Thursday, 1 November 2018

Pound surges after UK and Brussels 'strike trade deal on financial services'

  • Pound surged on rumours the UK and EU have deal covering financial services
  • Dominic Raab has raised hopes of Brexit breakthrough in letter to senior MPs
  • Brexit Secretary told Commons committee he 'expects' a deal by November 21
  • Aides played down the significance insisting the deadline was an 'ambition' 
The Pound surged today amid claims the UK and EU have struck a trade deal safeguarding financial services ties. 
A tentative agreement is said to have been reached that would keep the City's access to markets on the continent.
The blueprint could see the two sides commit to having 'equivalent' regulations - with an arbitration system for any disputes and a notice period for diverging.
The apparent breakthrough emerged after Brexit Secretary Dominic Raab sparked a wave of optimism by saying he 'expects' a divorce deal to be settled by November 21.Theresa May (pictured at Downing Street yesterday) has been fighting to get a Brexit deal with the EU
Theresa May (pictured at Downing Street yesterday) has been fighting to get a Brexit deal with the EU
But officials have been scrambling to play down the remark - made in a letter to senior MPs - insisting there is still a major sticking point over the Irish border backstop.
And Downing Street said today that those speculating over a breakthrough needed to 'take a deep breath'.  
‘While we continue to make good progress agreeing new arrangements for financials services, negotiations are ongoing,’ the PM's spokesman said. Sabine Weyand, the deputy to EU chief negotiator Michel Barnier, is also said to have told national ambassadors yesterday that 'nothing new' has happened in the talks.
And Mr Barnier today took to Twitter to warn that suggestions of a financial services deal were 'misleading'.
EU nationals will still be able to move to Britain and work for a 'transition period' even if there is no Brexit deal, Sajid Javid last night said.
The Home Secretary said free movement will effectively continue - directly contradicting remarks made just days ago by his deputy Caroline Nokes.
In a car crash appearance in front of MPs, Ms Nokes said EU nationals would not have an automatic right to work in Britain and would have to undergo new checks.
But last night the Home Office said EU nationals would only have to show their passport or ID card to work, and employers would not be expected to differentiate between those arriving before and after Brexit.
And Mr Javid appeared in front of the cameras to say there would not be an immediate crackdown on EU nationals.
Appearing on ITV's Peston Show, he said: 'We've just got to be practical.'
'Reminder: EU may grant and withdraw equivalence in some financial services autonomously,' he wrote.
'As with other 3rd countries, EU ready to have close regulatory dialogue with UK in full respect for autonomy of both parties.'
Mr Barnier is thought to be coming under increasing pressure from EU member states to compromise on his demand that Northern Ireland stays within the bloc's customs and single market jurisdiction if no other way can be found of ensuring there is no hard Irish border.
Despite the cautious messages, Sterling was up around a cent against the US dollar today at 1.29.
The proposals on services would form part of a political declaration to go along with any Withdrawal Agreement - meaning the details will not be hammered out until after a divorce package is agreed. It is unclear whether it would stand if there is no agreement on the separation terms.
In March, Philip Hammond warned the EU's existing regulatory equivalence regime was 'wholly inadequate for the scale and complexity of UK-EU financial services trade', in part because it would allow Brussels to end the relationship with little or no notice.
The framework reported in The Times could address some of those concerns, with neither side able unilaterally to declare regulations have fallen out of equivalence and block access to their markets without first going through independent arbitration and providing a notice period significantly longer than the current 30 days. 
The divorce talks have been at loggerheads over the issue of the Irish border backstop and future trade arrangements - with fears mounting that the UK could crash out of the bloc.
But Mr Raab wrote in a letter to the Brexit committee: 'The end is now firmly in sight and, while obstacles remain, it cannot be beyond us to navigate them. 
'We have resolved most of the issues and we are building up together what the future relationship should look like and making real progress.' Responding to a request to come and give evidence to the cross-party group, he said: 'I would be happy to give evidence to the committee when a deal is finalised, and currently expect 21 November to be suitable.'
Sources close to Mr Raab played down the significance of the remark, saying it was an 'ambition' rather than any shift. The letter was written on October 24, but has just been published by the committee.

Hard Brexit could turn UK into 'safe haven' for Mafia, Abbott warns

Hard Brexit could turn Britain into a 'safe haven' for the Mafia and terrorists, Diane Abbott claimed today. 
The shadow home secretary warned that failure to get a deal with the EU on security could cause chaos. 
In her speech, Ms Abbott said: 'Put simply, the government's hard Brexit and its lack of progress on security matters contains a real risk that this country could become a safe haven for the terrorists, the Mafia type criminals, the smugglers and the paedophiles on the run from the EU 27. 
'This is not a prospect either this country or the EU should contemplate.'
Downing Street also tried to pour cold water on speculation about dramatic movement in the talks.
Mrs May's official spokesman said: 'We want to get a deal as soon as possible.'
He would not confirm whether Mrs May had presented her promised new proposals on the Irish backstop, but added the PM had told MPs the EU was 'engaging' with Britain's ideas. 
Ministers are engaged in a desperate scramble to reach a settlement with the EU, as the clock ticks down to Brexit day.
If there is no movement next month the government needs to trigger large-scale contingency plans to try to reduce the impact of a no-deal outcome. 
In a glimmer of light for Theresa May, David Davis has admitted that he expects MPs to approve any Brexit deal she does secure because they are 'terrified' of crashing out of the EU.
The former Brexit secretary said 'irrational fear' would win out in Parliament if the PM manages to get any kind of agreement with Brussels.
Mr Davis tried to backpedal yesterday by insisting no package based on Mrs May's Chequers plan would get passed.
But the comments, from a vehement critic of Mrs May's stance, will encourage Downing Street.   

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