By TRG Alerts Admin
The Rendon Group
Each week The Rendon Group’s media analysts will focus on a different continent and a different issue affecting that continent. As always, we remain available to answer any questions you may have and to provide additional information upon request. For more information regarding The Rendon Group’s products and services, please contact us at Alert@Rendon.com or +1-202-745-4900.
Brexit: UK government navigates exit from EU as pound suffers flash crash
UK PM Theresa May speaking on 05OCT at the annual Conservative Party Conference in Birmingham, UK. (Toby Melville/Reuters)
This week’s snapshot focuses on the latest developments of Britain’s referendum to exit the European Union. The international community, particularly the soon-to-be-27 member bloc, has begun to examine measures to mitigate political and economic fallout. In the weeks leading to her ascendance to 10 Downing, British PM and leader of the Conservative Party Theresa May’s reluctance to publicly address a transitional plan to execute Article 50 has diminished amid pressure within Great Britain and abroad. In a speech given 02OCT, PM May indicated that she would ensure a “hard” leave, causing concern of a deeper divide among Tory MPs. The so-called Brexit has stirred anxiety among major banks over London’s future as a financial services hub for both Europe and the world economy. Moreover, members of the Commonwealth fear a reduction of exports to the United Kingdom, which will hurt their economies. While divisions withing the United Kingdom ensue, European leaders, such as German Chancellor Angela Merkel and French President Francois Hollande, responded to May’s rhetoric by stating the UK will have to pay the price for voting to exit the bloc. Large British companies expect to cut investment and hiring over the coming year.
News summary of events during the week of 03OCT16 – 10OCT16
03OCT: British Chancellor of the Excheque Philip Hammond said the economy will face turbulence as the government negotiates the country’s exit from the European Union. (Reuters)
03OCT: The Council of Europe voiced concern at a rise in racist violence in Britain in recent years, adding that campaigning for the Brexit referendum led to a further rise in “anti-foreigner sentiment”. (AFP)
03OCT: Northern Ireland’s High Court began hearing a legal challenge against British plans to leave the EU without a vote in the Westminster parliament. (Reuters)
04OCT: Guy Verhofstadt, a top EU negotiator on Britain’s departure from the EU, said the bloc would disintegrate if it bargains away the principle of free movement of its citizens. (AP)
04OCT: The IMF cut its 2017 growth forecast for Britain, saying it now expects GDP to expand by 1.1 percent, a downgrade of 0.2 points from the previous prediction. (AFP)
05OCT: British PM May said she wanted a Brexit deal which offered “maximum freedom” to operate in Europe’s single market but also emphasized she wanted control over immigration. (AFP)
05OCT: British Home Secretary Amber Rudd defended plans to make firms do more to employ British people, saying “don’t call me a racist” for talking about immigration. (BBC)
06OCT: Finnish FM Timo Soini said the country will not be among the ‘leavers’ and admitted the Brexit vote has for now boosted support for EU membership within the bloc. (Reuters)
07OCT: The pound suffered a “flash crash” in early Asian trade, hitting its lowest level since mid-1985, before rebounding to around $1.245. It also collapsed against the euro, before easing slightly as the European Central Bank indicated it is unlikely to trim its stimulus any time soon. (AFP)
07OCT: British business leaders wrote to the prime minister, urging her to avoid opting for “hard Brexit”. (Guardian)
07OCT: Leading foreign academics from the London School of Economics acting as expert advisers to the British government were told they would not be asked to contribute to government work and analysis on Brexit because they are not British nationals. (Guardian)
08OCT: Anti-Brexit campaigners erected six mock customs checkpoints along the Northern Ireland and Irish Republic border. (Reuters)
08OCT: Leading Wall Street banks are more likely to head for New York than the eurozone if they move out of London, their bosses indicated, adding that the UK’s exit from the EU could trigger a break-up of the remaining bloc. (FT)
09OCT: British Secretary of State for Defence Michael Fallon said Britain would not make companies list or name their foreign workers after an outcry from business groups and opposition politicians who said any proposal to “name and shame” employers would be divisive and discriminatory. (Reuters)
10OCT: A group of British MPs called for a parliamentary vote on Britain’s future relations with the EU, warning the option of a “hard Brexit” that has hit the pound would be a “grave danger”. (AFP)
Sample of Twitter handles tweeting about the latest developments of the post-Brexit referendum:
@AlexWhite1812 – Alex White, Director, Global Research
@DavidAllenGreen – David Allen Green, Columnist on law and policy, Financial Times
@GrayInGlasgow – Michael Gray, Columnist, The National (Scotland)
@GuyVerhofstadt – Guy Verhofstadt, President, Alliance of Liberals and Democrats for Europe
Sample of Third Party Validators regarding the latest developments of the post-Brexit referendum:
Athanasios Vamvakidis, Global head of G10 FX Strategy, Bank of America Merrill Lynch
“Events like what we’ve just seen for sterling are supposed to be extremely rare, particularly in the foreign-exchange market. But the truth is that such events keep happening.”
