Tag: EU Referendum

Sterling Falls over Brexit Uncertainty

Sterling Falls over Brexit Uncertainty

Sterling Falls as Investors Fret Over Brexit Uncertainty
Sterling has fallen against the dollar and yen on growing uncertainty over the outcome of the UK’s EU referendum.  The “volatility index” – a measure of investors’ uncertainty – has hit levels last seen in the 2008 financial crisis.

Investors are spooked by data showing the chances of a Remain vote have fallen, although markets have also been rattled by global economic worries.

But the Leave campaign argues that the pound has simply just retreated to levels last seen in March.

Investors are choosing to put their money instead into the dollar and the yen, with the pound falling to a three year low against the Japanese currency – considered a haven in times of uncertainty.  On Monday, sterling was at an eight-week low against the dollar.

With 10 days to go before the referendum vote, two polls at the weekend put the Leave camp ahead, while betting firm Betfair said the implied probability of a vote to Remain has now fallen to 68.5% from almost 80% a week earlier.

“We expect incoming polls to move the pound more aggressively than before,” said Charalambos Pissouros, senior analyst at IronFX Global. “If new polls continue to show a tight race between the two campaigns as we approach the voting day, the outcome is likely to become even more uncertain and hence, volatility in sterling is likely to heighten further.”

Joe Rundle, head of trading at ETX Capital, said the markets were now on full Brexit alert. “Polls show it’s now too close to call and markets are responding with some very twitchy activity. Sterling has shed more than 2% in two sessions to retrace its April lows.”

Worries about the economic impact of leaving the EU were also blamed for a big fall in Asian stock markets. Japan’s Nikkei index closed 3.5% down, while Hong Kong’s main index slid 2.5%. However, the reaction on London’s FTSE 100 was muted, with the index down 0.3% in morning trading.

On Sunday, Leave campaigner Nigel Farage told the Andrew Marr show that sterling had recently been strengthening.

“Sterling is up since March. Since Brexit became a possibility, sterling is up and FTSE is exactly the same level it was in March,” he said. He also pointed out that a weaker pound was good for Britain’s exporters. Last week, official figures showed that the UK trade deficit narrowed in April on the back of a jump in exports.

EU Referendum: Vote Leave Wants Power to Axe Fuel VAT

EU Referendum: Vote Leave Wants Power to Axe Fuel VAT

EU Referendum: Vote Leave Wants Power to Axe Fuel VAT
Tories Michael Gove and Boris Johnson and Labour’s Gisela Stuart wrote in the Sun that the tax on energy bills cannot be scrapped because of EU rules.
Chancellor George Osborne said this was “fantasy land” economics. Remain campaigners accused Vote Leave of promising a “make-believe land of milk and honey” if the UK left the EU.
There is one week left to register to vote in the EU referendum on 23 June.
The Electoral Commission says that, even after recent surges in registrations, many people are still not signed up to vote.
Follow the latest updates with BBC EU Referendum Live
EU referendum: All you need to know
Issues guide: Explore the arguments
Sign up for the BBC’s weekly EU referendum email
In their article, the Vote Leave politicians said they would seek to spend some of the cash saved by quitting the EU on cutting VAT from household gas and electricity bills, a tax imposed by a Conservative government in 1993.
“The least wealthy are hit particularly hard,” they wrote. “The poorest households spend three times more of their income on household energy bills than the richest households spend. As long as we are in the EU, we are not allowed to cut this tax. When we Vote Leave, we will be able to scrap this unfair and damaging tax. It isn’t right that unelected bureaucrats in Brussels impose taxes on the poorest and elected British politicians can do nothing.”
Mr Osborne tweeted his attack on Vote Leave’s claim, saying leaving the EU would lead to a smaller economy, “a hole in public finances” and higher taxes including VAT.
Remain campaigners also released a report which they said detailed Leave’s “unaffordable” spending commitments. They said more than 20 commitments, totalling £110bn, had been made – eclipsing the potential saving from leaving the EU.
Vote Leave said the Remain report contained “made-up” figures and that they had simply illustrated how money could be spent outside the EU.
Meanwhile, Business Secretary Sajid Javid will warn of the impact of leaving the EU on small and medium-sized enterprises. He will cite Department for Business, Innovation and Skills analysis, estimating that 8% export to the EU and a further 15% are in the supply chains of other businesses that export to the EU.
Britain Stronger in Europe said that amounted to about 1.2m firms.
Mr Javid said: “Britain’s small businesses are stronger, safer and better off in Europe. “If we leave the EU, small firms are on the front line and that’s a gamble with people’s livelihoods I’m not willing to take.”
But Vote Leave’s John Longworth said the government’s figures were “extremely questionable”.
He said: “I agree with what Sajid Javid used to say about the EU – before he changed his mind for reasons we can only guess at. EU rules damage all British businesses, and smaller businesses in particular – and hold us back from trading freely with the rest of the world.”

