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Brexit Bulletin: Britain’s New Friend

Brexit Bulletin: Britain’s New Friend

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Britain may have a new friend in Berlin.

Meet Olaf Scholz, Germany’s new finance minister, who has a history of trying to keep British-European ties intact. That includes back-channel diplomacy with David Cameron a few months before the referendum in 2016, Birgit Jennen reports.

Hailing from Hamburg, whose British trade links date back to the Middle Ages, Scholz is an Anglophile. His goal is to steer Brexit talks toward technical solutions that ultimately lock in close economic relations, according to a person familiar with his views. He’s concerned about the obstacles posed by political grandstanding, the person said. 

While he’s unlikely to budge on Germany’s red lines, he wants to get the U.K. side to shift theirs. He met Chancellor of the Exchequer Philip Hammond on Monday.

“Hammond and Scholz want the British government to change its course to seek a soft Brexit,” said Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economics in Washington. 

Brexit Bulletin: Britain’s New Friend

Scholz’s ties with U.K. politics include his involvement with Policy Network, a group founded by Peter Mandelson, a former cabinet minister and confidant of former Prime Minister Tony Blair. Scholz credits the group with helping develop a minimum-wage plan that he proposed when he became labor minister in Merkel’s first coalition in 2007.

And Brexit resonates close to home. Hamburg plays host to an Airbus SE plant, and does more trade with the U.K. than Germany does with some EU countries. More than 1,000 companies have business ties with the U.K. in the city, which often is dubbed Germany’s most British metropolis.

Scholz’s stance is summed up by his response to the referendum result. He quoted Elton John’s song “Friends Never Say Goodbye.”

Brexit Latest

No New Ideas | The U.K. hasn’t yet put forward an alternative “backstop” solution for the Irish border, with Brexit negotiations making slow progress since last month’s summit breakthrough, Ian Wishart reports. Since the summit, contact between officials in London and Brussels has been limited, with no changes made to the wording of the Irish part of the draft text. There’s also no sign of any schedule for talks on the future trading relationship.

Brexit Bulletin: Britain’s New Friend

Not Convinced | Once again, Theresa May couldn’t bring herself to say she backs Brexit. Asked on Monday if she has changed her mind since campaigning for remain in the referendum, she dodged the question, saying parliament gave the people a choice and it’s now up to politicians to deliver on the people’s verdict.

Trade for Migration | Theresa May hinted she may be willing to consider special treatment for EU citizens wanting to work in the U.K. as she linked the future trade deal she hopes to strike with the EU with immigration policy. Setting out her vision for a deep trading relationship, she said she would look at immigration “as part of that.”

Brexit Boosts Wages | A shortage of workers is pushing up wages. A new report on Tuesday showed pay for temporary and contract staff rose at the quickest pace in six months in March. Engineers and IT staff were the most sought-after for permanent roles while for temporary jobs, hotel and catering staff were most in demand.

Seeking to Stay | No country in the world produced a bigger percentage jump in nationals acquiring citizenship in the EU in 2016 than a current EU member: Britain. A total of 6,555 U.K. nationals were granted citizenship elsewhere in the 28-nation EU in 2016, up 165% from the previous year, Eurostat reported on Monday. Germany awarded the most, with more than 40% of the total, followed by Sweden with 15%.

Food Supply at Risk | An Irish border with checks and infrastructure would pose risks to food safety and standards, increase food prices and reduce access to healthy food in Northern Ireland, according to a report by the Chartered Institute of Environmental Health.

A Tragedy for the Dutch | Dutch Finance Minister Wopke Hoekstra said Brexit is a “tragedy,” in an interview with Bloomberg Television.

And Finally…

Phil Hogan, Ireland’s representative at the European Commission, had some insights on Monday into how the U.K.’s position on Brexit is evolving.

“There is a lot of the union that the U.K. wants to retain,” he told a conference in Brussels. “You might want to say it doesn’t want to change its EU outfit, just its shoes.”

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To contact the author of this story: Emma Ross-Thomas in London at erossthomas@bloomberg.net.

To contact the editor responsible for this story: Jones Hayden at jhayden1@bloomberg.net, Andy Reinhardt

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