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The Markets
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BrexitWatch - UK government looking for 'unique' EU deal

A look at some more Brexit topics in the last week of August

Anyone who thought Brexit may be put on the back shelf and quietly forgotten, received a jolt this week as the UK's first significant Cabinet meeting on the matter took place.

Prime Minister Theresa May was uncompromising in saying her administration would push ahead with triggering Article 50 without a vote in parliament.

And she's looking for a "unique" deal for the UK - not based on a previous model, for example like Switzerland.

Ministers are looking to control the number of people who come from Europe but also seek a positive trade agreement with the bloc.

How this marries up with the European leaders position that the UK must accept free movement of EU migrants, is, however, at this stage, anyone's guess.

With that in mind, David Davis, dubbed Minister for Brexit, said this week he would be ideally seeking tariff-free access to the single market, although conceded this would involve negotiation.

He suggested a workable deal for Britain would also be in the interest of other members of the EU in the long run.

What about the UK economy?

Following last week's CBI data, showing retailers had seen their strongest monthly sales in six months in August, there were more positives this week.

After the initial dip after the June 23 vote, UK manufacturing recorded its biggest month-on-month increase in 25 years for August as new orders for British goods surged as producers benefit from still having a foot in the EU and the weaker pound.

The Markit/CIPS purchasing managers' index (PMI) rose to 53.3 in August compared to July's 48.3. Anything above 50 signifies growth.

Commentators said the strong data again brought into question the Bank of England's latest interest rate cut, while the respected IMF, which has earlier warned of lower growth, said the market turmoil had subsided post the vote.

But the International Monetary Fund does still expects a sharp slowdown in growth in the third quarter, following 0.6% growth in the second.

The UK PMI data prompted sterling to surge higher against the dollar on Thursday against the dollar.

Attention turns now to the service industry data on Monday, highly important as it makes up 80% of the UK economy.

London to stay top dog?

There were very vocal fears London could lose its financial hub status before and after the vote. This week the head of Deutsche Bank, John Cryan, came out and said the capital would remain the top centre.

But he said that the nature of the key financial district will be different as its position in Europe changes.

Some clients, for which the bank trades EU shares, may demand they do business back in the EU, he suggested. It all hinges on whether big institutions will keep their "financial passports" with the EU - a matter yet to be determined.

The German economy minister Sigmar Gabriel looked at the European project big picture again saying that if Britain's exit was badly handled and other member countries followed , Europe would go "down the drain".

Brexit may be good for big corporations?

Indeed, this week's debacle with Apple (NASDAQ:AAAPL) and its tax affairs served to highlight the potential attractiveness of the UK to big corporations if it was to quit Europe.

The European Commission ordered the Irish government to recoup some US14.5bn of what it sees as unpaid taxes from one of its biggest investors and the biggest firm on the planet after ruling the country had given it special tax status for the last ten years.

It is not clear if the UK can ditch the EU’s state-aid legislation if it wants to maintain access to the single market, but a withdrawal from the EU could lead to a more competitive and appealing UK tax environment, some commentators suggested.

Not all good news

Recruiter Hays plc (LON:HAS) was one firm, which warned this week, it had taken a hit from 'Brexit' uncertainty.

The group said UK profits had increased 14% to £52.1mln, but warned that net fees were flat as rising concern about the economic outlook affected client and candidate performance.

It said uncertainty lifted in the period leading up to, and immediately after, the EU referendum on June 23.

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