Posts Tagged ‘EU’s single market’

A Look at What Is Ahead Now That Brexit Talks Have Started

June 19, 2017

BRUSSELS — The talks on Britain’s exit from the European Union finally started Monday when EU negotiator Michel Barnier said “Welcome David” to his counterpart, David Davis, and led him toward a huge oval table at the European Commission headquarters.

As the negotiations kick off, here’s a look at some of the major issues the sides face.



They will first have to unravel the British from the EU, which will be challenging to say the least. That will involve everything from deciding what waters each side can fish in to how nuclear agreements should be renegotiated. Only when there is “sufficient progress” does the EU want to look at creating a new relationship with Britain on things like trade and migration. Britain hopes the two themes — divorce terms and future relationship — can be discussed in parallel.



While Britain has struggled to agree on and present a coherent list of demands, the 27 EU nations have had one message all along — in the words of Barnier on Monday: “We must first tackle the uncertainties caused by Brexit.” It means clarifying the fate of EU citizens in Britain and vice versa, how to manage the border between Ireland and the U.K., and how much Britain will pay.



The EU says Britain can’t leave without settling its bill, paying up for all its commitments that are still ongoing, including projects that might reach into the next decade, as well as the U.K.’s share of EU staff pensions. EU officials have put the figure at around 50 billion euros ($63 billion) while other estimates by think tanks and in the media go as high as twice that amount. As in any divorce, count on both sides to be picky in splitting the goods and dues.



The EU says it will not compromise on its core “four freedoms”: free movement of goods, capital, services and workers. Britain insists that it must regain the right to control immigration and end free movement from other EU countries into Britain. May says Britain will leave the EU’s single market in goods and services and its tariff-free customs union, but nonetheless, somehow, wants “frictionless” free trade.



Even though May triggered the two-year process on March 29, negotiators will have to get a full agreement much faster than March 2019. EU nations and the European Parliament will have to approve any future deal and that can take months. EU officials have therefore put the realistic deadline at October — and at the latest November — of 2018. If no deal is struck by then, the sides may have to create a transitional deal, possibly prolonging some of the current relationship.

If Britain crashes out of the EU without a deal, that would create huge uncertainties for citizens and businesses as well as issues like global security. How bad that would be in reality is anyone’s guess.

UK’s May seals deal to prop up government, but loses key aides — Is the situation “all but ungovernable”?

June 11, 2017


By Alistair Smout and Amanda Ferguson | LONDON/BELFAST

British Prime Minister Theresa May secured a deal on Saturday to prop up her minority government but looked increasingly isolated after a botched election gamble plunged Britain into crisis days before the start of talks on leaving the European Union.

Her Conservatives struck an outline deal with Northern Ireland’s Democratic Unionist Party (DUP) for support on key legislation. It was a humiliating outcome after an election that May had intended to strengthen her ahead of the Brexit push.

Instead, voters stripped the Conservatives of their parliamentary majority. As May struggled to contain the fallout, her two closest aides resigned.

Newspapers said foreign minister Boris Johnson and other leading party members were weighing leadership challenges. But Johnson said he backed May.

May called the early election in April, when opinion polls suggested she was set for a sweeping win.

May’s aides, Nick Timothy and Fiona Hill quit on Saturday following sustained criticism within the party of the campaign.

Gavin Barwell was named new chief of staff. The Conservative lawmaker who lost his seat on Thursday and has experience working as a party enforcer in parliament.

The change was unlikely to significantly quell unrest within the party. Most of May’s cabinet members have kept quiet on the issue of her future, adding to speculation that her days as prime minister are numbered.

A YouGov poll for the Sunday Times newspaper found 48 percent of people felt May should quit while 38 percent thought she should stay.


The DUP, whose 10 seats in the new parliament give May just enough support to pass legislation, agreed in principle to a “confidence and supply” arrangement, Downing Street said.

That means it will support a Conservative minority government on key votes in parliament without a formal coalition deal.

A source close to the DUP said the party was seeking more funding for the province and concessions for former British soldiers in exchange for supporting May.

Britain’s Prime Minister Theresa May addresses the country after Britain’s election at Downing Street in London, Britain June 9, 2017. REUTERS/Stefan Wermuth

Still the deal with the DUP risks upsetting the political balance in Northern Ireland. It aligns London more closely with the pro-British side in the divided province, where a power-sharing government with Irish nationalists is suspended.

