London - We’ve had “Brexit means Brexit,” “red, white and
blue Brexit” and the repeated promise to seek the “best possible deal.”
Now investors and lawmakers have a date in the diary from
Prime Minister Theresa May for more details about her strategy for removing the
UK from the European Union.
Next Tuesday is the day she will set out her vision for
Brexit and creating a “truly global Britain,” her spokeswoman said
yesterday. Onlookers will be seeking answers to many questions, among them: how
does May plan to curtail immigration, and will she unilaterally let EU citizens
stay in the UK? Is she going to pull the Britain out of the single market
and/or customs union and if so, what model of trade does she want? Will she try
to protect the finance industry? Does she want a transitional deal to the new
regime?
Listeners might still not get much insight, with May
repeatedly saying she doesn’t want to reveal too much of her negotiating
position early on as she plans to trigger the withdrawal by the end of March.
Currency traders are already nervous. A one-week measure
of anticipated price swings for the pound climbed to the highest in two months
on the news alone that May will speak.
Meanwhile in Bloomberg Businessweek, Tim Ross explains
how preparing for Brexit just got harder as May marks six months in
office.
Message from Malta
May is just one side of the negotiating table, and it’s
her EU interlocutors who may ultimately have the whip hand.
The message sent this week from Malta, which holds the
EU’s rotating presidency, doesn’t bode well.
While he said “nobody is out to destroy the British
economy,” Prime Minister Joseph Muscat said he doubted Europe’s common front
will fracture and that “it’s very obvious” any deal must be inferior for the UK
than EU membership is. He also said European courts will have some jurisdiction
over the UK through any transitional phase.
Finance Minister Edward Scicluna was even harsher,
betting Britain will “blink first” in the discussions.
Blissful no more?
One thing in May’s favour has been the resilience of the
economy to the Brexit vote, yet a new index from Bloomberg Intelligence
suggests the mood is shifting.
BI’s Bliss Index, an amalgamation of growth, employment,
uncertainty, and inflation measures, now sits just above the zero mark that
divides above and below-average levels of well-being. Excluding the
post-referendum dip, the gauge is now at its lowest level since June 2013.
Read also: Brexit: May plans timetable for EU divorce
“Heightened uncertainty has caused the index to drop off
since the referendum,” said Bloomberg Intelligence economist Dan Hanson. “It’s
likely the gauge will fall further in 2017 as households feel the pinch of a
sterling-led bout of higher inflation.”
Retailers, including Next and closely held John Lewis,
this week warned that the year ahead will be tough as inflation kicks in.
Still, Tesco, J Sainsbury and Marks & Spencer all enjoyed a lift over
Christmas.
What’s equivalence?
Banks may be lowering their expectations of what can be
achieved in Brexit negotiations.
Having once sought to maintain so-called passporting
rights to enable them to access the EU from bases in the UK, executives and
lobby groups are now increasingly discussing “equivalence,” which would require
the UK and EU to pursue similar regulatory standards.
And finally...
Brexit just cut the cost of that dream sports car. As
long as you live in Ireland.
Mercedes-Benz is reducing new car prices there by 10
percent because of Brexit, a move it says is designed to support distributors
after the slump in the pound made UK imports cheaper. At 14 Irish dealerships,
the top-of-the-range Mercedes-AMG GT S now costs €225 000 ($240,000), saving
about €25 000, reports Bloomberg’s Dara Doyle.
“Like the UK, Ireland has right-hand drive, plus it has
the euro,” said Ashley Winston, who sources cars on request across the UK from
his London base. “So Irish drivers are almost uniquely placed to take advantage
of Brexit.”