Economists for Brexit Back Campaign to Leave EU

Economists for Brexit Back Campaign to Leave EU

Economists for Brexit Back Campaign to Leave EU
A group of eight influential economists have thrown their support behind the Leave campaign in the UK’s referendum on EU membership. The group, Economists for Brexit, claim the UK economy would be boosted by 4% outside the EU.


But the Britain Stronger In Europe campaign said their economic model would be “the worst possible alternative”.

It was the first time a group of economists have publicly backed Brexit. The economic arguments have so far been tilted towards the Remain camp, with the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) both warning against leaving.

The report’s authors include Patrick Minford, a former adviser to Margaret Thatcher, and Gerard Lyons, a former chief economist at Standard Chartered and now an adviser to the London Mayor, Boris Johnson, who is campaigning for Britain to leave the EU.

Prof Minford, professor of applied economics at Cardiff University, said: “Our analysis shows that walking away from the EU, not negotiating a new agreement with the EU while getting rid of EU trade barriers will bring about a 4% of GDP gain to the economy, consumer prices will fall about 8%, and our hugely competitive services sector will take the place of diminishing manufacturing output.”

He argued that the UK would not need a new trade agreement if it left the EU because 70% of exports were traded outside the bloc under WTO rules. “The remaining 30% would also become subject to WTO rules and would be sold to the EU subject to its general tariffs which average around 4%, in the same way as exports from Japan or the US,” Prof Minford said.

The group, which also includes Roger Bootle, founder of Capital Economics, said that leaving the EU could cut unemployment by 75,000.

Dr Lyons said that staying in Europe would increase risks for financial services and the City of London.

A spokesperson for Britain Stronger In Europe said: “Treasury analysis shows that trading under WTO rules would be the worst possible alternative to EU membership, seeing households £5,200 worse off and a public spending black hole of £45bn. “The Treasury also says this model will see the sharpest price rises, as new tariffs on goods, including 10 per cent on cars and 36.1 per cent on dairy products, would be imposed.”

Frank Field Warns Labour of EU Vote ‘Danger’

Frank Field Warns Labour of EU Vote ‘Danger’

Frank Field Warns Labour of EU Vote ‘Danger’
Labour risks losing “a swathe” of voters to UKIP by campaigning to remain in the EU, one of its MPs is to warn. Frank Field, who is backing the Leave campaign, will say the 23 June poll poses “an untold danger” for his party’s prospects of power. The vast majority of Labour MPs back EU membership.


Meanwhile former Labour home secretary Alan Johnson will tell union members that EU membership is “vital” for workers’ rights.

Mr Field, the MP for Birkenhead and a former welfare minister, is expected to warn in a speech that the referendum could be “the second-longest suicide note in Labour’s history” – behind the manifesto that preceded its 1983 general election drubbing.

Labour leader Jeremy Corbyn, who has expressed Eurosceptic views in the past, recently made his first major speech of the referendum campaign setting out a “socialist” vision for Britain in Europe. He said there was “nothing half-hearted” about Labour’s campaign and said he would continue to make the case for membership in the run-up to polling day.