The Observer newspaper said the DUP arrangement fell short of a full coalition agreement because of concerns among some Conservative lawmakers about the socially conservative DUP’s positions on gay rights, abortion and climate change.

The turmoil engulfing May has increased the chance that Britain will fall out of the EU in 2019 without a deal. Previously, she said she wanted to take Britain out of the EU’s single market and customs union in order to cut immigration.

Her party is deeply divided over what it wants from Brexit. The election result means businesses still have no idea what trading rules they can expect in the coming years.

EU Budget Commissioner Guenther Oettinger said it may now be possible to discuss closer ties between Britain and the EU than May had initially planned, given her election flop.

“For instance, if London were to stay in the customs union, then it would not have to renegotiate all trade agreements,” he told the Frankfurter Allgemeine Sonntagszeitung newspaper.

The pound on Friday fell 1.7 percent against the U.S. dollar and 1.4 percent against the euro.

After confirming on Friday that her top five ministers, including finance minister Philip Hammond, would keep their jobs, May must name the rest of her team, who will take on one of the most demanding jobs in recent British political history.

May has said Brexit talks will begin on June 19 as scheduled, the same day as the formal reopening of parliament. She confirmed this to German leader Angela Merkel in a phone call on Saturday.

She also reiterated that she would seek a reciprocal agreement early in the talks on rights of EU and British citizens, Downing Street said.

Elmar Brok, a German conservative and the European Parliament’s top Brexit expert, told the Ruhr Nachrichten newspaper that the two-year talks would now be more complicated.

“May won’t be able to make any compromises because she lacks a broad parliamentary majority,” he said.


Britain’s largely pro-Conservative press questioned whether May could remain in power.

The Sun newspaper said senior members of the party had vowed to get rid of May, but would wait at least six months because they feared a leadership contest could propel the Labour party into power under Jeremy Corbyn, who supports renationalization of key industries and higher taxes for business and top earners.

Survation, the opinion polling firm that came closest to predicting correctly the election’s outcome, said a new poll it conducted for the Mail on Sunday newspaper showed support for Labour now 6 percentage points ahead of the Conservatives.

“She’s staying, for now,” one Conservative Party source told Reuters. Former Conservative cabinet minister Owen Paterson, asked about her future, said: “Let’s see how it pans out.”

May had repeatedly ruled out the need for a new election before changing her mind. Labour stunned even its own supporters by taking enough seats from the Conservatives to deny them a majority.

The Times newspaper’s front page declared that Britain was “effectively leaderless” and the country “all but ungovernable”.

“The Conservatives have not yet broken the British system of democracy, but through their hubris and incompetence they have managed to make a mockery of it,” it said in an editorial.

If May is to honor the wish of the 52 percent of voters who opted last year to take Britain out of the EU, she must find a way to bridge the differences within her party.

Its eurosceptic wing has long been a thorn in the side of Conservative prime ministers. On the other hand, pro-Europe Scottish Conservative leader Ruth Davidson said she wanted to be involved in “looking again” at Britain’s aims for Brexit.

Davidson was one of the few Conservative success stories in the election as the Scottish wing of the party won 13 seats.

She has said she favors retaining the greatest possible level of access to Europe’s single market. Davidson also said she had received reassurances from May that the party’s deal with the DUP would not involve a rollback of gay rights.

(Writing by William Schomberg and Kate Holton; additional reporting by Alistair Smout, Costas Pitas, Kylie MacLellan and David Milliken in London, Andrea Shalal in Berlin; Editing by Kevin Liffey and David Gregorio)


China invites Britain to attend new Silk Road summit

February 8, 2017


FILE PHOTO: Chinese President Xi Jinping (R) shakes hand with British Prime Minister Theresa May before their meeting at the West Lake State House on the sidelines of the G20 Summit, in Hangzhou, Zhejiang province, China, September 5, 2016. REUTERS/Etienne Oliveau/Pool/File Photo
By Ben Blanchard and Elizabeth Piper | BEIJING/LONDON

China has invited British Prime Minister Theresa May to attend a major summit in May on its “One Belt, One Road” initiative to build a new Silk Road, diplomatic sources told Reuters, as London said she would visit China this year.

“One Belt, One Road” is Chinese President Xi Jinping’s landmark programme to invest billions of dollars in infrastructure projects including railways, ports and power grids across Asia, Africa and Europe.

