Connect with us

Brexit

UK enters shock economic downturn ahead of #Brexit, first since 2012

Guest contributor

Published

on

Britain’s economy shrank for the first time since 2012 in the second quarter, a severe hangover from a pre-Brexit stockpiling boost and one that bodes poorly as Prime Minister Boris Johnson gears up to leave the EU in October, write Andy Bruce and David Milliken.

Sterling slid to a new 31-month low against the dollar after data showed output in the world’s fifth-largest economy fell by 0.2% in the three months to June compared with the previous quarter, below all forecasts in a Reuters poll of economists that had pointed to a flat reading.

With Johnson’s government committed to leaving the European Union on 31 October, regardless of whether he can secure a transition deal to avoid trade disruption, the outlook for the remainder of 2019 is uncertain.

The world economy has also slowed due to the trade conflict between the United States and China.

Year-on-year economic growth slid to 1.2% from 1.8% in the first quarter, Britain’s Office for National Statistics said, its weakest since the start of 2018.

“There is ... little doubt that the economy is stalling, regardless of the volatility in the data,” PwC senior economist Mike Jakeman said.

British economic output declines for 1st time since 2012.

He said the Brexit crisis and the uncertain global outlook left Britain’s economy on a “knife-edge” for the third quarter.

Finance Minister Sajid Javid told the BBC he was not expecting a recession “at all”. He added that the figures - which none of the 51 economists polled by Reuters predicted - “were not a surprise in any way”.

Annual growth in June alone was the weakest since August 2013 at 1.0%.

The Bank of England has predicted that growth will pick up to a quarterly rate of 0.3% during the current quarter, and that growth for the year as a whole will drop to 1.3%.

But it also warned of a 1-in-3 chance that output in annual terms will contract in the coming quarters, even if Britain leaves the European Union on reasonable terms.

“The Bank of England has retained its tightening bias but any continued economic weakness will mean policymakers are likely to take an increasingly dovish stance,” Chris Williamson, chief business economist at IHS Markit, said.

But June manufacturing data was also unexpectedly poor and factory output for the quarter contracted at the fastest rate since early 2009, when Britain was mired in recession.

Private-sector business surveys have shown the manufacturing and construction sectors both suffered falling activity in July, while the larger services sector eked out only modest growth.

Nonetheless, most economists expect some improvement in the third quarter - which would avoid Britain meeting the technical definition of a recession, which is two consecutive quarters of negative growth.

“Consumers have cash in their pockets - wage growth is at an 11-year high (and) surveys point to further increases in employment,” Pantheon Macroeconomics’s Samuel Tombs said.

“In addition, growth in government spending should retain its current momentum, given the new government’s zeal for fiscal loosening,” he added.

Javid said late on Thursday that he would set out spending plans for next year in September.

Britain’s economy has slowed since June 2016’s vote to leave the EU, with annual growth rates dropping from more than 2% before the referendum to expand by 1.4% last year.

Friday’s (9 August) data showed business investment contracted 0.5% in the second quarter of the year versus economists’ expectations of a 0.3% fall.

Household spending, which has been much more resilient than business investment, due to falling unemployment and rising wages, rose 0.5% on the quarter.

Trade figures and its contribution to GDP were distorted erratic flows of non-monetary gold and also showed the effect of businesses building up fewer stocks than in the first quarter of the year when they were readying for Brexit.

Brexit

UK sends two navy boats to Jersey after France threatens blockade

Reuters

Published

on

By

The Mont Orgueil Castle is seen behind an island flag at Gorey Harbour in Jersey, in this February 26, 2008 file photo.  REUTERS/Toby Melville

Britain is sending two navy patrol boats to the British Channel Island of Jersey after France suggested it could cut power supplies to the island if its fishermen are not granted full access to UK fishing waters under post-Brexit trading terms, write Richard Lough and Andrew Macaskill.

Prime Minister Boris Johnson pledged his "unwavering support" for the island after he spoke with Jersey officials about the prospect of the French blockade.

Johnson "stressed the urgent need for a de-escalation in tensions," a spokesperson for Johnson said. "As a precautionary measure the UK will be sending two Offshore Patrol Vessels to monitor the situation."

Earlier, France's Seas Minister Annick Girardin said she was "disgusted" to learn that Jersey had issued 41 licences with unilaterally imposed conditions, including the time French fishing vessels could spend in its waters.

"In the (Brexit) deal there are retaliatory measures. Well, we're ready to use them," Girardin told France's National Assembly on Tuesday (4 May).

"Regarding Jersey, I remind you of the delivery of electricity along underwater cables ... Even if it would be regrettable if we had to do it, we'll do it if we have to."

With a population of 108,000, Jersey imports 95% of its electricity from France, with diesel generators and gas turbines providing backup, according to energy news agency S&P Global Platts.

Jersey's government said France and the European Union had expressed their unhappiness with the conditions placed on the issuance of fishing licences.

