Brexit White Paper Submitted
13 July, 2018
Yesterday was another trading day absent of any key eco stats for the UK with the main release of the day coming from across the pond. Latest Inflation figures for the US showed a drop in the monthly figure from 0.2% to 0.1% when no change was expected. When announced the USD weakened by around 0.3% against both the pound and Euro as whilst this single figure may not have any bigger implications, a continued trend of lowering inflation could see delays on the current plans to hike interest rates another 2 times in 2018.
For the UK Thursday was all about the Brexit white paper that was officially submitted to the EU. The 98-page blueprint for the UK’s exit plan from the EU has already seen the resignations of David Davis and Boris Johnson and is intended to fast-track negotiations and provide answers to the most difficult areas such as the Irish border conundrum. To help break it down, here are the key points to take from the white paper:
- The Irish Border – The UK government is proposing a common rulebook that includes a free trade area for ‘goods’ (NOT services) that would see a frictionless border remain in place.
- Common Rulebook – By maintaining EU standards and with the UK adhering to the EU’s customs code for goods, this would allow for free passing of goods through borders without any issues.
- Free Trade Area – This is said to be ‘the core of the UK’s proposal’ and suggests a frictionless travel of goods between the UK and EU by removing the tariff charges current in place and using new technology that would see tariffs charged based on their final destination.
- Ending free movement – EU citizens will no longer be able to live in Britain with the same rights as UK residents. Brussels have been offered the opportunity to negotiate a scheme to allow business professionals and students to move between countries for business purposes.
- Security – Britain is pushing hard for a close security partnership with Brussels, requesting access to a number of programmes and databases that the UK see as vital to having the best border security for both the UK and Europe.
- Pensions & Healthcare – As advised last year, UK citizens living in the EU in the future will continue to benefit from their pensions entitlement and associated healthcare.
As of yet, the markets are awaiting the response from the EU as to whether this white paper is acceptable, or even close to being acceptable, with a number of EU sided reports this week suggesting that the EU still sees a 50:50 chance of a NO DEAL come October. The white paper is certainly ambitious and whilst it targets free movement for goods, there will still be concerns over the services sector and in particular the implications on the financial sector. Now we eagerly await the response from the EU which could have a big impact on Sterling exchange rates depending on the details.
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