Tag: Brexit

Britain leaves the EU tomorrow

By Tom Edgington for BBC News

The UK formally leaves the European Union (EU) at 23:00 on Friday, 31 January. But it will immediately enter an 11-month transition period.

During the transition the UK will continue to obey EU rules and pay money to the EU. Most things will stay the same but there will be some changes:

1. UK MEPs lose their seats
Familiar faces such as Nigel Farage and Ann Widdecombe are among the UK’s 73 MEPs who will automatically lose their seats in the European Parliament.

That’s because, at the moment of Brexit, the UK will leave all of the EU’s political institutions and agencies.

However, in addition to the UK following EU rules during the transition period, the European Court of Justice will continue to have the final say over legal disputes.

2. No more EU summits
UK Prime Minister Boris Johnson will have to be specially invited if he wants to join other leaders at EU Council summits in the future.

British ministers will also no longer attend regular EU meetings that decide things such as fishing limits.

3. We will be hearing a lot about trade
The UK will be able to start talking to countries around the world about setting new rules for buying and selling goods and services.

It has not been allowed to hold formal trade negotiations with countries like the US and Australia while it remained an EU member. Brexit supporters argue that having the freedom to set its own trade policy will boost the UK’s economy.

There’s also a lot to be discussed with the EU. Agreeing a UK-EU trade deal is a top priority, so extra charges on goods and other trade barriers aren’t needed when the transition ends.

If any trade deals are reached, they won’t be able to start until the transition period ends.

4. The UK’s passports will change colour
Blue passports will be making a return, more than 30 years after they were replaced by the current burgundy design.

Announcing the change in 2017, then Immigration Minister, Brandon Lewis, praised the return to the “iconic” blue-and-gold design, first used in 1921.

The new colour will be phased in over a number of months, with all new passports issued in blue by the middle of the year.

Existing burgundy passports will continue to be valid.

5. Brexit coins
About three million commemorative 50p Brexit coins bearing the date “31 January” and the inscription: “Peace, prosperity and friendship with all nations”, will enter circulation on Friday.

The coin has received a mixed reaction, with some Remain supporters saying they will refuse to accept it.

The government had planned to introduce a similar coin on 31 October, the date Brexit was previously meant to happen.

However, those coins had to be melted down and recycled after the deadline was extended.

6. The UK’s Brexit department shuts down
The team that handled the UK-EU negotiations and no-deal preparations will disband on Brexit day.

The Department for Exiting the European Union was set up by former Prime Minister Theresa May in 2016.

For the upcoming talks, the UK’s negotiating team will be based in Downing Street.

7. Germany won’t extradite its citizens to the UK
It won’t be possible for some suspected criminals to be brought back to the UK if they flee to Germany. Germany’s constitution does not allow its citizens to be extradited, unless it’s to another EU country.
“This exception cannot apply anymore after the UK has left EU,” a spokesman from the German Federal Ministry of Justice told BBC News.

It’s unclear if the same restrictions will apply to other countries. Slovenia, for example, says the situation is complicated, while the European Commission was unable to provide comment.
The UK Home Office says the European Arrest Warrant will continue to apply during the transition period. (That means Germany will be able to extradite non-German citizens.)
However, it adds that if a country’s laws prevent extradition to the UK it “will be expected to take over the trial or sentence of the person concerned”.

Because the transition period begins immediately after Brexit, the vast majority of other things remain the same – at least until 31 December 2020 including:

1. Travel
Flights, boats and trains will operate as usual.
When it comes to passport control, during the transition period, UK nationals will still be allowed to queue in the areas reserved for EU arrivals only.

2. Driving licences and pet passports
As long as they are valid, these will continue to be accepted.

3. European Health Insurance Card (EHIC)
These are the cards that provide UK nationals with state-provided medical treatment in case of illness of accident.
They can be used in any EU country (as well as Switzerland, Norway, Iceland and Liechtenstein) and will continue to be valid during the transition period.

