EMERGENCY 🚨 Brexit , Deutschbank Collapse in Jan? UK Parliament Approves PM Johnson’s Plan - financialanalysis

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Saturday, December 21, 2019

EMERGENCY 🚨 Brexit , Deutschbank Collapse in Jan? UK Parliament Approves PM Johnson’s Plan

Brexit in January, Finally? UK Parliament Approves PM Johnson’s Plan.
British lawmakers gave preliminary approval Friday to Prime Minister Boris Johnson’s Brexit bill, clearing the way for the U.K. to leave the European Union next month.

The House of Commons voted 358-234 for the Withdrawal Agreement Bill.

It will receive more scrutiny and possible amendment next month, and also has to be approved by Parliament’s upper chamber, the House of Lords. But Johnson’s commanding Conservative majority in Parliament means it is almost certain to become law in January. Britain will then leave the EU on Jan. 31.Johnson said Friday that passing the bill would end the “acrimony and anguish” that has consumed the country since it voted in 2016 to leave the EU. Opponents argue that leaving the EU will only trigger more uncertainty over Britain’s future trade relations with the bloc.

Friday’s vote was a moment of triumph for Johnson, who won a commanding parliamentary majority in last week’s general election on a promise to end more than three years of political gridlock and lead Britain out of the European Union on Jan. 31.
The U.K.’s departure will open a new phase of Brexit, as Britain and the EU race to strike new relationships for trade, security and a host of other areas by the end of 2020.

Johnson, however, painted Friday’s vote as a moment of closure. Opening debate on the bill he said, optimistically, that after Jan, 31, “Brexit will be done, it will be over.”

“The sorry story of the last 3 1/2 years will be at an end and we will be able to move forward together,” he said.

“This is a time when we move on and discard the old labels of ‘leave’ and ‘remain,’” Johnson added. “Now is the time to act together as one reinvigorated nation.”

Britain voted narrowly to leave the EU in a 2016 referendum. But previous attempts by Johnson and his predecessor, Theresa May, to pass a Brexit deal through the U.K. Parliament foundered as lawmakers objected to sections of the agreement and demanded a bigger say in the process. Johnson’s election victory finally gives him the power to get his way.

“The election has produced a result: We will leave the EU at the end of January,” acknowledged pro-EU Liberal Democrat legislator Wera Hobhouse. “The battle to stop Brexit is over.”

The bill commits Britain to leaving the EU on Jan. 31 and to concluding trade talks with the bloc by the end of 2020. Trade experts and EU officials say striking a free trade deal within 11 months will be a struggle, but Johnson insists he won’t agree to any more delays, The Brexit bill has been amended to bar ministers from agreeing to extend the transition period with the EU.

That has set off alarm bells among businesses, who fear that means the country will face a “no-deal” Brexit at the start of 2021. Economists say that would disrupt trade with the EU — Britain’s biggest trading partner — and plunge the U.K. into recession.

Johnson said Friday he was confident of striking a “deep, special and democratically accountable partnership with those nations we are proud to call our closest friends” by the Brexit deadline.

He said extending the transition period would just prolong Brexit “acrimony and anguish … a torture that came to resemble Lucy snatching away Charlie Brown’s football.”

For all Johnson’s talk of “getting Brexit done” on Jan. 31, details of Britain’s negotiating stance — and even who will lead the trade talks — remain unknown.

Armed with his 80-seat majority in the 650-seat House of Commons, Johnson has stripped out parts of the Brexit bill that gave lawmakers a role in negotiating a future trade deal with the EU and required ministers to provide regular updates to Parliament. The clauses were added earlier in the year in an attempt to win opposition lawmakers’ support for the Brexit bill — backing that Johnson no longer needs.

A promise that workers’ rights will not be eroded after Brexit has also been removed from the bill, although the Conservative government says it will enshrine employment rights in separate legislation.

Opposition Labour Party lawmaker Hilary Benn said Johnson’s bill was “a gamble with our nation’s economy.”

“If he fails, the cliff-edge of a no-deal Brexit becomes in just 12 months’ time,” he said.

Labour leader Jeremy Corbyn said his 203 lawmakers would oppose the Brexit bill because of “the reckless direction in which the government and the prime minister are determined to take our country.”“There is a better and fairer way for this country to leave the European Union,” he said.

Even without opposition votes, the bill is expected to complete its passage through Parliament in January, in time for Britain to leave the 28-nation bloc on Jan. 31.

The divorce deal also needs to be ratified by the European Parliament. European Parliament vice president Pedro Silva Pereira said officials expect that to happen by Jan. 29.

Very little will change immediately after Brexit. Britain will remain an EU member in all but name during the 11-month transition period that ends in December 2020.Respected British Think Tank Slams Economy Crushing $90B Brexit Deal..A respected British think tank slammed Prime Minister Boris Johnson‘s Brexit deal on Wednesday, concluding that the economy would be 3.5% smaller over the next decade compared with staying in the European Union.

The study by the National Institute of Economic and Social Research says the agreement would deliver a 70-billion pound ($90 billion) blow to the U.K.

Researchers said that the outlook is clouded by political and economic uncertainty.

“We would not expect economic activity to be boosted by the approval of the government’s proposed Brexit deal,” the group said.

