last few weeks, there are some in Westminster who would wish to delay or even stop Brexit and who will use every device available to them to do so”.
That is where many MPs would see her as being mischievously disingenuous – because although there are MPs who hate Brexit in any shape or form, the Parliamentary action over the past few weeks has had a much narrower aim – namely to prevent a so-called no-deal Brexit.
The assorted forays by the likes of the senior Tories Sir Oliver Letwin and Dominic Grieve, and Labour’s Yvette Cooper, have been shaped not to blow up all or any Brexit, but simply the version by which the UK would leave the EU in a possibly chaotic way and at alleged great economic cost on 29 March this year.
It is in May’s conflation of her Brexit with any Brexit that she will anger and alienate both purist Brexiters and those who would rather the UK stays in the EU.
The important point is that there are many Brexiters who regard her own Brexit plan as betraying those who voted for Brexit.
And there are Remainers who argue that if the British people had known that Brexit would be her iteration they would never have voted for it.
Also, both sets of critics would point out something fundamental which is often overlooked – that in leaving on 29 March, we would be out of the EU without having much of a clue what kind of future trading relationship we would have with the EU, or how much commercial and lawmaking independence we would in practice enjoy.
In a bid to ward off the threat from Brexit, Britain’s biggest car maker Jaguar Land Rover is reportedly gearing to release its major turnaround plans in the new year.
According to reports, the car maker is expected to roll out its 2.5 billion pounds saving plan that could result in thousands of job cuts in the U.K.
Jaguar Land Rover, which currently employs 40,000 people in the U.K., has already laid off 1,000 temporary contract workers at its plant based in Solihull.
Following that, the company reportedly reduced working hours for some of its workers in the run-up to Christmas.
Now, reports claim that the company’s savings planis designed to help Jaguar Land Rover handle any potential Brexit threat, while also helping the company deal with dropping sales of diesel cars and overall sales decline in China.
In the three months to September, the company made a 90 million pounds loss – largely due to a decline in sales in China and Europe.
Then, in October, the carmaker announced its turnaround plan that would help the company save 2.5 billion pounds, including 1 billion pounds of cost cuts.
At the time, the company did not reveal the exact number of job cuts it was planning.
Recent reports, however, confirm that as part of the company’s plan, a large number of workers at the company’s i54 site at its Wolverhampton-based factory, where engines are manufactured, will be affected by the planned job cuts.
Jaguar Land Rover is expected to cut as many as 5,000 jobs.
Sources quoted in reports revealed that the company will release details of its cost-cutting plans in January 2019.
Commenting on reports over possible layoffs from its turnaround plan, Jaguar Land Rover released a statement saying, “Jaguar Land Rover notes media speculation about the potential impact of its ongoing charge and accelerate transformation programmes. As announced when we published our second-quarter results, these programmes aim to deliver 2.5 billion of cost, cash and profit improvements over the next two years. Jaguar Land Rover does not comment on rumors concerning any part of these plans.”
Prime Minister Theresa May said Monday that the postponed vote in Parliament on Britain’s Brexit agreement with the European Union will be held on 14 January, more than a month after it was originally scheduled and just 10 weeks before Britain leaves the EU.
But even as May insisted she could salvage her unpopular divorce deal, pressure was mounting for dramatic action — a new referendum or a vote among lawmakers — to find a way out of Britain’s Brexit impasse and prevent the economic damage of a messy exit from the EU on March 29 with no agreement in place.
Jeremy Corbyn, leader of the main opposition Labour Party, said he would submit a motion of no-confidence in the prime minister over her delays. Losing the vote on such a motion would increase the pressure on May, but unlike a no-confidence vote in the government as a whole, it wouldn’t trigger a process leading to the fall of the government and an early election.
No date was immediately set for the confidence vote, AP reported. The British government and the EU sealed a divorce deal last month, but May postponed a parliamentary vote intended to ratify the agreement last week when it became clear legislators would overwhelmingly reject it.
She tried to win changes from the EU to sweeten the deal for reluctant lawmakers, but was rebuffed by the bloc at a summit in Brussels last week. May’s authority also has been shaken after a no-confidence vote from her own party on Wednesday that saw more than a third of Conservative lawmakers vote against her.
