I have spent this week in Shanghai and Beijing explaining the likely consequences of the vote for Brexit to investors and hearing their views.
The political manoeuvring over Heathrow expansion is a case study in political risk and the final decision, recently postponed once again, will present an important test for David Cameron’s successor.
There are reports today that the European Commission is on the verge of the declaring the EU-Canada CETA a mixed agreement, paving the way for it to be ratified via national parliaments. This would be a big reversal for the Commission, which has fought a long battle over the Lisbon Treaty and what it does or does not do to restrict member state ratification rights in trade deals.
It was hard to imagine before 23 June that the uncertainty about what exactly ‘Out’ would mean could get any worse. But since the vote all sorts of ideas have been floated. Is it possible to peer through the Brexit fog to get an idea of where the UK’s relationship with the EU might be heading?
My colleague Gregor Irwin has just published a great blog on the ‘room in the middle’ between the views of the supporters of Brexit in the UK and the emerging views in the rest of Europe on what might constitute an acceptable trade-off between rights in the single market and the UK’s expressed intent to take back policy control from Brussels. Gregor’s view is that one possible compromise is ‘partial participation in the single market’ and UK involvement in some horizontal EU programmes all priced against a set of UK policy concessions that allow the EU27 to feel that the UK is not cherry-picking just the bits of being ‘in’ Europe it likes.
In the midst of some of the most tumultuous events ever seen in UK politics, Energy Minister Andrea Leadsom’s appearance yesterday before the Energy and Climate Change Committee received little attention. But Leadsom, now a Tory Party leadership contender, trailed today’s decision by the government to back the Committee on Climate Change recommendation for the Fifth Carbon Budget of a 57% cut in emissions from 1990 levels by 2032 and thus confirmed a major pillar of UK energy policy. With DECC estimating that the UK needs around £100 billion of investment in energy infrastructure by 2020, this will be a welcome point of clarity and continuity at a time when much else in UK politics and public policy looks deeply uncertain.
The story of Spain’s December 2015 general election was fragmentation. I made the case myself here. Spain’s historic two main parties – the centre-right PP and the centre-left PSOE – fell to just above a combined 50% of the vote in that election.
EU countries agreed last night a set of common anti-avoidance principles for corporate taxation, incorporating the OECD’s Base Erosion and Profit Shifting principles into law. This is seen by many as a watershed for co-operation on the design and base of business taxes, going far beyond earlier commitments to exchange information and co-operate in the enforcement of tax rulings.
While a lot has been written and said about the impact of Brexit on EU member states (and we have offered our own assessment), less attention has been paid to Turkey. One of the few statements came last week from the head of the Turkish-British Business Council, Remzi Gür, who said that the country would not suffer any commercial or strategic losses if the UK left the EU. This might be an overly optimistic assessment, however.
That is the headline you did not read last week, but in many ways it should have been. The focus of analysts has naturally been on when the Federal Open Markets Committee – the group that sets US monetary policy – will next raise interest rates, following the first rise in seven years last December. For now, the Fed is on hold, with expectations falling of another increase when it next meets in July, particularly after disappointing jobs figures in May. But in sharp contrast to this picture of inactivity, the Fed has been steadily revising down its forecast for longer term rates. This tells us much about the future prospects for the US – and global – economies.