Back in December, Brexit Secretary David Davis told the Exiting the European Union Committee at Westminster that there were no economic forecasts on the likely impact of Brexit on various sectors of the economy.
Well, now there is one. And it has been leaked to Buzzfeed.
Dated January 2018, the paper, produced by the Department for Exiting the EU and titled “EU Exit Analysis – Cross Whitehall Briefing”, makes for some grim reading.
Three possible post-Brexit scenarios are examined. In a “no deal” scenario, with the UK falling back to World Trade Organisation (WTO) rules, growth would fall by eight per cent over 15 years compared to current forecasts.
Under a comprehensive free trade agreement with the EU, growth would be five per cent lower over the same period.
Meanwhile, single market access under membership of the European Economic Area (EEA) would reduce growth by two per cent.
Furthermore, the calculations do not account for short-term hits to the economy, such as the cost of adjusting to new customs arrangements.
A government spokesperson pointed out that the paper does not detail the desired outcome of “a new deep and special partnership with the EU” – the government buzz phrase for some months now. What that actually means has never been spelled out in precise terms, prompting equal levels of frustration and ridicule in Europe. (If you haven’t read it already, this story from ITV’s Robert Peston about Angela Merkel mocking Theresa May is worth a quick look.)
The most detailed government description we have had so far is when Davis stated on The Andrew Marr Show a few weeks ago that the stated aim is “Canada plus plus plus”. This appeared to refer to the use of the Comprehensive Economic and Trade Agreement (CETA), signed between the EU and Canada last year, as a base, with some extra bits like services thrown in.
That scenario presumably puts us somewhere between the comprehensive free trade agreement and single market access scenarios described above. In which case, do we split the difference and prepare to be 3.5% worse off?
A referendum on abortion laws in the Republic of Ireland will be held at the end of May. Voters will be asked whether they would like to retain the Eighth Amendment of the constitution which states that the life of a mother and her unborn child are equal. This means that abortion is illegal except in exceptional circumstances. If citizens vote to reject the Eighth Amendment, the Irish parliament will legislate new abortion laws. A draft bill proposing unrestricted abortions up to 12 weeks will be prepared in the run up to the referendum.
Mike Pompeo, the director of the CIA, has warned that Russia will target the US mid-term elections in November. Speaking to the BBC, Pompeo stated that there had been no significant fall in Russian attempts at subversion in Europe and the US, but that the US is actively engaged in trying to counter Russian activity. The US intelligence community believes that Russia interfered in the 2016 presidential election – a claim President Trump has previously dismissed.
Police investigating seven aggravated burglaries which have taken place since 2014 believe the culprit may have a military or law enforcement background due to the “professionalism” on show. Four police forces are hunting the man – nicknamed the Night Watcher – who stakes out multimillion pound homes before threatening inhabitants with a sawn-off shotgun. In total, he has stolen £1 million in jewellery and watches from houses in Surrey, Kent and Berkshire.
Business & Economy
The prime minister will arrive in China today at the start of a three-day visit to boost trade and investment. She is accompanied by Liam Fox, the international trade secretary, and a large business delegation, and will hold talks with President Xi Jinping and business leaders. Speaking before the trip, Theresa May said the visit will “intensify the golden era in UK-China relations” and that the relationship allows for “frank discussions on all issues”.
Frank discussions will certainly be on the agenda, with May set to raise concerns over Xi Jinping’s flagship Belt and Road initiative, Chinese investors stating that they need certainty over the UK’s Brexit future, and concerns over the status of Hong Kong.
Goldman Sachs has stated that a stock market correction is a “high probability” in the coming months. The investment bank said that falls would be sharp and “rather painful”, but not prolonged, and that investors should use the dip to buy shares. This follows a similar warning from Bank of America Merrill Lynch last week.
What happened yesterday?
The FTSE 100 was up 5.99 points, or 0.08%, to 7,671.53, and the FTSE 250 was down 37.66, or 0.18%, to 20,577.92.
Higher metal prices and a stronger dollar boosted mining companies. Glencore climbed 3.26%, Rio Tinto was up 2.08%, and Anglo American gained 1.23%.
Sky edged 0.19% higher following disclosure over the weekend that Elliot Management, the New York hedge fund known for its activist campaigns, has raised its stake from 1.09% to 1.29%. This comes ahead of a possible shareholder vote on the proposed £11.7 billion takeover by 21st Century Fox.