May told lawmakers in the House of Commons on Monday that they would resume debate on the deal when Parliament comes back after its Christmas break the week of 7 January, with the vote held the following week.
“I know this is not everyone’s perfect deal,”May said. “It is a compromise. But if we let the perfect be the enemy of the good then we risk leaving the EU with no deal.”Opposition legislators — and many from May’s Conservative Party — remain opposed to the deal, and accused May of deliberately wasting time by delaying the vote for several more weeks.
“The prime minister has cynically run down the clock trying to maneuver Parliament into a choice between two unacceptable outcomes: her deal and no deal,”Corbyn said. A growing number of politicians from across the political spectrum believe a new referendum may be the only way to break the political logjam over Brexit.
But May told lawmakers that staging another referendum would ride roughshod over voters’ 2016 decision to leave the EU and “would say to millions who trusted in democracy that our democracy does not deliver.”
May’s deal is loathed both by pro-Brexit lawmakers, who think it keeps Britain bound too closely to the bloc, and pro-Europeans, who see it as inferior to staying in the EU. The main concern for pro-Brexit lawmakers is a contentious insurance policy known as the “backstop,” which would keep the U.K. tied to EU customs rules in order to guarantee the border between Ireland and Northern Ireland remains open after Brexit.
EU officials insisted at last week’s summit that the withdrawal agreement cannot be renegotiated, although they also stressed that the backstop was meant only as a temporary measure of last resort. May said she had had “robust” exchanges with other EU leaders in Brussels, but that the two sides were still holding talks about “further political and legal assurances” about the backstop.
European Commission chief spokesman Margaritis Schinas, however, said Monday that “at this stage, no further meetings with the United Kingdom are foreseen.” With Britain’s departure from the bloc just three months away, it remains unclear whether the country will leave with a deal or crash out with no deal— a chaotic outcome that could see economic recession, gridlock at U.K. ports, planes grounded and shortages of essential goods.
The Cabinet will discuss “no-deal” planning at its weekly meeting on Tuesday, with details to be announced soon of 2 billion pounds ($2.5 billion) in government funding to absorb some of the potential economic shock.
Pro-EU Cabinet ministers, meanwhile, are seeking to work with opposition politicians to find a way out of the morass. One suggestion is to give members of Parliament votes on a range of options — from leaving without a deal to holding a new referendum — to see if there is majority support for any course of action.
May’s spokesman, James Slack, said Monday that the government had “no plans” to hold such an indicative vote. But the idea has support in Cabinet. “We can’t just have continuing uncertainty and I think Parliament should be invited to say what it would agree with,” Business Secretary Greg Clark told the BBC.
He said, “I think businesses up and down the country would expect elected members to take responsibility, rather than just be critics.”
Taoiseach Leo Varadkar has said he thinks a Brexit deal can be done by November.
The Irish border is the most vexed issue still facing UK and EU negotiators.
The Republic’s premier warned the damage caused by talks failure to Britain and Ireland would be “immense”.
A special meeting of European leaders in Brussels has been mooted for November if the two sides are close to reaching agreement.
Mr Varadkar said: “I do think we’ll get there.
“I think we’ll get there in November because nobody wants us to end up with a no-deal scenario because the damage for the UK would be immense.
“The damage for Ireland would also be immense and it would have a serious impact on other countries like Belgium, Holland, and France and Denmark.
“So I believe we will get there in November but we are in unchartered territory.”
The EU has interpreted a backstop, agreed in principle between the UK and Europe in December, to mean that, in the absence of a trade deal, Northern Ireland would continue to follow EU rules relating to commerce and thus prevent the imposition of a hard Irish land border.
With Brexit posing as the biggest challenge to the City of London’s finance industry and Britain’s divorce from the European Union prompting banks to shift jobs out of the city – London’s position globally has taken a beating.
According to a new survey, London has lost the position as the world’s most attractive financial center to its biggest competitor – New York.
The Z/Yen global financial centers index, which ranks 100 financial centers on factors such as infrastructure and access to quality staff has ranked New York as the world’s most attractive financial center.
