Brexit Bulletin: Terror Returns

EghtesadOnline: Terror returned to the streets of Britain on the weekend, again recasting the political debate just days before Thursday’s election.

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05 June 2017

After a brief suspension of campaigning following the Saturday night attack in London, the prime minister and opposition Labour leader Jeremy Corbyn re-engaged over who had the worst record on countering terrorism, according to Bloomberg.

May toughened her rhetoric, arguing extremism has been tolerated for too long. Corbyn attacked May’s record as home secretary and for cuts made to police forces.

The latest polls indicate the Conservatives’ lead over Labour has shrunk to between 1 and 12 percentage points, from more than 20 at the start of the campaign.

For more, see our stories on how police are adapting to new forms of terrorism and what the U.K.’s approach means for technology companies.

On the Markets

The pound fell in Asia after the attack, the third in less than three months.

May called the election in part to strengthen her hand in the looming Brexit talks and a tightening race is raising questions over whether she will secure her aim. An outcome in which either her Conservatives or Labour were unable to secure an outright victory would create huge uncertainty before Brexit negotiations begin.

“On a slightly more medium-term basis we are still cautious on the pound,” said Daniel Been, Sydney-based head of foreign-exchange research at Australia & New Zealand Banking Group Ltd. “Even once this week’s election is out of the way, there are still numerous uncertainties surrounding Brexit, in particular on where the common ground for negotiation is with Europe’s negotiating parties. At the same time, the economy is slowing.”

Sovereign Sell-Off

Sovereign wealth funds and central banks may look to cut their U.K. assets in 2017 after sentiment toward the country slumped since the Brexit vote, according to an Invesco report.

About 41 percent of institutions, who together oversee about $12 trillion in assets, said they expect to introduce new underweight positions in the U.K. this year. Britain was also deemed to be the least attractive developed market, scoring 5.5 out of 10 in 2017, the report said. That’s down from 7.5 in 2016.

Fifty four percent of respondents said they aren’t making any changes to their allocations until they can assess the longer-term effects of Brexit, the survey showed.

Brexit in Brief

Brexit Secretary David Davis said there are just “days to save Brexit” because a defeat for the Conservatives would mean “the prospect of us ever leaving the European Union is seriously at risk.”

Chancellor of the Exchequer Philip Hammond tells the Telegraph that it won’t be “more onerous” for businesses to employ foreign workers after Brexit

Labour Brexit spokesman Keir Starmer says he would refuse to let the European Court of Justice be the final guarantor for EU citizens’ rights after Brexit, but could accept it having an ongoing role for trade disputes, according to the Independent

More than 1,300 academics from the EU have left British universities in the past year, the Observer reports

Manufacturing lobby group EEF raises its forecasts for U.K. industry growth to 1.3 percent this year from 1 percent

Italian Finance Minister Pier Carlo Padoan says many financial companies are “undeniably” looking at Milan to shift jobs from London

Former Standard Chartered CEO Peter Sands says finance may be among the most adaptable areas of the U.K. economy to Brexit.

And Finally

Britain is looking beyond its borders for help.

According to The Times, the Brexit department has sought the advice of Swiss diplomat Michael Ambuhl, who spent three years leading his own country’s trade negotiations with the EU.

“The Swiss agreements establish a nice working model that could possibly be adapted to British needs,” Ambuhl told the Times. “It is a bespoke model that gives market access and legal certainty.”