4. Living and working in the EU
Freedom of movement will continue to apply during the transition, so UK nationals will still be able to live and work in the EU as they currently do.
The same applies for EU nationals wanting to live and work in the UK.

5. Pensions
UK nationals living in the EU will continue to receive their state pension and will also receive the annual increase.

6. Budget contributions
The UK will continue to pay into the EU budget during the transition. This means existing schemes, paid for by EU grants, will continue to be funded.

7. Trade
UK-EU trade will continue without any extra charges or checks being introduced.

SA, UK strike post-Brexit deal

Source: Supermarket & Retailer

The ANC’s Minister for Economic Development, Ebrahim Patel, has concluded a groundbreaking new trade deal with the UK, ensuring all existing trade arrangements and more have been cemented prior to the UK’s departure from the European Union (EU).

With the prospects of a no-deal Brexit having risen significantly in recent months, the onus has been on the UK to engineer new trade deals with partners across Africa and the rest of the globe in the event of a disorderly exit from the EU and immediate trade on World Trade Organization (WTO) terms.

The spectre of a no-deal Brexit has been the elephant in the room in terms of the financial markets for several months, with the pound looking increasingly weak against both the US dollar and the euro.

However, the pound has also become a forex market of interest among investors option trading in South Africa who are already speculating on the future price of sterling in the event that Prime Minister Boris Johnson’s new Brexit withdrawal agreement bill is approved by Parliament. Put options are also a useful hedge for those with ‘long’ positions on sterling in case a no-deal Brexit happens out of the blue, causing the pound to crash.

As the UK became South Africa’s fourth-largest export market in 2018, it was imperative for the South African government to have clarity and certainty as a Commonwealth trading partner, regardless of the Brexit outcome. Minister Patel has confirmed that the new trade agreement is effectively a “rollover” of the terms of trade in their existing European Partnership Agreement, which will enable “seamless” and “uninterrupted” trade to continue post-Brexit.

This new deal is essential for the protection of up to 175,000 jobs that have been created as a consequence of increased trade links between South Africa and the UK. It’s now a marketplace worth an estimated R142 billion to the South African economy.

What does this new trade deal offer for South Africa?

First and foremost, all automobiles assembled in South Africa can continue to be exported to the UK with tariff-free access. The new arrangement also extends the nation’s tariff-free quota for unrefined and refined sugar, canned fruits and wine – the latter extending to a whopping 70 million litres of South African wine. This is very good news for the Western Cape given that wine was its most influential export to the British Isles in 2018, valued at R1.89 billion. The new agreement also extends South Africa’s quota levels for specific duty-free products, whilst safeguarding the agricultural sector’s health and safety standards for all new products.

The nation’s existing trade terms on EU livestock will also remain applicable to British poultry, until March 2022 at the earliest.

This new trade continuity deal doesn’t just benefit South Africa before the Brexit deadline, it also offers certainty to the five other nations on the African continent within the Southern African Customs Union and Mozambique (SACU+M). The preferential trade terms will provide continued access to UK markets for Botswana, Lesotho, Namibia and Eswatini too.

In total, the trading relationship between the UK and the entire SACU+M was worth R184.3 billion in 2018. Consumers in the UK will continue to benefit from greater choice of goods exported from SACU+M, while the SACU+M will also benefit from UK exports of automobiles, machinery, appliances and much more.

Source: Business Day

Prime Minister Theresa May’s Brexit deal was rejected by Parliament in a humiliating defeat, her plan for leaving the European Union all but dead. Opposition leader Jeremy Corbyn responded by proposing a vote of no confidence in her government.

The House of Commons voted 432 versus 202 against the divorce the UK government brokered with the European Union. A margin of less than 60 would have given grounds to hope that the deal was salvageable, with the EU poised to engage in ways to make it more palatable.

Sterling rebounded smartly from the day’s lows and rallied more than a cent to stand above $1.28 after the vote.

Corbyn’s motion will be debated and voted on Wednesday. If it is successful, there will be 14 days for a new government to be formed, or a general election will be scheduled.

Instead, the largest defeat in over a century prompted the Labour Party to pounce to try to force a general election.

