Brexit Bulletin: No Election Escape

Days to Brexit deadline: 79

(Bloomberg) --

Today in Brexit: The impact of the latest delay to the U.K’s exit is continuing to make itself heard above the election din.

What’s happening? Even with the focus firmly on its election campaign, the U.K. — and the European Union — can’t escape the political, economic or financial consequences of the latest Brexit delay.

On Tuesday Boris Johnson was handed a dressing down by the European Commission in a reminder that, for now at least, the U.K. retains its responsibilities to the bloc. After her previous letter went unanswered, President-elect Ursula von der Leyen sent the prime minister another missive informing him of the U.K.’s legal obligation to nominate a new EU commissioner. She said she expects a response by the end of this week. The letter also reminded Johnson of his government’s promise not disrupt the EU’s functioning during its Brexit extension to Jan. 31.

In the U.K., a gloomy week of economic data continued, highlighting the detrimental impact of uncertainty. A report from the Office for National Statistics showed the U.K. lost jobs in the third quarter even as unemployment dropped slightly, to 3.8%. Vacancies posted their largest annual decline since the financial crisis.

The figures, which follow Monday’s anemic growth data, provide further evidence that Brexit is finally hitting the labor market, an area that has defied the wider economic troubles since the 2016 vote. Reports on inflation, retail sales and house prices later this week will give more clues on the strength of the economy, just as the issue becomes a key part of the election debate.

Meanwhile, the world’s biggest banks are pressing policy makers to pass an urgent Brexit fix to ensure European traders’ access to London derivatives clearinghouses and avoid rupturing £61 trillion ($78 trillion) of contracts. The industry’s top lobbying associations told the Commission yesterday that it must act fast or risk turmoil when the stopgap solution elapses in March.

Back on the campaign trail, the Sun reports that Johnson will today use a speech in the West Midlands to call for an “end to the groundhoggery of Brexit” — part of his continued effort to make leaving the EU the defining issue of the election. Meanwhile, Nigel Farage’s decision to pull his Brexit Party candidates out of Conservative-held seats already looks set to give Johnson a boost, according to a poll by YouGov for the Times.

In the survey, which removed the Brexit Party from seats where its candidates aren’t standing, the Conservatives held a 14-point lead, with their support climbing above 40% for the first time in YouGov polling since Farage launched his party.

Today’s Must-Reads

• Rob Hutton tracks the emergence of tactical voting. The practice has risen in importance in a year when stopping Brexit — or making sure it happens — will be a major incentive for many voters.
• Jeremy Corbyn, whose Labour Party will today announce a promise to spend billions more on the NHS, will serve a full five-year term if he wins next month’s election, the 70-year-old told the Mirror.
• The Telegraph reports that Arron Banks, the co-founder of the Leave.EU campaign, has warned Farage that he has “48 hours to save Brexit” and should pull more Brexit Party candidates from Conservative target seats.

Brexit in Brief

Lib Dem Matters | Pro-EU campaigner Steve Bray, whose cries of “Stop Brexit” have become a familiar sound track in Westminster, has been selected to fight the seat of Cynon Valley for the Liberal Democrats. Meanwhile, Tim Walker yesterday announced he was stepping aside for Labour in the race to become the next MP for Canterbury. The move appeared to be a unilateral decision, with the Lib Dems later saying they would field a new candidate.

“Sack Them All” | Stephen Lansdown is furious about Britain’s delayed departure from the EU, prompting him to suggest a simple but brutal remedy to the turmoil. Speaking in a Bloomberg interview, the co-founder of financial-services firm Hargreaves Lansdown launched a broadside at the nation’s politicians, and wondered “if there’s some way the country could call an annual general meeting and sack them all.”

Market Positioning | Pound traders remain cautious going into the election and are betting the currency will fall in coming months. That “probably still tells us the market is yet to be convinced that the Conservatives are on course for a solid majority,” according to CIBC’s Jeremy Stretch. Still, stock markets are becoming increasingly confident that Labour will also fail to win an outright majority, with utility companies seeing gains on bets Corbyn’s nationalization plans won’t come to fruition.

Sorrell’s Singapore Vision | Martin Sorrell, executive chairman of S4 Capital, told Bloomberg TV on Tuesday that he's looking for a post-Brexit Britain that’s like “Singapore on steroids,” and “open for business” like never before.

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To contact the editor responsible for this story: Anne Swardson at aswardson@bloomberg.net

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