“Computers Seen as a Culprit in Pound’s Plunge”, WSJ, 07OCT16
Charles Grant, Director, Centre for European Reform
“In most EU countries the big issue is inflows of people from outside, not inside the EU. In Germany, for example, mainstream politicians do not see intra-EU migration as a big problem. So the 27 are not going to allow the British to combine single-market membership with controls on EU migration.”
“EU leaders line up to insist UK will pay a high price for Brexit stance”, Guardian, 08OCT16
Fredrik Wesslau, Senior policy fellow, European Council on Foreign Relations
“A few years down the line, when the U.K. is not a member of the European Union, I think we will see a…much softer policy towards Russia.”
“Brexit Likely to Alter EU’s Sanctions Policy”, WSJ, 06OCT16
Paul Johnson, Director, Institute for Fiscal Studies
“The world believes that the U.K. is going to be poorer in the future, and find it more expensive to trade. Essentially, the world is betting against the pound.”
“For Britain’s ‘Brexit’ Bunch, the Party Just Ended”, NYT, 07OCT16
Steve Peers, Professor, University of Essex
“I don’t really get the security or sensitivity argument. Whatever the reasons, this will come across as hostile, narrow and xenophobic.”
“Brexit: Government ‘bars foreign academics from advising on EU withdrawal’”, Independent, 07OCT16
Sample of open source research conducted by TRG analysts related to the aftermath of Britain’s vote to leave the European Union:
1. Commonwealth warns of knock-on trade impact of Brexit
Media: Agence France-Presse (AFP)
Date: 05 October 2016
London, Oct 5, 2016 (AFP) – Sterling’s exchange rate plunge could damage exports to Britain from Commonwealth countries, the 53-country body warned Wednesday, voicing concern at the potential knock-on effect of Brexit.
But while a weaker pound might hit exports to the UK, and be bad news for tourists and remittances coming the other way, Britain’s exit from the EU opened up the potential for new trade avenues, it said.
2. Pound hit by ‘flash crash’ in biggest fall since Brexit
Media: Agence France-Presse (AFP)
Date: 07 October 2016
Tokyo, Oct 7, 2016 (AFP) – The pound suffered a “flash crash” Friday morning, its biggest drop since Britain voted in June to leave the EU, with confused traders scrambling to understand the reason for the sharp sell-off.
Sterling fell off a cliff in early Asian trade to hit $1.1841 — its lowest level since mid-1985 — before immediately rebounding to around $1.2450.
3. EU leaders line up to insist UK will pay a high price for Brexit stance
Media: The Guardian (UK)
Byline: Jon Henley
Date: 08 October 2016
Britain and the EU appear more bitterly divided over Brexit than at any time since the referendum, with European leaders ramping up their rhetoric after Theresa May signaled she would seek a clean break with the bloc.
The prime minister’s Conservative conference speech, in which she indicated Britain would prioritize immigration control and restore the primacy of UK law to become an “independent, sovereign nation” without full access to the single market, drew a sharp response from continental capitals.
4. Scottish nationalists say UK has ‘no mandate’ for hard Brexit
Date: 08 October 2016
LONDON (Reuters) – British Prime Minister Theresa May has no democratic mandate to pursue a ‘hard Brexit’ that would cut political and trade ties with the European Union, the Scottish National Party said ahead of its annual conference later this week.
Most Scots voted for the United Kingdom to stay in the EU, unlike their compatriots in England and Wales, and the SNP has said June’s result may re-open the case for another referendum on Scottish independence after 2014’s vote to stay in the UK.
5. Anti-Brexit activists erect mock border posts in Ireland
Media: Deutsche Presse-Agentur (DPA)
Date: 08 October 2016
London (dpa) – Hundreds of anti-Brexit activists erected six mock border posts between Ireland and Northern Ireland on Saturday to highlight their claim that Northern Irish voters face leaving the European Union against their will.
The Border Communities Against Brexit group said it staged the protest to urge the British government to respect Northern Ireland’s majority vote for remaining in the EU in a referendum on June 23.
Fifty-six per cent of voters Northern Ireland chose to remain in the EU, compared with 48 per cent across the United Kingdom.
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