China has dedicated $40 billion to a Silk Road Fund and the idea was the driving force behind the establishment of the $50 billion China-backed Asian Infrastructure Investment Bank.

China has so far given few details about who will attend the summit, to be held in Beijing.

The country’s top diplomat, State Councillor Yang Jiechi, told the official China Daily last week that leaders from about 20 countries have confirmed their participation, representing Asia, Europe, Africa and Latin America, though he did not give names.

One Beijing-based diplomatic source with direct knowledge of the invite list told Reuters that May was among the leaders who had been invited.

“China is choosing the countries it sees as friends and who will be most influential in promoting ‘One Belt, One Road’,” said the source, speaking on condition of anonymity.

Two other diplomatic sources confirmed May was on the invite list.

“It’s China’s most important diplomatic event of the year,” one of the sources told Reuters.

Chinese Foreign Ministry spokesman Lu Kang said plans for the summit are proceeding smoothly, and that details of the participants will be announced at a later date.

“China welcomes Prime Minister May to visit China at the appropriate time,” Lu told a daily news briefing.

Sri Lanka has already confirmed its prime minister is coming, and China says Philippine President Rodrigo Duterte is also attending.

Foreign leaders often combine attendances at important multilateral events China is hosting with official state visits to China.


Speaking in London, May’s aides confirmed she would visit China this year to discuss trade ties, the latest in a series of foreign trips to cement relations with major powers as she negotiates Britain’s divorce from the European Union.

May’s aides gave few details about the trip, but she is keen to strengthen her hand by securing foreign support before launching Brexit talks, which are set to be among the most complicated Britain has ever undertaken.

“It would be a renewed expression of the close relationship between Britain and China, something that you have seen obviously develop over the past few years,” May’s spokesman told reporters on Tuesday.

“I would imagine that trade would form some part of the discussions that we have.”

The Commerce Ministry has said China has an open attitude towards a free trade deal with Britain once it leaves the EU and was willing to study it, but Chinese officials have otherwise said little publicly about the subject.

May attended a summit in China of the G20 leading economies last September, shortly after she became prime minister following June’s referendum vote to leave the EU, and was invited by Xi to visit again.

With May having made clear she plans for Britain to leave the EU’s single market, trade has dominated her talks with foreign leaders in recent months.

She has secured assurances from U.S. President Donald Trump, Indian Prime Minister Narendra Modi and other world powers that they are keen to start talks on boosting links.

But her attempts to up the stakes in talks with the EU, which she is due to launch before the end of March, have also drawn criticism.

Some opposition lawmakers have accused May of ducking difficult issues to win promises for trade – a charge repeated when she became the first foreign leader late last month to meet Trump, who has since been criticized over his immigration curbs.

She also came under fire for strengthening ties with Turkish President Tayyip Erdogan, who has been criticized by rights groups for jailing tens of thousands of people after a failed coup in July.

(Additional reporting by Kylie MacLellan in London and Michael Martina in Beijing; Editing by William James, Catherine Evans and Lincoln Feast)

French PM, Juncker say Brexit deal must be worse than membership

February 6, 2017


France’s Prime Minister Bernard Cazeneuve (L) flanked by European Commission President Jean-Claude Juncker speaks in Brussels on February 6, 2017

BRUSSELS (AFP) – French Prime Minister Bernard Cazeneuve and European Commission chief Jean-Claude Juncker warned Britain Monday that the terms of any Brexit deal must not be better than full EU membership.Cazeneuve added that Britain must discuss its divorce agreement, including an exit bill that the EU estimates at 60 billion euros, before talks on a future relationship can even begin.

“We must first discuss the conditions in which the exit will take place, and to do it within the time allowed for negotiation, without wasting time,” Cazeneuve said after talks in Brussels with Juncker.

Cazeneuve said this should happen “with the aim of ensuring that the interests of the EU are defended and that a state leaving the EU can not benefit from a better regime than that between member states.”

Juncker, the former Luxembourg prime minister who heads the executive arm of the EU, gave a similar warning to Britain.

“We agreed on a central point: that the deal that will one day be offered to the United Kingdom should not be a deal as advantageous” as membership, he said.

New European Parliament chief Antonio Tajani meanwhile said MEPs “deserve to be involved in all decisions” about Brexit.

Parliament’s Brexit negotiator Guy Verhofstadt has warned the assembly, which has the final vote on any Brexit deal, could veto an arrangement which gives too much away.

