Brexit Bulletin: The Brexit Bump
(Bloomberg) -- Today in Brexit: As politicians dither, the real impact of Brexit shows up in hard economic data due today.
Brexit is on hold, as politicians posture. But the impact of Westminster’s failure to deliver an orderly divorce will show up in data today — a reminder of how the dithering is distorting the British economy.
For months, companies have diverted funds to hoarding goods in preparation for the worst-case scenario of a no-deal Brexit. With GDP numbers due to be published this morning, Bloomberg Economics estimates that all this added 1 percentage point to growth in the first quarter of the year.
The Bank of England said last week it expects growth to slow in the second quarter as companies scale back. The question now is whether firms maintain their stocks or start offloading, which would dampen growth further.
Businesses have complained that while the extension of the Brexit deadline to October is a welcome alternative to a crash-out divorce, it has merely increased their costs — and prolonged the uncertainty they’ve been wrestling with for three years. The big picture is that the U.K. economy is widely estimated to be around 2% smaller than it would be had Britain voted to stay in the EU, and the pound is 13% weaker than it was before the vote.
In Westminster this week, people talked of more delay and new deadlines that few actually believe in. Negotiations between the government and Labour opposition continue, though a meeting billed as make-or-break turned out simply to be a precursor to more talks. Prime Minister Theresa May’s team says she’s aiming for a new vote on a Brexit deal in the next couple of weeks. The deadline is May 23 — the day Britain holds European elections that were never meant to happen, and also the day members of Parliament head off for an 11-day holiday.
- The U.K. had a taste of being an outsider at an EU summit in Sibiu, Romania, Ian Wishart reports.
- Past failures haunt the Sibiu summit, writes Nikos Chrysoloras. The EU is making pledges that ring hollow.
- Will there be a Brexit deal? The Spectator’s James Forsyth takes a look at the chances, and the alternatives for each side.
Brexit in Brief
Don’t Mention Brexit | Jeremy Corbyn launched Labour’s European election campaign on Thursday and moved on from Brexit as quickly as possible. The party’s 28-page election booklet devotes barely two pages to Brexit. “The real divide in our country is not how people voted in the EU referendum,” Corbyn said. “The real divide is between the many and the few.”
Naming and Shaming | The Conservatives’ EU election leaflet blames members of parliament for blocking May’s Brexit deal, with a link to a website that names them all. It’s a move that has enraged Brexiteers, the Times reports. Internal party polling shows the Tories could come fourth or even fifth in the election, with support in single digits, the the Guardian reports.
Wooing the DUP | May had a private meeting at Chequers on Thursday with Arlene Foster and Nigel Dodds of the Democratic Unionist Party. The DUP, which props up May’s minority government, has repeatedly refused to back the current Brexit deal.
Quickly, Please | Chancellor of the Exchequer Philip Hammond said a Conservative leadership contest must take place “as soon as possible” after a Brexit deal is done and May steps down. In an interview with the Evening Standard, he didn’t rule out a new leader by the annual party conference at the end of September. In a tweet, key Tory Brexiteer Steve Baker alluded to a potentially crowded field.
Bracing With Bonds | Offshore-windfarm builder Orsted is selling the biggest sterling corporate-bond deal in 18 months as the Danish company seeks to reduce Brexit-related currency risks.
Winning in Europe | There’s no letup in the sporting irony this morning as the world digests the fact that all four finalists in this year’s showpiece European soccer finals are English teams. Liverpool and Tottenham will contest the Champions League final in Madrid while Arsenal and Chelsea last night sealed their places in the Europa League final, to be held in Baku, Azerbaijan. The uncomfortable truth for Brexit supporters and crowing politicians? Three of the four teams are run by coaches from other EU countries. (And the fourth is from Argentina.)
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