First published in Kleine Zeitung, Austria
Brexit and The City of London
If the Chancellor thought his words this morning would steady the market he was wrong. The market fears Brexit.
By noon this morning sterling had fallen by 3-4% dropping to the lowest value against the US dollar for 31 years.
In terms of holiday money, a traveller will get about £9 less in foreign currency when exchanging £100.
10 year UK gilts have fallen below 1% for the first time ever. All the FTSE indexes were down. The FTSE 100 was 1.9% down at noon (2.55% down at close of trading) and the FTSE 250 was 5.94% down at noon (6.96% at close of trading).
Banks are seen as vulnerable. Barclays has lost 30% of its value since the Referendum and RBS is 32% down. Airline and Property shares are also out of favour. Easy Jet was down 18% today. S&P has followed Moodys in downgrading the UK’s AAA credit rating to AA saying that the referendum result could lead to “a deterioration of the UK’s economic performance, including its large financial services sector“. Downgrades make government borrowing more expensive.
The FT published this on the day after the Referendum: “Leave vote a disaster for City and business“. One comment was rather prophetic: “Lord Hill, the Briton installed after lobbying as European Commissioner for financial services, looks set to lose his job. His project for capital markets union would be completed by a continental substitute. The City, where three-quarters of Europe’s securities business is transacted at present, would no longer be part of it.” In fact, Lord Hill resigned the next day before he was pushed.
Brexit and Clown Boris
Boris Johnson still scribbles a column for the Telegraph and on Sunday he wrote “I cannot stress too much that Britain is part of Europe – and always will be“. Reuters picked this up and Breitbart published this story: “Boris floats associate membership with freedom of movement maintained“. See also this BBC report: Brexit: Boris Johnson – time to build bridges with Remain voters. It contains a video of Boris giving assurances on what he thinks will happen in the negotiations which sounds very much like a Norway style EFTA solution .which makes one wonder why Boris spent so much time in a campaign based on immigration which was hardly distinguishable from that of UKIP. It seems some aspects of the Clown’s scribbles have upset the EU member states: Brussels rejects Boris Johnson ‘pipe dream’ over single market access. In effect confirming that access to the single market requires the acceptance of free movement.
Meanwhile, the Conservative Home blog is canvassing its followers on their preferences for the next leader of the Tories: “Who should be the next Conservative leader? And should there be a snap election? Take our monthly survey.”
One comment from a reader included this:-
“Boris for leader – are you all quite mad? He is a self serving clown. Having him sitting with serious world leaders, whilst the B role of a zip wire runs in the background or wiff waff quotes abound. We would be a laughing stock. He is a very clever man BUT he is also a buffoon. The court jester of politics. Like all politicians he lies, lies and lies again, the back-peddling from the EU referendum is deafening. If you want a philanderer leading the country I am sure we can find another who covers his tracks better. “
The Brexiteers are seeking a fellow Brexiteer, with Clown Boris as their favorite, but hopefully, the Party will select someone more responsible and fit to be recommended by the PM to the Sovereign for appointment as his successor. For example, Teresa May ?
Can Parliament decide to Remain?
In a previous post I expressed the view that Parliament could properly decide whether or not to implement the Referendum vote – Parliament must approve Brexit.
It is comforting to see that a very prominent barrister, Geoffrey Robertson QC, has endorsed that view in The Independent: Brexit loophole? MPs must still vote in order for Britain to leave the EU, say top lawyers. The report notes that Charles Flint QC has said the same thing in a letter to The Times.
But I would add that it would be prudent for the new Prime Minister to obtain the approval of Parliament prior to the presentation of the Article 50 Notice.because in default of a withdrawal agreement Article 50.3 provides that the Article 50 Notice can lead to automatic withdrawal.
The Cabinet met this morning and afterwards there were many expressions of unity, sweetness and light from those who had campaigned for Vote Leave. The process for choosing a new leader for the Conservative Party is under way and should be completed by September.
The Prime Minister then made a Statement to a packed House of Commons.on Referendum issues. He made it clear that it will be the next Prime Minister who will decide whether and when notice will be given to the EU of an intention to leave. That, of course, is not going to make the other Member States or the Commission all that happy.
The Prime Minister also informed the Commons that a special EU Unit was being set up by the Civil Service to prepare the ground for the forthcoming negotiations. Given that Lord Hill was a special adviser to Kenneth Clarke and head of John Major’s Political Office during the Maastricht Treaty negotiations, and then a Minister before being nominated to the Commission – he might be very useful now he is back.
The Labour Party is in difficulties with its leader. It looks as though the parliamentary party is going to say that it has lost confidence in the Leader. See this BBC Report: Who’s staying and who’s going in the shadow cabinet? and this list in the Evening Standard: Labour resignations: Latest list of departures as Jeremy Corbyn faces uprising from his MPs
But the Leader’s job is in the gift of the members of the party and Mr Corbyn is saying that if there is a new election process he will stand again and, given the support of Momentum, he might well win. As if to prove that, Momentum managed to produce a mass rally in support of Corbyn at very short notice. See this Evening Standard video: Keep Corbyn protest: Defiant leader addresses huge crowds after ‘catastrophic’ meeting with MPs. Some Labour MPs are now talking about leaving the party. (much as the SDP once did.
The so-called Independence Day
Both Boris Johnson and that dreadful man, Nigel Farage, spoke of the Referendum by claiming their referendum victory as “Independence Day”. They seem to forget that this country is both independent and formerly an Imperial power.
Most countries that celebrate their independence actually got if from us .