British Prime Minister Theresa May has promised to trigger Article 50 of the EU’s governing treaties by the end of March, after which negotiators will have two years to thrash out a deal before Brexit happens.

May has said she wants Britain to keep as much access to the EU’s single market as possible while limiting immigration from EU countries but Brussels says she cannot pick and choose.

Britain believes the exit bill, which covers budgetary obligations and pension contributions for EU employees, should be closer to 20 billion euros, European sources said.

After Theresa May Sets Out Her Plan For Brexit, Many Applaud, Many Worry — UK is not a “supplicant” — “There is a fine line between ambitions and hopeless optimism.”

January 18, 2017

BBC News

Image may contain: 1 person

The Latest on British Prime Minister Theresa May’s speech on Brexit

By Gavin Stamp and Alex Hunt

David Davis, the secretary of state for exiting the European Union, says negotiations with the EU will conclude after two years as per Article 50.

Mr Davis was keen to stress that the UK is not a “supplicant” in negotiations and that a good deal would benefit both sides. He does admit, however, that implementation of new deals may take significantly longer.

Here’s the text of Laura’s analysis on BBC Radio 4’s Today:

Laura Kuenssberg

BBC political editor

The Brexiteers in government are delighted but, make no mistake, the government knows it is a risk to take this approach. There is a fine line between ambitions and hopeless optimism. If you were at the speech yesterday, watching the faces and the body language of the EU ambassadors who were all invited along to listen, their reactions ranged from looking sad and devastated to what looked like nausea among some of them. For the government, the appeal of clarity was very strong. They killed off some the accusations that were leveled at them that they did not know what they want and they could not make up their mind. That argument has gone. But this is the beginning of a very long and politically risky process. It is a bit like trying to cross the Himalayas on foot without oxygen or sherpas to carry your gear. It is a bit like Theresa May has made it to the top of the first foothill without too many injuries but if you look at ahead at the summits – in front of her they are enormous and full of jagged rocks. Past prime ministers have foundered on our relationship with the European Union and Theresa May is well aware of that.”

Shadow Brexit Secretary Keir Starmer says he is concerned that a disorderly exit could leave the UK with “no meaningful relationship” with the EU.

‘What I was highly critical of yesterday was Theresa May’s sort of bargain basement tax haven threat,” he told BBC’s Breakfast

“That would make people poorer, there’s no mandate for it and it is totally inconsistent.”

Jeremy Corbyn, who will face Theresa May later at Prime Minister’s Questions, echoed this view by tweeting that he would fight any attempt to turn the UK into a “tax haven on the edge of Europe”.



Today Programme

BBC Radio 4

Asked if he guarantees there won’t be any customs checks in future, Brexit Secretary David Davis says he can’t, but his aim is for a customs agreement that is as “frictionless as possible” – repeating a phrase that Mrs May used yesterday.

He rejects suggestions that the Civil Service simply isn’t equipped to deliver Brexit, saying he has spoken to senior mandarins in every single department and they all think it is possible.

He quotes former cabinet secretary Robin Butler as saying that if the civil service can cope with World War Two, it can cope with this.

In conclusion, he says he hopes Brits will see their economic prospects enhanced by Brexit while the UK remains “good friends” with its neighbours.

Today Programme

BBC Radio 4

Parliament will have debates and votes through the Brexit process, not just on the final deal, Brexit Secretary David Davis says. He cites other looming legislation such as the Great Repeal Bill. 

Asked what happens if MPs block the settlement, Mr Davis suggests that this “will not reverse” Brexit as the government has already been given a mandate to proceed by the referendum decision.

Parliament will not vote it down. This negotiation will succeed.”

David Davis: Public wants us to ‘get on with’ Brexit

Today Programme

BBC Radio 4

David Davis echoes Boris Johnson by saying there are a huge number of countries that are keen to do free trade deals with the UK – he names Canada, New Zealand, Australia and the US among them.

He says his goal is the best possible deal – both for the UK and the EU.

He is pressed by John Humphrys on how long the process may take. Mr Davis says he believes the fundamental negotiations can be done in two years although he agrees that the implementation phase may take longer.

Asked how long – John Humphrys mentions five years – Mr Davis says it won’t take that long and says the public wants the government to get on with it.

We need to do this expeditiously and that is what we are going to do.”

