Monday, 5 September 2016

May Sees Difficult Times Ahead for U.K. Economy Post-Brexit

In World Economy News 05/09/2016

Prime Minister Theresa May warned there were “difficult times ahead” for the U.K. economy in the wake of the country’s vote to leave the European Union.
May was speaking as she traveled to the Group of 20 summit in Hangzhou, China, where she’ll make the case that Britain can be a champion of free trade, while warning of the risk of anti-globalization sentiment from those who see themselves hurt by the lowering of barriers.
“I won’t pretend it’s all going to be plain sailing,” she told reporters on board her plane, when asked about the economy. “There will be some difficult times ahead.”
May said different pieces of data had sent “different messages” about how the economy was responding to the Brexit outcome, but that businesses she had spoken to had told her “let’s get on with it, let’s make a success of it.”
She said she saw a role for Britain as a global champion of free trade, but added the poorest in society needed to be protected. “We can’t ignore the fact that there’s sentiment out there which is anti-globalization,” she said. “We need to consider how, when we put these free trade arrangements in place, they’re actually going to benefit everybody.”
Obama Warning
May got an early taste of the difficulties to come after her first one-on-one meeting, with Barack Obama. The U.S. president told reporters he stood by his warning earlier this year that a trade deal with the U.K. wasn’t high on his country’s list of priorities.

“I never suggested that we will quote unquote punish Britain,” he said in response to a question from a U.K. journalist. “I was asked about the viability of negotiating a separate trade deal between the U.S. and the U.K.” He said the U.S. was focused on its trans-Pacific and trans-Atlantic trade deals and “it would not make sense for us to put those efforts aside.”
Japan’s Ministry of Foreign Affairs has published a 15-page document setting out the concerns that country’s businesses have about Brexit. It urged Britain to stay within the EU’s single market, with the free movement of capital and people. It also said the U.K. should remain the clearing house of the euro and keep EU agencies currently located there, such as the European Medicines Agency.
‘Strongly Request’
“Japanese businesses with their European headquarters in the U.K. may decide to transfer their head-office function to Continental Europe if EU laws cease to be applicable in the U.K. after its withdrawal,” it said. “In light of the fact that a number of Japanese businesses, invited by the government in some cases, have invested actively to the U.K., which was seen to be a gateway to Europe, and have established value-chains across Europe, we strongly request that the U.K. will consider this fact seriously and respond in a responsible manner to minimize any harmful effects on these businesses.”

In a BBC Television interview recorded before she left for China, May confirmed that the formal process for exiting the EU will not be triggered this year, but pledged it would not be “kicked into the long grass.” The government is seeking good deals for British goods and services as well as the controls on free movement from the EU that Britons want, she told the “Andrew Marr” program. She also ruled out a general election in the U.K. before 2020, saying a “period of stability” is needed following the June Brexit referendum.
Hinkley Point
Following her meeting with Obama, May held one-to-one talks with Russia’s Vladimir Putin. She’s also due to meet Narendra Modi from India on Monday, but her toughest conversation is likely to be with Chinese President Xi Jinping. She said she’s still making up her mind about whether to let the Chinese-backed Hinkley Point nuclear power station proceed.

The plant would be built in Britain by Electricite de France SA and one-third funded by China General Nuclear Power Corp. Some in her team have expressed security concerns. Asked if she trusted the Chinese, May replied, “of course we have a relationship with them and we have seen significant Chinese investment. What I want to do is build on that relationship.”
She said her intended silence on the subject in China should not be taken as a sign she was against the project.
“This is the way that I operate,” she said. “I don’t just come in and say I’m going to take the decision, I actually look at the evidence, weigh up the evidence, take the advice, consider that and then come to my decision. That’s exactly the process I’m going through. I’ve said a decision will be taken in September and it will. It’s not to be taken now, it will be taken later.”

Source: Bloomberg