Jersey’s external relations minister, Ian Gorst, said the island had issued permits in accordance with the post-Brexit trade terms, and that they stipulated any new licence must reflect how much time a vessel had spent in Jersey's waters before Brexit.

"We are entering a new era and it takes time for all to adjust. Jersey has consistently shown its commitment to finding a smooth transition to the new regime," Horst said in a statement.

The rocky island sits 14 miles (23 km) off the northern French coast and 85 miles (140 km) south of Britain's shores.

The French threat is the latest flare-up over fishing rights between the two countries.

Last month, French trawlermen angered by delays to licences to fish in British waters blocked lorries carrying UK-landed fish with burning barricades as they arrived in Boulogne-sur-Mer, Europe’s largest seafood processing centre.

Continue Reading

Brexit

Brexit barriers in focus as Northern Ireland's DUP kicks off leadership contest

Reuters

Published

on

By

Democratic Unionist Party's (DUP) Edwin Poots makes a statement to the media outside Stormont Castle in Belfast, Northern Ireland June 28, 2017. REUTERS/Clodagh Kilcoyne/File Photo

Northern' Ireland's biggest party was set for its first ever leadership election after its Westminster chief Jeffrey Donaldson threw his hat into the ring, promising to focus on the divisive issue of post-Brexit trade barriers.

Donaldson will stand against Edwin Poots to lead the Democratic Unionist Party at a time of heightened instability in the British province and unionist anger over the installation of a customs border in the Irish Sea.

Both Donaldson and Poots, Northern Ireland's agriculture minister, stopped short of making detailed campaign promises. But Britain, Ireland and the rest of Europe will be watching for any hardening of stances on Brexit or social issues including abortion that could alter the political balance ahead of elections next year.

The DUP currently leads Northern Ireland in a power-sharing government with its Irish nationalist rivals Sinn Fein.

Donaldson or Poots will take over the leadership from Arlene Foster who announced last week she was stepping down as Northern Ireland's First Minister at the end of June, bowing to pressure from party members unhappy at her leadership. Read more

Her departure has added to instability in the region, where angry young pro-British loyalists rioted in recent weeks, partly over the barriers that they feel have cut them off from the rest of the UK.

"I will develop and swiftly implement an agreed programme of meaningful reform and clear policy direction on key challenges like the protocol," Donaldson said in a video announcement, referring to the post-Brexit trading arrangements.

Like Foster, Donaldson, 58, is a former member of the more moderate Ulster Unionist Party. He was part of the negotiating team that stuck a deal to prop up the government of former British Prime Minister Theresa May in 2017.

Once the DUP's support was no longer needed, May's successor Boris Johnson broke the party's "blood red line" and agreed to erect the trade barriers.

Poots, 55, is one of a number of DUP ministers who have protested against the Brexit arrangements by refusing to attend meetings with Irish counterparts established under the 1998 peace deal that ended 30 years of violence in Northern Ireland.

Poots, a young earth creationist who rejects the theory of evolution, announced he was standing last week.

Continue Reading

Brexit

Statement by Commission Vice President Maroš Šefčovič following the conclusion of the EU-UK Trade and Co-operation Agreement

EU Reporter Correspondent

Published

on

European Commission Vice President Maroš Šefčovič warmly welcomes the ratification of the EU-UK Trade and Co-operation Agreement, which will now be fully applicable as of 1 May 2021. This comes after an overwhelming vote of consent by the European Parliament on 27 April and subsequent Council decision today, thereby concluding the ratification process. The EU and the UK will exchange letters to that effect.  

"The ratification of the Trade and Co-operation Agreement is good news for European citizens and businesses. It provides a solid foundation for our longstanding friendship, co-operation and partnership with the United Kingdom on the basis of shared interests and values.

"In practice, the Agreement helps avoid significant disruptions, while protecting European interests and upholding the integrity of our Single Market. It also ensures a robust level playing field, by maintaining high levels of protection in areas, such as climate and environmental protection, social and labour rights, or state aid. Moreover, the Agreement includes effective enforcement, a binding dispute settlement mechanism and the possibility for both parties to take remedial measures.

"Democratic scrutiny will continue to be key in the implementation phase of the Agreement in order to ensure faithful compliance. Unity among EU institutions and member states will remain a cornerstone during this new chapter in our EU-UK relations." 

Vice President Šefčovič reiterates that the European Commission looks forward to a strong, constructive and collaborative partnership with the United Kingdom, based on mutual trust and respect. We have far more in common than that which divides us. He will reach out this week to Lord David Frost, co-chair of the EU-UK Partnership Council, to prepare the launch of its work, including the work of Specialized Committees.  

Finally, the Commission will continue to work tirelessly for joint solutions so that the Withdrawal Agreement, and the Protocol on Ireland / Northern Ireland in particular, is also fully implemented and works for the benefit of everyone in Northern Ireland.

Continue Reading

Twitter

Facebook

Trending