But Mr Field will say: “The last thing Jeremy needs to do is to undermine further the traditional Labour vote, much of which wishes to leave the European Union. For the party leader more actively to campaign for the Remain campaign will push even more Labour voters into the arms of UKIP.”

Mr Field, who campaigns for “balanced migration”, will criticise an “open-door policy” which he says pushes down wages and puts a strain on public services. Ahead of the speech, Mr Field said Labour MPs’ overwhelming support for staying in the EU was “very unrepresentative” of the views of many of the party’s activists in the country at large.

“While the polls show a majority of Labour  voters support staying in Europe, about 40% do not and the number of MPs who represent that view are a mere handful,” he told BBC Radio 4’s Today. “It is our job to make a good case for leaving Europe so these voters feel that at last their views are being represented in the debate.”

The Leave campaign has targeted migration this week with interventions from Michael Gove and Boris Johnson as it attempted to regain the initiative following warnings about the economic effect of a vote to leave.

Alan Johnson, who is leading his party’s Remain campaign, will claim a vote to stay in the EU would be as important as the election of Labour’s reforming government in 1945, which led to the creation of the NHS and expanded welfare.

“From nurses and builders to railway workers, steel workers, postal workers and shop workers, trade unions will be campaigning for a Britain that remains in Europe,” he will tell the Usdaw union’s conference. The rights of working people are protected by our EU membership, and Labour and our union movement are united in campaigning for Britain to remain in Europe.”

Elsewhere in the EU debate, the Commons Foreign Affairs Committee published what it said was a “reliable, unbiased analysis” of the issues involved. The cross-party committee, which was divided on whether to back EU membership, said it had chosen not to endorse either side. Instead it urged voters to consider the UK’s trading relationship with the rest of the EU and the rest of the world, its “international representation and reputation” and how the EU and its policies might develop in the future.

Committee chairman Crispin Blunt said: “The referendum offers the British people a once-in-a-generation opportunity to chart a course for the UK’s role in the world. “Voters should consider not only the short-term consequences of staying or leaving but the long-term opportunities and challenges.”

Barack Obama: UK More Effective at Fighting Terror Inside EU

Barack Obama: UK More Effective at Fighting Terror Inside EU

Barack Obama: UK More Effective at Fighting Terror Inside EU
The UK’s ability to fight terrorism will be “more effective” if it sticks together with its European allies, US President Barack Obama has said. Writing in the Daily Telegraph Mr Obama also said being inside the EU magnified Britain’s influence across the world.


The president arrived for a three-day visit of the UK late on Thursday.

But writing in the Sun, Vote Leave’s Boris Johnson said President Obama’s view was “a breath taking example of the principle do-as-I-say-but-not-as-I-do”.

Before meeting David Cameron for talks later, the president and First Lady Michelle Obama will attend a private lunch with the Queen and Duke of Edinburgh at Windsor Castle – the day after the Queen’s 90th birthday celebrations. The Duke and Duchess of Cambridge and Prince Harry have also invited the Obamas to have dinner with them at Kensington Palace on Friday evening.

The president’s intervention in the UK’s forthcoming EU referendum on 23 June has been hotly debated and sparked claims of “hypocrisy” from those who want to leave the EU. However, in his newspaper piece President Obama recognised that ultimately the matter was for British voters to decide for themselves. But he also said: “The outcome of your decision is a matter of deep interest to the United States.

“The tens of thousands of Americans who rest in Europe’s cemeteries are a silent testament to just how intertwined our prosperity and security truly are.  And the path you choose now will echo in the prospects of today’s generation of Americans as well.”

BBC North America editor John Sopel said the president had not needed to make his intervention and could have been much more nuanced.  “That he has is a mark of the profound concern felt in Washington about the implications of a British departure from the EU,” he said.

The president said that the US’s relationship with the UK had been “forged as we spilt blood together on the battlefield”. He went on: “The European Union doesn’t moderate British influence – it magnifies it. A strong Europe is not a threat to Britain’s global leadership; it enhances Britain’s global leadership.”