Severn Trent was the biggest faller on the main index, shedding 1.97% after Goldman Sachs put a “sell” rating on the shares.
Meanwhile, EasyJet fell 0.65% after Bernstein warned about long-term opportunities for earnings growth, with fuel prices rising and industry capacity likely to expand again in the medium term. As a result, the broker said stock look fairly valued at about £16.
On the currency markets, the pound gave up most of last week’s gains. It was 0.68% lower against the dollar at $1.4072, and down 0.29% against the euro at €1.1363. This was attributed to political uncertainty stemming from Brexit and questions over Theresa May’s leadership.
Filtronic, NWF Group, PZ Cussons
Avocet Mining, CYBG, Domino’s Pizza Group, Restore, UDG Healthcare Public Limited Company
Hollywood Bowl Group, Patisserie Holdings, Greencore Group, Solgold, Servoca, UDG Healthcare Public Limited Company, Utilitywise plc, ZPG plc
Wizz Air Holdings
UK Economic Announcements
(09:30) Consumer Credit
(09:30) M4 Money Supply
(09:30) Mortgage Approvals
International Economic Announcements
(10:00) Business Climate Indicator (EU)
(10:00) Consumer Confidence (US)
(10:00) Economic Sentiment Indicator (EU)
(10:00) GDP (Preliminary) (EU)
(10:00) Industrial Confidence (EU)
(10:00) Services Confidence (EU)
Columns of Note
Writing in the Financial Times, Janan Ganesh acknowledges Theresa May’s shortcomings as prime minister but asserts that removing her from power will not alter the course of Brexit. Ganesh argues that the advantage the EU holds in Brexit negotiations is structural – a union with a population of 450 million versus a nation of 65 million – but Leavers cannot admit that the terms they promised voters are unachievable. Therefore, “the blame is transferred, like a debt, to the prime minister”.
In The Times, Rachel Sylvester looks at the growing momentum behind calls for a referendum on the final Brexit deal. She notes that it is not just pro-Europeans like Tony Blair and Sir Nick Clegg who now advocate this position, but also Arron Banks who believes it would be give people the opportunity to “shout from the rooftops their support of a true Brexit”. Much, she claims, depends on whether Jeremy Corbyn will shift his opinion, which some believe he will if it suits his political interests.
Did you know?
The “mayday” distress signal originated in 1923 when Frederick Stanley Mockford, the senior radio operator at Croydon Aerodrome, was asked to think of a word that would indicate distress and be easily understood by any pilots or ground staff in an emergency. As nearly all air traffic from Croydon at the time was to and from Le Bourget in France, he proposed “mayday”, derived from the French phrase “m’aider” meaning “help me”.
The call is always given three times in a row to prevent it being mistaken for a similar sounding phase under noisy conditions or when radio signal is weak.
House of Commons
Oral Questions: Business, Energy and Industrial Strategy – including Topical Questions
Legislation: High Speed Rail (West Midlands-Crewe) Bill – 2nd reading
House of Lords
European Union (Withdrawal) Bill – Second Reading (day 1) – Baroness Evans of Bowes Park
European Union (Withdrawal) Bill – Second Reading regret motion - as an amendment to the motion that the European Union (Withdrawal) Bill be now read a second time, at end to insert “but that this House regrets that the bill makes no provision for the opinion of the people to be secured on the terms on which Her Majesty’s Government proposes that the United Kingdom withdraw from the European Union.” - Lord Adonis
Stage 3 Proceedings: Representation on Public Boards (Scotland) Bill
House of Commons
Oral Questions: Wales
Prime Minister’s Question Time
Opposition Day Debate - Subject to be announced
House of Lords
Legislation: European Union (Withdrawal) Bill – Second Reading (day 2) - Baroness Evans of Bowes Park
Strategy for reducing income inequality - Baroness Lister of Burtersett
Reducing the amount set aside in NHS budgets for clinical negligence claims and the annual level of payment - Lord Sharkey
Government objectives for the Brexit transition period - Lord Lennie
Porfolio Questions: Communities, Social Security and Equalities
Stage 1 Debate: Budget (Scotland) (No.2) Bill