More than half of British business leaders believe the vote to leave the European Union has had a negative impact on their companies but most firms are confident they can survive the change, according to a survey on Monday.
(Reporting by Kate Holton; editing by Michael Holden)
UK to have 18 months to strike Brexit deal
The UK will have less than 18 months to finalise its exit from the European Union once talks begin and won’t be allowed to pick and choose what it likes, said the EU’s chief Brexit negotiator on Tuesday.
Michel Barnier said that formal procedures such as parliamentary approvals across Europe will cut into the two-year period that Britain was expecting to have to negotiate the terms of its exit.
In his first press conference since taking the post, Barnier said: “Time will be short. It is clear that the period of actual negotiations will be shorter than two years.”
This comes after Theresa May voiced her intention to invoke Article 50 of the Lisbon Treaty by March next year. A step that will officially start the 2-year countdown for the EU-UK divorce.
Still, Barnier warned that the effective negotiating time will be less, as an agreement will have to have been reached by October 2018, so as to ensure it is in place and enforced by March 2019 – exactly two years from the triggering of Article 50.
“The European Union is ready to receive the (article 50) notification,” Barnier said. “Keep calm and negotiate.”
However, May might find it difficult to trigger article 50, after a court last month decided that Parliament had to give its backing to such a move. The government is contesting the ruling in the Supreme Court, with critics warning of the serious societal instability if the ruling goes against the people’s vote to leave the EU.
Should it confirm that Parliament is to be involved in the process, May’s plans to begin the exit discussions could be delayed indefinitely.
Barnier, who spoke in English and French, said that Britain cannot “cherry pick” policies from the EU, asserting that the single market and its four freedoms, namely freedom of movement, are “indivisible”.
Craig Webb
Associate Wealth Manager
deVere Spain (Marbella)
Prime Minister Theresa May will resume her foreign outreach this week after stirring global concern that her government’s focus on immigration controls as it leaves the European Union risks alienating international partners as well as curbing access to the single market.
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The Conservative Party leader will travel to Denmark and the Netherlands on Monday for talks with prime ministers Lars Lokke Rasmussen and Mark Rutte respectively as she tries to build understanding for her position ahead of this month’s EU summit in Brussels, her first as premier. The visits to two traditional allies within Europe follows trips to other EU capitals including Berlin, Paris and Warsaw as the U.K. prepares to trigger Article 50 by the end of March, beginning up to two years of Brexit negotiations.
The prime minister is under pressure from financial markets, business leaders, government colleagues and a cross-party group of lawmakers after she set out her vision of how Britain will exit the 28-nation bloc. May’s pledge to restrict immigration is increasingly seen by investors and fellow EU governments alike as incompatible with continued U.K. access to the single market, posing a risk to the economy.
That realization has sent shock waves through markets and pushed the pound to its biggest weekly loss since the Brexit vote in June. Sterling resumed its decline on Monday, and was down 0.2 percent as of 10:35 a.m. in London.
“The U.K. is really shooting themselves in the foot and it is going to get ugly,” Nouriel Roubini, professor of economics at the New York University Stern School of Business, said at an event in Washington on Sunday. “The risk is not that the U.K. has a recession of two-three quarters; the risk is that the U.K. will stagnate at 1 percent growth for the next five years,” Roubini said. Then, “those that voted for Brexit are much worse off.”
The political shock waves from the signals out of last week’s Conservative Party conference mirrored the market tremors that reverberated around the globe. The Observer newspaper reported that former Labour Party leader Ed Miliband held talks with pro-EU Conservative lawmakers on forming an alliance to demand the government allow a parliamentary vote on the terms of Brexit. Miliband is considering pushing for May to appear before Parliament to explain the body’s role in EU-exit decisions.
Credits: Bloomberg.com
Mr. Green is speaking out as several contributing factors combine to negatively impact savers’ retirement funds.
“UK pensions face an unprecedented level of risk following the Brexit vote. Those with UK pensions must be made aware that many of their hard earned savings are now in the eye of the perfect storm following the UK’s historic decision to leave the EU.”
Now more than ever savers must ensure they are properly diversified to mitigate the increasing threats to their retirement funds.
He continues: “There are four key factors that could seriously derail people’s retirement plans:
1. As more and more individuals seek to secure a transfer, the more likely it is that schemes will run into liquidity problems and could seek to freeze transfers altogether.
Gilt yields have reduced considerably since the Brexit vote and this has driven up transfer values. This is good news for those wishing to take money out of the defined benefit scheme, but these larger pay-outs put extreme further pressure on the pension schemes themselves – many of which are already woefully underfunded.”
2. These falling gilt yields will further drive up pension deficits –and this is the last thing they need.
It was widely reported last week that the UK’s pension funding hole has hit a record high of £935 billion. This is likely to grow and will soon reach a trillion. The weight of these deficits brings into question the very survival of many company pension schemes and in order to survive they will need to make drastic changes to the terms of employees’ pension schemes.”
3. The downturn in the UK economy after the Brexit vote.
With some experts now forecasting a possible recession, it will become more and more difficult to fund pension schemes. Many companies will find the true cost of operating them increasingly prohibitive.”
4. The value of the assets that the schemes invest in and hold is likely to depreciate due to the economic downturn.
For instance there are real and justified concerns over a cooling property market and the banking and travel sectors, with companies across many different industries issuing profit warnings.”
Mr. Green concludes: “Brexit has helped create the worst of all worlds for pensions – and the true damage to pension schemes is not always immediately apparent as most schemes only carry out a full valuation every three years. As such, the ramifications of Brexit on pension schemes will only truly be felt over a period of years and by that point schemes may have already gone beyond the point of no return. Now more than ever savers must ensure they are properly diversified to mitigate the increasing threats to their retirement funds.”
Associate Wealth Consultant deVere, Craig Webb