 Image may contain: 1 person, suit

David Davis: Best speech for a ‘long time’

Today Programme

BBC Radio 4

Brexit Secretary David Davis tells the BBC that Mrs May’s speech was “overwhelmingly positive” – describing it as one of the best speeches he has heard from a prime minister for a “long time”.

Quoting Donald Tusk – who said Mrs May’s ideas were “realistic” – he says the EU’s response has been measured and there hasn’t been the “push back” that you would expect at this early stage.

Pressed about criticism of the UK’s approach from European Parliament negotiator Guy Verhofstadt, Mr Davis says “Guy is only one player in this”.

Mr Davis says the UK wants a constructive relationship with the EU going forward, in areas like trade and security, but he says what the UK will not “take” is any kind of settlement designed to punish the UK.

Tomas Prouza, the Czech Republic’s secretary of state for EU affairs, tells Today that he thinks David Cameron could not have gotten any more from the EU in his negotiations. Mr Prouza says Cameron’s attitude to the EU was all wrong, as it suggested “We like your money but we don’t like your people”. Mr Prouza says that this is not the Europe anyone wants to see.

Catch-up: Newsnight on May’s speech, including Corbyn interview

Brian Taylor

Political editor, Scotland

It was, all in all, an assured performance by the prime minister. She looked and sounded confident as she delivered her Plan for Britain. But it might be thought appropriate to note the ironies and even potential contradictions.

Gemma Tetlow from the Financial Times explains the single market

Brexit: Prime Minister Theresa May says Britain will leave the EU’s single market — but will “seek greatest possible access to it”

January 17, 2017

LONDON — The Latest on British Prime Minister Theresa May’s speech on Brexit (all times local):

12:40 p.m.

Prime Minister Theresa May says Britain will ensure control of immigration from Europe as it exits the EU — though she pledged to guarantee the rights of EU citizens living in the U.K. as soon as possible.

May said that while Britain remains an open and tolerant country and wants to continue attracting the best talent, immigration has put pressure on public services like schools and health care.

May says that Brexit must mean controlling the number of Europeans arriving from Britain. She vowed to guarantee the rights of Europeans already living and working in Britain — as well as those of Britons living in Europe. But she didn’t provide details on either of those points.

Questioned on what Britain’s future immigration policy would look like, May said details had yet to be worked out.

12:20 p.m.

Prime Minister Theresa May says Britain will leave the EU’s single market — but will “seek greatest possible access to it” — as it exits the trade bloc.

May says her plans for Brexit cannot allow the U.K. to remain in the single market of the bloc because that would mean “not leaving the EU at all.”

May said she wanted Britain to be part of a customs union agreement with the other EU states, and remove as many trade barriers as possible. She did not provide details, but said she had an “open mind” on how to do it.


12:15 p.m.

The pound is rallying on British Prime Minister Theresa May’s focus on keeping Britain open to global trade.

Though her speech Tuesday indicates that Britain will leave the European Union’s single market, she stressed her government’s desire to make the country open to new trade opportunities in the global economy.

May added that Britain will seek a free trade deal with the EU after leaving it. Such deals, however, typically take years to negotiate.

The pound, which has been recovering Tuesday from steep losses earlier in the week, rallied to trade 1.9 percent higher at $1.2271. On Monday, it was as low as $1.20, the weakest level since October and near a 31-year low.


12:05 p.m.

Prime Minister Theresa May says that Britain plans to make a clean break from the European Union and not opt for “anything that leaves us half-in, half-out.”

In a major speech Tuesday, May said Britain won’t “hold on to bits of membership,” nor seek associate or partial membership of the bloc.

She says Britain will forge a “new and equal partnership” with Europe.

Britons voted to leave the EU in a referendum in June.

Setting out her vision for Britain, May said she wanted her country to emerge “stronger, fairer, more united and more outward-looking than before.”

She also said that Britain’s parliament will get to vote on a final Brexit deal.


11:15 a.m.

Anthony Scaramucci, who is part of President-elect Donald Trump’s transition team, says global elites have to get out of their comfort zones and listen to the people if they don’t understand how Trump was elected or why Britain voted to leave the European Union.

At a panel at the World Economic Forum, financier Scaramucci said the richest top 3 percent of the world benefited from the massive stimulus measures enacted by global central banks since the financial crisis and are basically back to where they were in 2007. The remaining people, he said, are “struggling.”

To those among the global elites who don’t understand that post-crisis phenomenon, Scaramucci had a message: “Go to the prairie lands of the United States, or perhaps places in Great Britain or places in Europe. You know the places. Listen to the people. We have to as a collective group of people come up with the right policies.”


