Blogs

An £18bn misunderstanding

Author: 
31 Oct 2016
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Region: 
EU/Eurozone

A British think tank rather definitively announced last week that it had added up the potential tariff bill for EU-UK trade in a ‘hard Brexit’ scenario – and declared the EU the bigger loser by some margin. Applying the EU’s existing tariffs by tariff line to existing trade flows gave them a ‘bill’ for EU exports of around £13bn. The implied tax on UK exports to the EU was less than half this. Inevitably this has got quite some media coverage, although it largely reflects the volume of flows in both directions – i.e. the UK’s deficit in goods trade with the EU. However, to see this differential purely as UK leverage in a future negotiation with the EU requires you to ignore two basic things about trade.

'Singapore of the North Atlantic': a viable option for post-Brexit Britain?

Author: 
28 Oct 2016
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Region: 
UK

In the months since Brexit there have been murmurings about whether, post-Brexit, Britain could adopt a ‘Singapore model’. A number of Brexiteers in the financial sector have suggested that Britain could become a “super-duper Singapore” through deregulation and focusing on new markets in Asia.

Offshore Britain?

Author: 
27 Oct 2016
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Region: 
UK

According to one major newspaper, the UK Government is developing a “nuclear” Brexit negotiating threat in the form of a corporation tax cut to 10%. The logic goes that the prospect of an aggressively low-tax “offshore” UK on the doorstep would scare the EU into accommodating British preferences for the future UK-EU relationship. But as with all nuclear deterrents, the question boils down to one of credibility: could and would the UK actually deliver a CT rate of 10%?

Spain will have a new government, but how much will it be able to do?

Author: 
26 Oct 2016
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Region: 
EU/Eurozone

After 10 months of political uncertainty and two general elections, Spain will now get a government, but one that will be severely constrained. Incumbent interim centre-right Prime Minister Mariano Rajoy will now face, and win, an investiture vote in the Congress of Deputies at the end of the week. This follows the decision by the centre-left Socialist Party at the weekend, who held the balance of power, to reluctantly abstain in the vote. Faced with the possibility of a third round of elections, the Socialists decided to unilaterally abstain, without any negotiations or policy concessions from the governing People’s Party. While Mariano Rajoy will now govern as a minority – with nearly 50 seats fewer than his party had when it governed as a majority – the prospect of significant policy change remains unlikely. 

Is Donald Trump about to become an exception to the ‘October 31 rule’?

Author: 
21 Oct 2016
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Region: 
Americas

Donald Trump’s performance in the third and final presidential debate seems unlikely to do much to stem his plummeting popularity. It is not unusual for presidential campaigns to be tawdry affairs but the last couple of weeks has seen the race between Trump and Hillary Clinton shock even seasoned political commentators. The clip of audio revealing Trump’s amused commentary on how his status allowed him to grope women has been followed by a slew of further accusations and now an apparent willingness to refuse to accept the election outcome. 

CETA: What’s the matter with Wallonia?

Author: 
21 Oct 2016
|
Region: 
EU/Eurozone

This has been a tricky week for EU trade policy. Up until last Friday, EU governments were largely expected to unanimously give their final greenlight in this week’s Council meeting for the signing and provisional implementation of CETA. However, this week the minister president of Belgium’s Wallonia Region Paul Magnette de facto ordered the Belgian federal government to vote against the deal. The Canadians have just walked out of attempts to patch up an agreement in time for the 28th October formal signing at the EU-Canada summit. Clearly the ability of little Wallonia to halt the ratification of the EU’s flagship FTA in 2016 is an issue. The question will be how to resolve it.

Pravin Gordhan and what happens next in South Africa

Author: 
21 Oct 2016
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Region: 
Africa

In his time, Pravin Gordhan has played many roles: pharmacist; anti-apartheid activist; prisoner; chief taxman; and finance minister not once, but twice. In South Africa’s current political morality play, he is cast as the martyr – fending off what many see as politically motivated accusations of fraud from the National Prosecuting Authority (NPA) to prevent him exposing unsavoury dealings between President Jacob Zuma and the Gupta family. What happens next will almost certainly have big consequences for the ANC and South Africa. 

Marmite for banks

Author: 
14 Oct 2016
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Region: 
UK

When British Prime Minister Theresa May addressed her Conservative Party conference earlier this month she railed against the side-effects of super-low interest rates and bemoaned the cost to savers. She promised to fix the problem “because that’s what a Conservative Government can do” raising concerns about whether a government that says it is “prepared to intervene” might be about to squeeze the independence of the Bank of England. That is most likely not the message she intended to send. Somewhat ironically, however, her market moving speech, and the economic fall-out from the Brexit vote, may help to produce the conditions that allows interest rates to rise.