The survey’s authors pointed out that London’s ranking fell by eight points from six months ago – which was said to be the biggest decline among the top contenders.
Further, the surveyors noted that the drop reflected the uncertainty around Brexit.
Britain’s decision to leave the European Union has prompted banks to shift jobs out of the city to preserve access to Europe’s single market.
Further, experts have pointed out that Brexit has become London’s biggest challenge since the 2007-2009 financial crisis as it threatens banks and insurers who have established presence in the city — and would now lose access to the world’s biggest trading bloc, the EU.
Due to this, some of the world’s most powerful finance companies in London have begun moving staff to the EU to preserve the existing cross-border flow of trading after 2019.
A study published by Reuters in March said that around 5,000 roles are expected to be shifted or created in the EU from London by March next year – the date of Britain’s EU exit.
Mark Yeandle, the co-creator of the index pointed out, “We are getting closer and closer to exit day and we still don’t know whether London will be able to trade with all the other European financial centers.
“The fear of losing business to other centers is driving the slight decline and people are concerned about London’s competitiveness.”
Meanwhile, in the Z/Yen global financial centers index, New York took first place, followed by London, Hong Kong and Singapore.
Former Conservative leader William Hague has warned Britain faces the “most serious constitutional crisis” for at least a century if a Chequers-based Brexit deal is blocked.
Image: Willaim Hague
Following warnings from Steve Baker, the former Brexit minister, that up to 80 Tory MPs are prepared to vote down Theresa May’s proposals, if brought to the table, Lord Hague considered the worst-case scenario in a newspaper column.
“It would be no exaggeration to say this would be the most serious constitutional crisis in Britain for at least one century, possibly two,” he wrote.
“It is worth thinking about (the various scenarios) because everyone in Parliament who is enjoying making categorical statements about being against Chequers or against ‘no deal’ is now loading the revolver for a game of Russian roulette, with a lot more than Brexit at stake.”
Today, John McDonnell, the shadow chancellor, delivered a speech in Manchester at the Trade Union Congress’ annual conference.
Sir Elton John expressed disappointment over what he described as “lies and confusion” spread in the media about Brexit, adding that most British citizens did not understand what they voted for in 2016.
Speaking in an interview with Channel 4 News, the British singer said many Brexit-supporters were deceived with phony and ridiculous promises before the votes.
‘I doubt that Brits knew the truth about Brexit to start with,’ the glamorous music star said.
‘People in Britain got promises of something completely ludicrous and hardly economically viable. The brainwashing is now so complicated that I just don’t know what’s going on.’
The 71-year-old musician also described the vote for Brexit as “someone walking through Hampton Court maze blindfolded and being turned around 16 times trying to find a way.”
His words: ‘Brexit propagators made promises unrealistic promises…Something that wasn’t achievable with the current economic realities.
‘It is so confusing that there’s a new cereal called Brexit. But the truth is: you eat it and you throw up afterwards.’
In his statements, Sir Elton John acknowledged US president Donald Trump as a leader he believed to have the ability to end AIDS.
‘We have the drugs to stop this disease now and all it takes is for Putin, Trump, Merkel, Macron, Trudeau to say “let’s do one great humanitarian thing, let’s just end this scourge,’” the English rock singer said.
‘I am sure they can do it. It equally gets me frustrated,’ he continued, calling out Russia for growing cases of abuse against the LGBT community.
‘If people learn to embrace the uniqueness of human nature, we could get rid of the disease [AIDS] far quicker,’ he noted.
With expectations of unfavorable banking rules and regulations in post-Brexit UK, JPMorgan has warned that nearly 4,000 workers would be downsized.
Jamie Dimon, chief executive officer of the world-famous bank, said in an official statement that “heads will role” if the United Kingdom and European Union (EU) fail to agree on common banking rules.
Speaking in an interview with the BBC at the World Economic Forum in Davos, Dimon said he hopes to secure a Brexit deal that’s up to the status quo but stressed that more than a quarter of its entire workforce in the UK would be affected if expectations are not met.
JPMorgan is set to cut down an estimated 16,000 UK staff .
The giant American bank has thousands of staff working its Canary Wharf office, Glasgow, as well as in Bournemouth.