10:25 a.m.

The chairman and CEO of Bank of America says major companies like his need clear rules before deciding how much business to maintain in Britain after it quits the European Union.

Brian Moynihan and other top bankers and executives gathered at the World Economic Forum in Davos are eagerly awaiting details about the U.K. exit plans from British Prime Minister Theresa May in a speech Tuesday.

Moynihan, speaking to The Associated Press, said Bank of America is working on “all kinds of scenarios” to possibly shift activities out of London after the so-called Brexit, but insisted “it’s still not clear what that would do, or wouldn’t do.”

He said: “It’s still premature to say what anybody’s going to do until you have one set of rules. London will be an important part of our company no matter what happens with the British economy.”

Noting a mass sense of “dislocation” in the British and U.S. electorate because of fast technological change, he said, “The No. 1 job for the leader of any enterprise, whether civil political or business, is to be responsive to the people they serve.”


9:05 a.m.

Prime Minister Theresa May is preparing to make a speech that will signal that Britain will make a clean break from the European Union and not seek to remain “half-in, half-out.”

In her most detailed address on the U.K.’s exit strategy, May will say that Britain doesn’t want “partial membership of the European Union” or “to hold on to bits of membership as we leave.”

Advance excerpts suggest May’s speech will disappoint businesses and voters who want the country to stay in the bloc’s single market.

It’s likely to be another shock for the pound, which hit a three-month low below $1.20 Monday. It traded slightly above that level early Tuesday.

Neil Wilson, senior market analyst at ETX Capital, said he was “expecting a wild ride for the pound today.”


In ‘Brexit’ Speech, Theresa May Outlines a Clean Break for U.K.

LONDON — In a speech that could define Britain’s relations with its neighbors for decades to come, Prime Minister Theresa May on Tuesday charted a course toward a clean break with the European Union, calling for the country to abandon the single market after more than four decades of integration with the Continent.

Mrs. May emphasized Britain’s determination to regain control of migration from the European Union and rejected the supremacy of the European Court of Justice, even at the risk of losing unfettered access to the single market, but she also said she wanted to procure tariff-free trade with the bloc and to keep parts of its customs union.

The long-awaited speech was a shift for Mrs. May, who had dropped heavy hints about her thinking but had refused to outline publicly how Britain would leave the bloc after voters supported a withdrawal in a June referendum.


Pound quivers near three-month low, stocks weak before May’s Brexit stance speech

January 17, 2017
By Shinichi Saoshiro | TOKYO

The pound hovered near three-month lows versus the dollar on Tuesday and stocks were mostly weaker as investors waited for British Prime Minister Theresa May to lay out plans to exit the European Union amid fears Britain will lose access to the single market.

Safe-havens such as the yen, gold and Treasuries gained in turn.

Speadbetters forecast a slightly lower open for Britain’s FTSE .FTSE, Germany’s DAX .GDAXI and France’s CAC .FCHI.

According to her office, May will say in a speech later in the day that Britain will not seek a Brexit deal that leaves it “half in, half out” of the EU. She is due to set out her 12 priorities for upcoming divorce talks with the bloc.

Those priorities will include leaving the EU’s single market and regaining full control of Britain’s borders, media reported, reinforcing fears of a ‘Hard Brexit’ which has pushed the pound to some of the lowest levels against the U.S. dollar in more than three decades and weighed on other riskier assets.

Sterling hovered around $1.2070 GBP=D4, in striking distance of $1.1983, its lowest since Oct. 7 struck the previous day.

Growing uncertainty over the policies of Donald Trump have also hurt equities, which had rallied in many parts of the world thanks to speculation that the U.S. President-elect would enact bold stimulus and reflationary measures once in office.

“Markets affected by the twin political black swans of 2016 – the Brexit vote and Trump win – remain volatile and uncertain,” wrote David Croy, senior rates strategist at ANZ.

U.S. stock futures ESc1 dipped 0.3 percent. Wall Street was closed on Monday for Martin Luther King Day.

Japan’s Nikkei .N225 brushed a five-week low and was last down 1.5 percent. Australia and Shanghai .SSEC also suffered losses, but MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.4 percent.

“Europe is going to be dominating the headlines today, and the focus is justifiably on May’s speech, and also on the interviews that Trump gave to European newspapers,” said Stefan Worrall, director of Japan equity sales at Credit Suisse in Tokyo.