He said the UK had benefitted from being inside the EU in terms of jobs, trade and financial growth.

“This kind of co-operation – from intelligence sharing and counter-terrorism to forging agreements to create jobs and economic growth – will be far more effective if it extends across Europe. Now is a time for friends and allies to stick together,” he wrote.

James Rubin, US secretary of state from 1997 to 2000, told BBC Breakfast the president had not offered any words of reassurance about Britain’s future relationship with the US if it left the EU because “it won’t be OK”.

“We have a phrase in America: ‘Friends don’t let friends drive drunk,'” he said, adding that it would be “a big mistake for Britain to leave the EU and set asunder what has been a very successful relationship”.

But Boris Johnson described Mr Obama’s argument as “inconsistent” and “downright hypocritical”. “The Americans would never contemplate anything like the EU for themselves or for their neighbours in their own hemisphere. Why should they think it right for us?” And Mr Johnson described the notion that the UK had more influence inside the EU than outside as “nonsense”. “The UK has been outvoted 40 times in Brussels in the last five years, and the total bill for those defeats – in extra costs for UK government and business – is put at £2.4bn a year,” Mr Johnson wrote.

Tory MP Iain Duncan Smith, who is also part of the Vote Leave campaign, accused Mr Obama of double standards.

“I can imagine no circumstances under which he would lobby for the US Supreme Court to be bound by the judgements of a foreign court,” he said. Nor can I imagine any circumstances in which he would accept that laws should be made for ­- or taxes imposed on­ – the people of the United States without the approval of Congress.”

Mr Obama’s UK stay is part of a tour taking in Germany and Saudi Arabia, which he left on Thursday after having discussions with King Salman on issues including Iran, Syria, Yemen and the fight against so-called Islamic State militants.
Mr Obama arrived at Stansted Airport late on Thursday and was greeted by the Lord Lieutenant of Essex, John Petre, and the US Ambassador to the UK, Matthew Barzun.

The Obamas previously met the Queen, Prince Philip and the Duke and Duchess of Cambridge during their state visit in 2011.

Angel of the North Anti EU Message

Angel of the North Anti EU Message

Angel of the North Anti EU Message
Sculptor Antony Gormley has sent a legal letter to Vote Leave after the Gateshead landmark is used as a political advertising board for the group. Tyneside’s most famous work of art has been hijacked in a political stunt, sparking outrage from its creator. Artist Antony Gormley has fired off warning letter through his solicitors after the Vote Leave group projected its message and logo across the 54-metre wingspan of the Angel of the North.


While the group hoped the move would boost their anti-EU message in the run up to June 23’s in-out referendum, it has also landed them in legal trouble from Angel sculptor Mr Gormley.

When contacted, the artist was on his way to Beijing, with a spokesperson saying he would not be commenting on the issue but is “discussing next steps with his legal team”. However, we have seen a copy of a legal letter sent by Mr Gormley’s solicitors to the CEO of the Vote Leave group.

The letters states: “As an artist with a substantial reputation in the United Kingdom and worldwide, it amounts to passing off to suggest a false endorsement by, or by connection with, Sir Antony in connection with the activities and political purposes of Vote Leave Limited.

“Presumably the reputation of thew work and its instantly recognisable character were the reasons that it was selected for the projection or digital manipulation.”

This is not the first time misuse of the landmark has angered the sculptor. In 2014, the artist criticised a stunt by Morrisons where the supermarket giant projected a giant baguette onto the Angel, branding it as “shocking and stupid”. The supermarket had hoped to kick start a new price cutting move by projecting the baguette onto the Angel’s wings as part of an advertising campaign. The moved caused widespread outrage, prompting Morrisons to apologise.

The publicity campaign was strongly criticised by Mr Gormley, who has always wanted the artwork to stand without any interference, isolated and unlit.

Mr Gormley had a clause added to the original agreement when work on the Angel began in 1994, refusing permission to light the Angel.