“If we can’t find reciprocal recognition of rules, and there are a lot of people who are mad with the Brits for leaving and want their pound of flesh, then it could be bad.
“…It could be more than 4,000,” Mr Davos added.
“We love London, we love working there. We’ve got, as you point out, huge efficiencies for us.
“Huge efficiencies for the eurozone too. But if they determine that you can’t have reciprocal trade practices and reciprocal regulations, it would be a lot.”
In the CEO’s explanation, JPMorgan is facing a challenge of reducing cost through staff reduction if the EU decides that Britain’s post-Brexit regulations are not “reciprocal.”
There are speculations that Britain’s financial services industry might not be able to stay in business within EU thanks to so-called regulatory equivalence, which also implies that rules in the UK’ are not less stringent or comprehensive compared to that of the EU.
The issue of employment around EU, and Britain retaining passporting rights after leaving the union, remains a quagmire for most Londoners, some of who now hope for some sort of favorable regulatory equivalence between the UK and the continent
According to The Independent, “equivalence” would effectively mean the UK transferring existing EU financial regulations onto its own statute book allowing banks and financial services companies to continue operations on both sides of the channel without breaking any rules.
However, trouble started during the interview when Dimon told BBC’s Simon Jack that JPMorgan would take drastic measure if the UK and EU can’t agree on a better arrangement.
“When asked if that outcome would represent a real threat to the future success of London as a financial center,”the BBC’s Simon Jack writes: “He gave a single word answer: ‘Yep.'”
While some companies in the financial services industry have said they will have to begin moving jobs imminently if the Government cannot give clarity on the post-Brexit situation, JPMorgan, which counts London as the center of its European hub, says it has also considered relocation.
The bank is currently making plans to expand into other financial centers, particularly Dublin, where it announced its readiness in May to buy a building with the capacity to accommodate 1,000 staff .
JPMorgan announced in November 2017 that it was gearing to employ over 60 new staff in Paris.
The UK Prime Minister, Theresa May, has taken her time to send a lovely Christmas message to UK citizens living in Europe, with a assurance that their rights would be taken care of after Brexit.
According to a report from The Independent, May, 61, said in her letter that she understands the anxiety evoked by the referendum result and what it implies for all British families living abroad.
Image: Theresa May
The PM also noted that she has won a deal with Brussels for a reciprocal guarantee of rights, revealing that some parts of the agreement include: pensions and benefits, healthcare rights, and the decision on how family members could join expats.
May, however, admitted that the pressing issues are being deliberated upon.
Here is her letter in full:
“From the very beginning of the UK’s negotiations to leave the European Union I have been consistently clear that protecting the rights of both EU citizens living in the UK and UK nationals living in the EU was my first priority. I know that the referendum result has caused considerable anxiety for many of you and your families.
“That is why, at the beginning of the negotiating process, I made it clear that any deal guaranteeing the rights of EU citizens living in the UK would be dependent on such an offer being reciprocated for our UK nationals in the remaining Member States.
“So I am delighted to announce that in concluding the first phase of the negotiations that is exactly what we have achieved.
“From speaking to my counterparts across Europe, I know that they hugely value the UK nationals living in their communities. We have worked hard to address the very complex and technical issues that needed working through before a formal agreement could be reached. The details are set out in the Joint Report agreed by the UK Government and the European Commission, as published Friday 8 December.
“This agreement guarantees that your rights as residents in the EU will be protected in the Withdrawal Agreement, so you can have certainty that you will be able to receive healthcare rights, pension and other benefits provisions as you do today. You can also benefit from existing rules for past and future social security contributions.
“Furthermore, we have agreed that close family members will be able to join you in the Member State where you live, after the UK has left. This includes existing spouses and civil partners, unmarried partners, children, dependent parents and grandparents, as well as children born or adopted outside of the UK after 29th March 2019.
“While I hope this agreement will bring you some reassurance, I know there are a few important issues that have yet to be concluded. We raised these concerns, including the ability of UK nationals living in the EU to retain certain rights if they move within the EU, but the EU was not ready to discuss them in this phase of the negotiations. We will continue to raise these issues with the EU in the New Year.