The euro nudged up 0.3 percent to $1.0642 EUR= to pare most of its overnight losses.

The yen benefited from its safe-haven status, gaining versus the dollar, euro and sterling.

The dollar was down 0.3 percent at 113.790 yen JPY= having gone as low as 113.610 the previous day, its weakest since Dec. 8. The greenback also pulled back against the Swiss franc, another currency sought out when risk sentiment sours.

The Australian dollar was up 0.3 percent at $0.7499 AUD=D4, inching back towards a one-month high of $0.7519 reached last week on the back of higher iron ore prices.

Gold was helped by the heightened risk aversion stemming from Brexit and uncertainty over Trump’s plans.

Spot gold was $1,206.70 an ounce XAU= after climbing to $1,207.86 overnight, its highest since late November.

Crude oil was higher as Saudi Arabia’s steady commitment to reduce production offset a report forecasting U.S. output would rise again this year. [O/R]

U.S. crude was up 0.2 percent at $52.46 a barrel CLc1.

Elsewhere, the price of U.S. Treasuries rose, taking the yield on the benchmark 10-year note US10YT=RR down by about 2 basis points.

(Reporting by Shinichi Saoshiro; Additional reporting by Lisa Twaronite in Tokyo; Editing by Eric Meijer and Kim Coghill)

Investors uneasy ahead of Trump’s inauguration — Pound sharply lower, yen higher — ‘Hard Brexit’ fears — Investors buy the safety of the Japanese currency

January 16, 2017


Investors consider a safe haven in times of geopolitical and financial instability. “With plenty of worries, the near-term course of the market is unpredictable.”

Market Watch

Jan 16, 2017 1:45 a.m. ET

Investors also uneasy ahead of Trump’s inauguration



The yen remained stronger against its rival currencies in Asian trade on Monday, as lingering concerns about Brexit bruised sentiment and prompted investors to buy the safety of the Japanese currency.

Investors’ worries about a hard Brexit scenario have hit the U.K. pound hard, ahead of a key speech by U.K Prime Minister Theresa May.

Having nose-dived as much as 1.6% against the dollar, the pound trimmed its earlier losses later in the Asian trade. The pound GBPUSD, -1.2394%  was changing hands at $1.2037 midday, down 1.1%. The euro GBPEUR, -0.7689%  was trading around £0.8818 after jumping to £0.8852.

In her speech on Tuesday, May is expected to elaborate on the U.K’s priorities in negotiations over its exit from the European Union. Several British newspapers reported that Ms. May will emphasize that the U.K will leave the EU’s single market to regain control of immigration policy.

These headlines bolstered the Japanese currency, which investors consider a safe haven in times of geopolitical and financial instability.

The greenback USDJPY, -0.35%  weakened to ¥113.93, compared to ¥114.75 late Friday in New York.

The euro EURJPY, -0.80%  tumbled to ¥121.02 from ¥121.79. The pound GBPEUR, -0.7689%  , which fell 1.9% to ¥136.84 from ¥139.45 late Friday, was still weak at ¥137.08.

In addition to lingering Brexit concerns, investors were sitting on the sidelines ahead of President-elect Donald Trump’s inauguration speech scheduled Jan. 20.

Many investors have tempered their optimism, as Trump last week failed to give more details on his administration’s plans for fiscal stimulus, deregulation or tax cuts at his first news conference since the U.S. elections.

“With sentiment turning to risk-off, investors buy the dollar but they buy the yen more,” said Marito Ueda, director at FX Prime by GMO. “With plenty of worries, the near-term course of the market is unpredictable,” said Ueda.

Among other currency trades, the euro EURUSD, -0.4791%   rose to $1.0624 from $1.0614 late Friday.

The WSJ Dollar Index BUXX, +0.33%  , a measure of the U.S. dollar against a basket of major currencies, was up 0.14% at 92.01.

Elder Statesmen Who Built the European Union Encourage Britain To Stay

February 14, 2016

By Paul Taylor

BRUSSELS (Reuters) – Elder statesmen who built and shaped the European Union have a clear message for Britain as it prepares for a referendum on whether to stay in the bloc: “We love you. Don’t leave us now.”

Valery Giscard d’Estaing, father of the European Monetary System that was the forerunner of the euro single currency, said that despite its long-standing semi-detached approach to Europe, keeping Britain in was well worth the trouble.