The solicitors’ letter states that Vote Leave should have known that “their use of the Angel of the North as an advertising medium is both unlawful and damaging to the integrity of this important work”. Sculptures are protected by the law of copyright.

The Vote Leave group, which is aiming to get voters to opt out of the European Union in this summer’s referendum, opted not to address the stunt, but rather stated: “Every year the North East sends £500m to the EU. If we take back control we can start spending our money on our priorities in the North East like the NHS.”

Pound Heading for Fall since 2009 on Brexit Fears

Pound Heading for Fall since 2009 on Brexit Fears

Pound Heading for Biggest One Day Fall since 2009 on Brexit Fears
The pound is heading for its biggest drop in nearly seven years against the dollar amid uncertainty about a possible British exit from the EU. At one stage it was down 2.1% at $1.41020, the biggest one-day drop since March 2009. The move follows London Mayor Boris Johnson joining the campaign to leave the EU after Prime Minister David Cameron set a June referendum date. The steep fall adds to losses made by the pound over recent months.

So far this year, fears of a British exit from the EU – dubbed ‘Brexit’ – have already pushed the pound down by more than 4% against the US dollar. Analysts said that was likely to continue to direct sentiment until the vote.

“Today’s weakness appears to reflect an increased probability of Brexit after political reaction to the new deal on EU membership was more split than the PM would have hoped,” said Sam Hill, senior UK economist at RBC Capital Markets.

If the pound finishes at its lows for the day, it will be the biggest one-day loss since the Bank of England cut interest rates to 0.5% in 2009 and started its economic stimulus programme known as quantitative easing.

Against the euro, the pound is down 1.2% to €1.2774. Against the yen, the pound has slumped to 160.075 yen, its lowest since late 2013.  “I don’t think investors are saying Brexit is good or bad, but it’s the uncertainty,” said Simon Smith, chief economist at FxPro. The pound has already dropped more than 17% against the dollar in the last 18 months, partly due to the outlook for UK interest rates.

Whereas the US raised rates last year, Bank of England governor Mark Carney has ruled out such a rise for now. As a result sterling is seen as less attractive for investors, continuing to fall from the $1.7165 peak seen on 1 July, 2014.

A weak pound helps exporters by making British goods cheaper on international markets. It also makes the UK a better value destination for tourists. However, a weaker pound makes imports more expensive, possibly hurting consumers and businesses that rely on foreign goods.

David Cameron announced on Saturday that the EU referendum would be held on 23 June after he came back from Brussels with a renegotiation of Britain’s EU membership.

According to Mr Smith, the pound went “up the escalators” on Friday and “down the lift-shaft at the start of the Asia session” after the weekend’s events.

The intervention by Boris Johnson is being seen as a significant blow to Mr Cameron’s campaign to remain in the EU. Several other senior Conservatives – including Justice Secretary Michael Gove – have already said they would join the Out campaign.

Airbus has ‘No Intention’ of Pulling out of UK over EU

Airbus has ‘No Intention’ of Pulling out of UK over EU

Airbus has ‘No Intention’ of Pulling out of UK over EU
Airbus chief executive Fabrice Bregier has said he has “no intention” of pulling manufacturing out of the UK if the country votes to leave the European Union (EU). Speaking to the BBC at the Paris Airshow, Mr Bregier said the aircraft manufacturer was committed to its 16,000 employees based in the UK. He added Airbus had no plans to relocate its British factories.

His comments contradict those of Airbus UK’s chief executive, Paul Kahn. Last month, Mr Kahn said that if the UK voted to leave the EU in the planned in/out referendum, Airbus would reconsider future investment in the UK.

On Tuesday, Mr Bregier admitted he would have to make a judgement about what the consequences would be for the competitiveness of his business following the referendum. His comments come as ministers tabled an amendment to the EU referendum bill on Monday evening, ruling out holding the plebiscite on 5 May 2016, the same day as Scottish, Welsh and Northern Irish assembly elections and local elections.