“The constructive way in which these talks have been conducted gives me confidence that we will achieve a final deal that reflects the strong partnership between the UK and our European partners, and is in the mutual interest of citizens living across the continent.
“I wish you and your families a great Christmas and a very happy New Year.”
Some British expatriate workers have protested in the past that they’re unsure of how and where they will stand after EU withdrawal, adding that the negotiation process has used them as bargaining chips.
The government reports that an estimated 1 million UK nationals are long-term residents of other EU countries, including nearly 300,000 in Spain. France and Germany also harbor a large number of British citizens.
Hillary Clinton has sympathized with the large number of children who stand affected in the Brexit process. The former Secretary of State said on Saturday during a speech at Swansea University in Wales, that most of the kids are feeling “worried and unsafe.”
Image: Hillary Clinton
The 2016 U.S. presidential candidate was presented with an honorary doctorate degree at the event.
Hillary, 69, admits there’s uncertainty on the rights and future of nearly 3 million European Union citizens living in Britain, adding that “the residency rights of half a million children, including many who were born in the U.K. are hanging in the balance.”
According to the ex-Secretary of State, “there are reports of children being worried, feeling uncertain, even unsafe.”
The former First Lady openly criticized U.S. President Donald Trump whose statements are often considered divisive and controversial.
“…Instead of bringing people together, we have leaders who stoke our divisions, try to distract us with controversy after controversy, and undermine free speech and the press,” she said.
US politician Hillary Rodham Clinton, left, receives a Honorary Doctorate by Pro-Chancellor Roderick Evans, at Swansea University, in recognition of her commitment to promoting the rights of families and children around the world, in Swansea, Wales, Saturday, Oct. 14, 2017. (Ben Birchall/PA via AP)
US politician Hillary Clinton, right, receives a Honorary Doctorate and is also handed a book of her Welsh family history by Pro-Chancellor Roderick Evans, at Swansea University, in recognition of her commitment to promoting the rights of families and children around the world, in Swansea, Wales, Saturday, Oct. 14, 2017. (Ben Birchall/PA via AP)
US politician Hillary Rodham Clinton, right, sits in the Great Hall at Swansea University, prior to receiving an Honorary Doctorate in recognition of her commitment to promoting the rights of families and children around the world, in Swansea, Wales, Saturday, Oct. 14, 2017. (Ben Birchall/PA via AP)
Hillary Clinton arrives at Swansea University, where she is expected to receive an Honorary Doctorate in recognition of her commitment to promoting the rights of families and children around the world, in Swansea, Wales, Saturday, Oct. 14, 2017. (Ben Birchall/PA via AP)
Swansea University honored Clinton for her huge contributions in promoting the rights of families and children, a cause the school shares.
The Welsh institution has renamed its college of law the Hillary Rodham Clinton School of Law.
In her speech, Mrs. Clinton bemoaned what she called divisive politics and rhetoric on both sides of the Atlantic, saying “currents of anger and resentment are underpinning our national conversation in the United States.”
Hillary Clinton served as a senator representing New York between 2001 – 2009, when she was appointed the 67th U.S. Secretary of State (2009 -2013).
Business analysts said earlier today that Burberry, the famous British luxury goods designer, was expected to benefit from Brexit and a fast crashing sterling but the forecast came out wrong as the company’s shares performed contrary to an expected £125m profits.
Burberry’s shares dropped 6.9 per cent at the open, according to a report from CityAM.
The British pounds sterling has seen the worst decline in recent years since UK voted for Brexit in June this year. And financial reports in recent weeks show the currency is fast losing value.
The luxury goods group carried out a business forecast using September 30 exchange rates. With the available records, all retail/wholesale profits for 2017 was adjusted to arrive at a likely business profits expected to stand around £105 million before today.
Burberry extended the forecast using an upward trend in the country’s exchange rate which recorded an increase between September 30 and October 12 to arrive at an estimated £20m additional profit to the earlier £105m.
Although the British conglomerate gained huge profits in the first half of 2016, the months that followed until September that year witnessed an unexpected revenue fall – four per cent to £1.16bn.
However, retail revenue was up two per cent, to £859m, the 2016 record shows.