The researchers based their prediction over the long term on the assumption that the U.K. would leave the bloc with a free trade agreement with the EU after a transition lasting until 2021 while negotiating new deals with other nations. It said that higher “barriers to goods and services, trade and restrictions to migration,” would force the economy to slow.

As politicians squabble over how and when Britain will leave the EU, Brexit is reshaping the economy. Initially planned for March, Brexit was pushed back to Halloween and now is not likely to happen before January. Companies are meanwhile shifting investments, creating new supply chains and stockpiling goods to mitigate any damage that would occur from leaving the EU, with or without a deal.

The NIESR estimated that the economy was 2.5% smaller than it would have been had Britain not voted in 2016 to leave the European Union.

The British government says it plans a different scenario than the one considered by the think tank.

“We are aiming to negotiate a comprehensive free trade agreement with the European Union, which is more ambitious than the standard free trade deal that NIESR has based its findings on,” the Treasury department said in a statement.

The research suggested a no-deal Brexit would cause an even greater loss to the economy, with a 5.6% blow to GDP.

Liberal Democrat Brexit spokesman Tom Brake said the figures “come as no surprise”.

“The Tories’ obsession with Brexit at any cost puts our future prosperity at risk,” he said. “It is unconscionable that any government would voluntarily adopt a policy that would slow economic growth for years to come.”Brextension: EU Grants Brexit Delay to Jan. 31; UK Ponders New Election.The European Union agreed Monday to delay Brexit until Jan. 31 next year — making the concession just three days before Britain was due to become the first country ever to leave the 28-nation bloc.

After a very short meeting of diplomats in Brussels, European Council President Donald Tusk said on Twitter that the EU’s 27 other countries will accept “the UK’s request for a Brexit flextension until 31 January, 2020.”

In London, Prime Minister Boris Johnson’s spokesman said it was Parliament’s fault, not Johnson’s, that another Brexit delay was needed.

Johnson secured “a great new deal, he set out a timetable that would have allowed the U.K. to leave on Oct. 31 with that deal — and Parliament blocked it,” said spokesman James Slack.

Johnson now plans to seek an early general election with the goal of getting a Parliament that would back his Brexit plan, but he may not have enough support. Lawmakers were meeting later Monday in the House of Commons on Johnson’s early election call.

Tusk added that the EU decision is expected to be formalized through a written procedure, meaning a special summit of EU leaders won’t likely be necessary to approve the move.

Two diplomats told The Associated Press the term “flextension” means that the U.K. will be able to leave even earlier than Jan. 31 if the Brexit divorce deal that the EU and British Prime Minister Boris Johnson agreed upon earlier this month is ratified before Jan. 31. If that happens, the U.K. will leave the EU on the first day of the month following the ratification.

Speaking anonymously because details of the decision have yet to be made public, one diplomat added that the Brexit withdrawal agreement can’t be renegotiated during the extension period.

Under a law passed by British parliamentarians that forced Johnson to request the extension — which he did not want — Johnson must notify Tusk that Britain agrees to the proposed delay.

Johnson had previously said he would “rather be dead in a ditch” than agree to extend Brexit beyond Oct. 31. He has been hammering his “Get Brexit Done” mantra since he replaced Theresa May this summer, and his apparent willingness to consider leaving the bloc without a Brexit deal has spooked many British lawmakers.

Economists say a no-deal Brexit would hurt the economies of both Britain and the EU.

Tusk’s announcement came after the EU diplomats met to sign off on the Brexit new delay. EU Brexit negotiator Michel Barnier told reporters “it was a very short and efficient and constructive meeting and I am happy the decision has been taken.”

It’s the second time the Brexit deadline has been changed since British voters in 2016 referendum decided to leave the bloc.

In London later Monday, British politicians are voting on whether to hold an early election to try to break the country’s deadlock over Brexit. Johnson wants a Dec. 12 election, but looks unlikely to get the required support from two-thirds of lawmakers.

In a tactical chess move, two opposition parties — the Liberal Democrats and the Scottish National Party — plan to push for a Dec. 9 election if Johnson’s proposal fails.

The ruling Conservatives desperately want a new election to bolster their numbers in Parliament. They face resistance from the main opposition Labour Party, however, which fears it could lose scores of seats in the election and is wary about having the country unwittingly tricked into crashing out of the EU without a deal.

The Dec. 9 election proposal is an effort to force Johnson to delay debate in Parliament on his Brexit withdrawal bill until after any election, depriving him of a possible victory on his trademark issue. It makes Johnson’s government choose between holding an election to improve its position in Parliament and its goal of securing Brexit before that election takes place.

France was initially reluctant to extend the Brexit deadline beyond its scheduled date of Oct. 31, but French European Affairs minister Amelie de Montchalin said the perspective of a new election in Britain justifies a new delay.

She said the important thing now is that “the British and the Europeans understand that, if there are some more weeks or months, it’s not to postpone difficult decisions but to put ourselves in a position to clarify the situation.”

Montchalin also suggested that Britain can also still backpedal on its decision to leave the bloc by revoking Article 50 of the EU treaty and canceling Brexit.

“The prime minister can pick up his phone and call Brussels to say: I stop everything,” she said.


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