It means the referendum will now almost certainly take place next autumn or not take place until 2017, depending on the prime minister’s ability to negotiate concessions from his European counterparts and despite calls for the UK to get the vote over with.

Businesses have repeated raised concerns about the level of uncertainty caused by the timing of the referendum and the potential economic harm caused as investment decisions are delayed as a result.

Last month, Mr Kahn said the UK must compete for international investment. “The best way to guarantee this is by remaining part of the EU,” he said. “I believe that it is vital for a company such as Airbus to come out and make a stand in favour of Britain remaining in the European Union.”

Airbus, the world’s second-largest aircraft manufacturer after Boeing, employs 6,000 people at its site at Broughton, north Wales, where it assembles the wings for all Airbus aircraft. Several thousand more people are employed at Filton, near Bristol, designing wings and testing landing gear.

Mr Kahn stressed that if the UK were to leave the EU, the company would not suddenly close. But he added: “If after an exit from the European Union, economic conditions in Britain were less favourable for business than in other parts of Europe, or beyond, would Airbus reconsider future investment in the United Kingdom? Yes, absolutely.”

Airbus is one of Europe’s biggest industrial enterprises spanning civil aviation, defence and space, with operations in Germany, France and Spain.

In the event of a British exit from the EU, Mr Kahn suggested the company could face more red tape in areas such as work visas and trade barriers. He said he was not “blindly supporting Britain’s membership of the EU”, adding: “I welcome the UK government’s intentions to deliver positive and hoped-for reforms – which would create a leaner and more efficient EU.”

EU Referendum Should be Held as Soon as Necessary

EU Referendum Should be Held as Soon as Necessary

EU Referendum Should be Held as Soon as Necessary
Bank of England governor Mark Carney has said that the UK should hold its EU referendum as soon as necessary. “We talk to a lot of bosses and there has been uncertainty whether it’s for the election or the referendum,” said Mr Carney on the BBC’s Today programme.

Analysts fear businesses may delay making investments while there is uncertainty over Britain’s future in the EU. David Cameron has promised a vote on whether the UK stays in the EU by 2017.

“Businesses have not yet acted on that uncertainty,” he said. “Or to put it another way, they are continuing to invest and they are continuing to hire,” but he added that it was in everybody’s interests to resolve the uncertainty.

Companies may also be investing less in technology than they otherwise would do as a result of the wide pool of available workers. Older people willing to work and workers seeking more hours added 500,000 to the labour force over the last two years, said Mr Carney. Migrant labour also expanded the workforce, but its impact was only a tenth of the size according to Mr Carney.

Mr Carney told the BBC’s Today programme that he would “really dampen down” the argument that foreign workers were to blame for lower productivity. As the number of jobseekers falls, attention will turn to productivity, he added.

“Now that spare capacity is being used up,” said Mr Carney. “For the economy to move forward, it’s going to be a story of increased productivity. We think that it’s going to start to pick up over the next few years.”

The UK’s level of productivity per worker fell during the global economic crisis.

“This is one of the great costs of the financial crisis,” said Mr Carney. “What you have in economies after a financial crisis is a sharp drop in productivity. There is a huge opportunity cost.”

Productivity levels have taken longer to recover than expected.

“We have been successively disappointed with the productivity performance of the UK,” Mr Carney told the BBC. Productivity matters in terms of the speed limit for the economy and for when we should raise interest rates,” said Mr Carney. “We think the most likely path for interest rates is up.”

Mr Carney warned on Wednesday that “persistent headwinds continued to weigh on the UK economy”, which would mean more gradual increases in interest rates than had previously been the case.

Inflation was 0% in March for a second month, well below the Bank’s 2% target.

Carney said that the UK might fall into deflation next month, but inflation was expected to pick up, notably towards the end of the year. “Our aim is not just to get the inflation rate back to 2% but to keep it there,” said Mr Carney. “In order to get it there and keep it there, there will be limited and gradual increase in interest rates over the next few years.”