“In a challenging external environment, we continue to focus on product innovation, retail productivity and digital leadership, against a backdrop of sustained action and investment to deliver long-term out-performance of our brand and business,” said Burberry chief creative and chief executive officer Christopher Bailey.
“The progress we are making to improve our ways of working, the agility of our teams to react to changes in consumer behaviour and the strength of our brand give us confidence for the future. We remain on track to deliver our financial goals.”
CityAM quotes Swiss bank UBS as having predicted that Burberry could still make huge gains from the drop in sterling back in July, when it said the “weak pound more than offsets weak sector trading”.
Burberry on Tuesday said it has seen “significant performance in the U.K. in the second quarter,” although the company continued to struggle in Hong Kong and said it saw an uneven performance in the U.S., Market Watch wrote.
According to a Financial Times report, the company said it planned to “re-balance marketing from brand towards key products”.
Part of that would be a renewed focus on bags, where it admitted it had fallen behind peers.
The impact of Britain exiting the European Union (EU) on trade and investment in East Asia and the Pacific (EAP) is not likely to be substantial due to the region’s low exposure to the UK, said the World Bank in a new report.
Direct trade between EAP countries and the United Kingdom (UK) is “limited” as EAP accounts for just 2 and 5 per cent of total UK exports and imports respectively. Trade with the UK is a small share of EAP trade: 10 per cent in Fiji, 3 per cent in Vietnam and less than one per cent for the rest, The Business Times reports.
Britain’s exit or “Brexit” could have a negative – if small – impact on EAP trade via the global value chain channel, as it affects value-added contributions to exports of final products to the UK through other countries. For instance, the Philippines sells electronic components to South Korea, which are then assembled and exported to the UK.
The report pointed out: “The combined impact would still, however, represent only one to 4 per cent of EAP’s total exports.”
Few EAP countries have free trade agreements (FTA) with the EU. South Korea has a “new-generation” FTA with the EU that was signed in October 2010, while Fiji and Papua New Guinea have a partnership agreement with the EU. FTA negotiations were concluded with Singapore (in 2014) and Vietnam (in 2015) but both agreements have not been ratified yet.
In terms of investments, the impact of Brexit on EAP countries will be muted, as the role of UK in foreign direct investment (FDI) in EAP is “not considerable”. Only 10 per cent of the UK’s FDI is concentrated in EAP, and mostly in China. The UK’s outward FDI reportedly represents just under 5 per cent of total FDI inflows to EAP countries.
Overall, most of the impact on trade and investment in EAP will be a result of “heightened global uncertainty”. This is even though financial markets seem to have regain some stability since the referendum last month.
The report added that in the baseline scenario, the risks to the global economic growth could be contained. However, in the worst-case scenario, Brexit could lead to follow-up referendums in other EU countries and undermine the union, which would produce “grossly negative” long-term impacts on Europe and the global economy.
For EAP countries, new trade agreements with the UK will need to be renegotiated when Brexit becomes effective in the next 2 1/2 years in the baseline scenario, said the World Bank. Until then, trade relations will be governed by World Trade Organisation rules, which include non-preferential tariffs.
EAP countries such as Japan and China will also need to renegotiate or start new bilateral international investment agreement (IIA) negotiations with the UK, as the UK will be excluded from the currently ongoing IIA negotiations between the EU and China and Japan, said the report.
It added that the IIAs that have been recently agreed by the EU and its relevant trading partners would have to be amended too, “to reflect Brexit”.
There will be no need for a referendum on EU membership in Austria if the European Union decides not to let Turkey become a member, Norbert Hofer, the head of Austria’s eurosceptic Freedom Party (FPO) told RT.
Image: Norbert Hofer
“I believe that people are able to learn, that political structures are able to develop, and that Austria will contribute to making Europe better. There is one exception, however, that is if the EU decides to let Turkey join the Union,” Hofer said, adding that under such circumstances “Austrians will have to be asked whether they want this.”
“I hope that there will be no need for a referendum [on EU membership] in Austria, and that the Union will develop in a positive manner,” he added. “But I am fully certain that Austrian people will not accept Turkish membership in the bloc, as well as the situation where Austria is deprived of its powers in favor of the authorities in Brussels.”