“It is clear the House does not support this deal,” May told MPs following the vote. “But tonight’s vote tells us nothing about what it does support,” she said, pledging to talk to her Northern Irish allies and senior politicians across Parliament to try to reach a consensus. “The government will approach these meetings in a constructive spirit.”

She also acknowledged the “scale and importance” of the vote and said the first step must be to confirm that MPs still had confidence in her government.

It is likely that Tories and Northern Ireland’s Democratic Unionist Party, which props up her government, would still stand by her — for now. Though one question is whether pro-Brexit Tories who wanted to oust her as leader last year would consider voting with the opposition just to get rid of her.

More than two years after the nation cast a die and voted to leave the 28-nation bloc, the UK is facing political paralysis over a decision that has divided the nation and its political class for decades.

May’s choices are limited by the fact that her Conservative party does not have a majority in Parliament and that there are competing interests between those who want a clean break from the EU those that want to preserve close ties and an opposition party eager to come power.

The UK was meant to leave on March 29 — two years after May triggered the process — but now that is also looking unlikely and an increasingly boxed-in prime minister could well decide to ask fellow EU leaders for an extension as she works out her next steps.

The chairman of EU leaders Donald Tusk said the only positive solution after the vote is for Britain to stay in the EU.

“If a deal is impossible, and no-one wants no deal, then who will finally have the courage to say what the only positive solution is?” Tusk tweeted after the vote.

Britain leaves the EU

Prime Minister Theresa May has signed the Article 50 letter of notification that she will send to the European Union on Wednesday to formally get Brexit underway.

May was pictured in Downing Street on Wednesday evening adding her signature to the historic letter, which will formally notify the European Commission of Britain’s departure from the EU.

The letter will be handed to European Council President Donald Tusk at 12:30 p.m (BST) tomorrow by British ambassador to the EU Sir Tim Barrow, immediately after May finishes debating Labour Party leader Jeremy Corbyn in this week’s instalment of Prime Minister’s Questions.

A two-year process of negotiations will then get underway where May and her negotiating team will try to come to a divorce agreement with EU figures. The discussions are set to cover how much Britain must pay the EU as part of its divorce settlement and what long-term free trade deal — if any — can be finalised before the two-year window expires.

Britain is set to officially drop out of the EU no later than March, 2019.

In an address to Parliament on Wednesday, May is set to call on the country to “come together” and support a “truly global Britain” as the nation braces itself to leave the 28-nation bloc after nearly half a century of being a member.

The prime minister is expected to say:

“When I sit around the negotiating table in the months ahead, I will represent every person in the whole United Kingdom – young and old, rich and poor, city, town, country and all the villages and hamlets in between.

“And yes, those EU nationals who have made this country their home.

“It is my fierce determination to get the right deal for every single person in this country.

“For, as we face the opportunities ahead of us on this momentous journey, our shared values, interests and ambitions can – and must – bring us together.

“We all want to see a Britain that is stronger than it is today. We all want a country that is fairer so that everyone has the chance to succeed.

“We all want a nation that is safe and secure for our children and grandchildren. We all want to live in a truly Global Britain that gets out and builds relationships with old friends and new allies around the world.

“These are the ambitions of this Government’s Plan for Britain. Ambitions that unite us, so that we are no longer defined by the vote we cast, but by our determination to make a success of the result.

“We are one great union of people and nations with a proud history and a bright future.

“And, now that the decision has been made to leave the EU, it is time to come together.”

Source: www.businessinsider.com

The impact of Brexit could make for a gloomy Christmas for retailers after latest indications of a slowdown in the sector ahead of the festive period.

Retail Ireland, the Ibec group that represents the retail sector, said its Retail Monitor for the third quarter of this year showed a fall in consumer sentiment and a slowing down in sales.

Retail Ireland said the Government now needed to prioritise support for the sector and take steps to ensure shifts in currency do not hamper the economic recovery and the jobs associated with it. Adding a warning over wages, it said there needed to be “a renewed effort is needed to keep labour, energy, regulatory and insurance costs in line”.