“I strongly hope they stay,” the former French president, who turned 90 on Feb. 2, told Reuters in an interview in Paris.

Giscard took office a year after Britain joined the European Economic Community in 1973 and, despite building close relations with then West Germany, he has always been an Anglophile.

“Britain has an ancient and very brilliant history, the good citizenship of its population, an old and deeply authentic democratic tradition and expertise in international trade,” the veteran center-right statesman said.

Europe was perfectly able to accommodate a member state that wanted to be in the big single market but did not wish to join the euro or be drawn into closer political union with continental powers, Giscard said.

Etienne Davignon, 83, the Belgian statesman and business leader who served in the European Commission under its only British president, Roy Jenkins, said the EU could adapt its structure to allow the euro zone to integrate further while keeping Britain in the EU’s single market.

“This is not an impossible question to resolve: how you go further without harming those who are left behind,” Davignon said in a separate interview in Brussels.

“This is a legal organization and it’s perfectly possible to organize this.”

The former Commission vice-president, who restructured and modernized Europe’s steel industry in the 1980s, said Britain had made a major contribution to the EU by promoting the development of the single market and free trade.

“Britain is an honest member. What is decided they implement. What they don’t like, they argue on,” Davignon said.

Both statesmen said a British vote to leave the EU in a referendum expected as early as June would be a lose-lose proposition for all sides.


Giscard, who has met every British leader from Edward Heath – the only one he described as a “true European” – to David Cameron, said geography dictated the nature of Britain’s ties with continental Europe.

“From the outset, Britain positioned itself somewhat at a tangent to the European system,” he said. “The current efforts by David Cameron’s government run along the same lines.”

Most of the issues that the Conservative British leader was trying to address in a renegotiation of membership terms, due to culminate in an agreement at a Brussels summit later this week, were “false problems” that could easily be settled, he said.

For example, the EU had recognized since the 1991 Maastricht treaty that the objective of “ever closer union” did not mean Britain would have to join the single currency. It was Britain that had chosen to admit European migrant workers as soon as the bloc enlarged in 2004, and London could amend its welfare laws if it wanted to change the benefits they receive, he argued.

As for Britain’s fear that the City of London financial center could have regulation imposed on it by the euro zone, he said: “The problem doesn’t arise in reality because euro zone countries have no intention of regulating non-euro countries.”

The only “red line” in any deal should be that Britain and other outsiders are not allowed a right of prior approval on the closer integration of the euro zone, Giscard said.

At a time of global political disorder and instability around Europe’s borders in the Middle East and Africa, a British exit from the EU would spread disorder into Europe, dealing a blow to the standing of the bloc and its single currency.

It would also damage British economic interests, he said.

“London’s prosperity is very much built on its financial activity, and breaking or weakening that link would certainly have a negative effect on the prosperity of London as well,” Giscard said.

Giscard, who served as president from 1974 to 1981, went on to head the convention that drafted an ill-fated European constitution in 2003, which was voted down in referendums in France and the Netherlands in 2005.

He is still active in public life as he enters his 10th decade, his mind as razor-sharp as ever, and keen to revive European integration, which he acknowledges has broken down.

He plans to address the Oxford Union debating club at Britain’s ancient university in early March to encourage Britons to see the advantages of EU membership.

His longtime partner in European leadership, former West German Chancellor Helmut Schmidt, died a few weeks ago. They maintained regular ties for decades after leaving power.

Keen to speak a few words of English during the interview, he said: “To break up a system that works will have a negative impact. The British will wonder ‘What are we going to do now?’ and Europeans will say ‘It’s too bad the British left’.”

Turning to the future of the EU, Giscard said he was sure there would be initiatives after next year’s French and German elections to reinvigorate the drive towards political union.

“The momentum can be revived, first of all by a British decision to stay in the union,” he said.

Core euro zone countries centered on the EU’s six founding members – France, Germany, Italy, Belgium, the Netherlands and Luxembourg – could commit themselves to a fiscal union with common tax rates on companies, individual income and capital within five years, he suggested.

Davignon said the real problem was that euro zone countries did not know how to move forward. He called recently for European nations to swear a new “Tennis Court Oath”, modeled on the vows of the founders of the French Revolution.

“Each country has to decide for itself how far they want to go. But the present ambiguity is bad for everybody,” he said.

(Writing by Paul Taylor; editing by Andrew Roche)