Retail Ireland director Thomas Burke said: “While sales values grew by 1.1% in the third quarter of the year when compared with the same period last year, the steady decline in growth rates quarter on quarter is a cause for concern.

“The 23% slump in the value of sterling since the beginning of the year has prompted more consumers to travel North to shop, with new figures also showing a surge in online shopping in the months following the UK vote. Central Bank statistics show that e-commerce transactions recorded on Irish debit and credit cards jumped by 20% from €1bn to €1.2bn between July and September as sterling fell. This was way above trend and is likely to have mostly gone to UK based online retailers.”

He said the Irish retail sector was working to adjust its prices even though it was still selling products that were purchased at a much different exchange rate a number of months ago.

Mr Burke said retailers were squeezed by consumers demanding price reductions and UK-based suppliers seeking price increases.

In department stores, despite total sales values increasing by 1.5% compared to Q3 last year and total sales volumes rising 2.3% over the same quarter last year, the devalued sterling exchange rate has driven Irish shoppers across the border and online to UK-based websites, while there has been a decline in UK tourist spend.

The pharmacy sector grew by 1% in value terms and 1.3% in volume in Q3 compared to last year, but RI said the overall growth was driven by modest prescription volume growth and strong over the counter healthcare sales due to an extended hay fever season.

The third quarter was broadly positive for the DIY and hardware stores, but the books, newspaper and stationery market was disappointing with CSO data suggesting the market was down 5% in both volume and value. As for supermarkets and convenience stores, sales values and volumes were up 2.5% and 3.1% versus last year.

Meanwhile, a dispute between the the Musgrave group and Unilever is over.

The country’s largest grocery group and Unilever had been at loggerheads over pricing but in a joint statement both said: “Following a satisfactory conclusion to recent commercial discussions, Musgrave and Unilever are pleased to confirm that supply of all Unilever products to all Musgrave stores recommenced on Monday.”

By Noel Baker for www.irishexaminer.com

The rand remained the worst performing emerging market currency on Monday 27 June, but an analyst said there is a silver lining for the local unit.

It continued to show its volatile nature on Monday, after losses against the dollar swung between 2% and 8,5% on Friday.

By 08:30, the rand was 4.25% lower against the dollar at R15.19 and 4% higher against the pound at R20.35.

The harsh swings are in reaction to the UK’s vote to exit the European Union, which caused extreme volatility in most emerging market currencies, but especially the rand.

“It is difficult to see light at the end of the tunnel and that is reflected in the pound this morning, as it trades down below 1.34, over 2% lower,” says Adam Phillips of Umkhulu Consulting.

“This has dragged the euro down by 0,83% and the rand is leading the emerging market currencies lower.

“Gold continues to shine with the yen and the former might help us in South Africa a little, although other commodities are staying on the fence.”

Rand Merchant Bank analyst John Cairns says not all is negative in a note on Monday.

“The silver lining for the rand remains that global monetary conditions will be easier after the Brexit vote,” he says.

“Fed futures, amazingly, have completely priced out further hikes this year and are even toying with the idea that the Fed could cut rates.

“Further ECB (European Central Bank) and BoJ (Bank of Japan) easing is all but assured. Switzerland has already reacted with currency intervention on Friday.”

The victory for Brexit tore through world markets on Friday, pummelling the pound and high-yielding assets as more than $2.5trn was wiped from global equity values. Prime Minister David Cameron resigned without spelling out when the UK intends to leave the EU, and eight members of Labour Party leader Jeremy Corbyn’s team quit amid calls for his ouster.

US Secretary of State John Kerry travels to Brussels and then London on Monday as Nicola Sturgeon, the First Minister of Scotland – whose people voted to stay in the EU – teases the possibility of a second referendum on independence from the UK.

The next days and weeks will likely be key for central banks as they seek to limit volatility in financial markets. The European Central Bank is hosting a three-day meeting in Sintra, Portugal that will include speeches from its president, Mario Draghi, and Federal Reserve chair Janet Yellen. German Chancellor Angela Merkel will host European Council president Donald Tusk in Berlin on Monday to talk about the UK’s plan to exit the bloc.
Cairns says the result of uncertainty is volatility. “Expect jittery and ragged trade in global markets through this week, implying the risks of severe rand weakness are not over yet.

“The UK may be tearing itself apart,” he says. “Opponents of Brexit have called for another referendum, a re-Brexit, and are arguing for Parliament to vote to stay in the EU.

“Scotland wants another independence referendum. And both the Labour and Conservative Parties are in turmoil. Reflecting the uncertainty… some market participants are calling for further 5% to 10% losses (in the pound to dollar losses).

“The bigger threat is that Europe might also be torn apart,” he says. “As expected, independence parties from across the union have called for their own countries to hold referendums.

“Do we get Departugal, Italeave, Czechout, Oustria, Finish, Slovlong, Latervia, Buygium and no more Germania? These are not minor concerns.”

By Matthew le Cordeur and Bloomberg for Fin24

At the time of writing, the rand was appreciating. Why? Because the latest opinion polls out of the UK pertaining to the vexed Brexit issue were more favourable to the “remain” side. This referendum is therefore of critical importance not only to the UK and Europe, but also to us here at the southern tip of Africa.

Currency issues seem to loom large in any discussion about the domestic economy. And a Brexit or ‘leave’ can flesh open a fresh wave of rand volatility detrimental to our already ailing economy.

Emerging markets are already under strain. The Brexit threat adds global uncertainty and a potential capital (and currency) flight to safer havens. While sterling may well devalue immediately after any Brexit vote, it is the US dollar that may strengthen, thereby affecting the ZAR.

South Africa simply cannot afford a further decline in the rand/dollar value. Coupled with the threats of rating agency downgrades towards the end of the year, a new era of currency volatility not related to our domestic political economy is clearly a danger.

To kickstart the flagging foreign direct investment needed to grow our economy, South Africa needs not only to be attractive to domestic political and economic policy, but also requires a broader ‘risk averse’ global investor climate.
Clearly, any Brexit-induced shock to the international financial system will do us no favours.

It is often said that a fair proportion of the value of our currency is reflective of international macro-economic and sentiment-driven trends. Indeed, a Brexit vote will not only create currency instability, but it can also precipitate a sense of unease within the existing European Union over a host of member countries and even national regions which are increasingly sceptical of the entire EU project. The EU certainly does not need to encourage a rising tide of nationalism that a Brexit vote may fuel.

A Brexit vote could lead to other national referenda and in an already emotionally charged atmosphere in Europe, with security, immigration and debt concerns looming large, a weakened or balkanised EU would further hamper any recovery in global trade – already pretty lacklustre. South Africa too would bear the brunt of this as the EU continues to be its major trading partner.

Trade remains at of the heart of the UK-SA relationship. Any Brexit vote would hamper levels of trade between UK-based companies and South Africa as a result of negative economic consequences on London. Our country would
also be harmed by the possible renegotiation of trade agreements between the UK and her EU counterparts.

If the preferential trade agreements which form the cornerstone of the EU are diminished as a result of any UK exit, this will surely have a knock-on effect here in South Africa. After all, South Africa remains the UK’s largest African trading partner and while it has slipped lower on our domestic radar screens in terms of export trade, the UK remains our seventh largest import and export market in global terms (2014 figures).

Although some have speculated on what this might mean in terms of a direct statistical effect on our GDP, it’s the unintended consequences of any Brexit that pose a greater risk to our domestic economy.

So it will be a tense week for both politicians and markets in both the developed and emerging economies. The ramifications of a domestic vote in the UK are global, emphasising the interconnectivity of the UK economy in a much more globalised world.

Making predictions are always risky, but given the high level of uncertainty as to what a Brexit might mean for a voter in Manchester or Edinburgh, it may just be that the voters opt for the old adage of ‘better the devil you know than the devil you don’t know’.

After all, the EU was always a risky experiment and leaving it would be just the same.

By Daniel Silke for Fin24

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