Brexit: Is UK paying the 39 billion pounds?

The Brexit-situation between the UK and the EU is escalating. The UK newspapers have reported that the new Prime Minister Boris Johnson is not willing to pay the 39 billion pounds exit deal to EU in no-deal case but rather 9 billion pounds. The EU has told that it is not willing to change the Brexit agreement which was reached with the former PM Theresa May.

This new approach is raising questions of the Brexit outcome in general. For example the editor of Financial Times, Lionel Barber wrote in his twitter feed on Sunday about the situation:

” In the Brexit referendum, we were told exiting the EU would be a cake walk and a new trade deal would be agreed on day two. Now Boris Johnson is asking for legal advice on shutting down Parliament for five weeks to force through Brexit. This is the tyranny of the tiny majority”, he tweeted.

According to the Guardian the PM Johnson has asked the attorney general if the UK Parliament can be shut down for five weeks from September 9  to stop MPs forcing a further extension to Brexit. Many MPs have rejected such a move to be against the democratic process saying it will “threaten the future of our country”.

 

 

 

 

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Brexit: Weekend elections – ECB rate cut? (corrected)

Corrected: the Conservative Party elections timetable

The Brexit situation in the UK will move forward when the Tories had their elections for the next Prime Minister and party leader. The markets are considering Boris Johnson the likely winner to place the former Prime Minister Theresa May. The other candidate is foreign minister Jeremy Hunt.

The next UK Prime Minister, which name will be published during the beginning of this week, will lead the country out of the EU block, with or without a trade deal by the October 31st.

In the UK the sterling has decreased to its lowest levels in 2 years. The FTSE 100-index is trading up 0,45 % to 7542,86 points today.

The financial markets have seen the global interest rate easing starting this time in Asia. For example the South Korea and Indonesia have lowered their interest rates last week. Now the expectations are for the US Fed and European Central Bank, which is having its next meeting on July 25th. According to Reuters, markets are waiting for a 10-basis point cut with 60 % chance.

During this week there will be also earnings releases from Facebook (FB) on Wednesday and Alphabet (GOOG) on Thursday, as well as Amazon (AMZN)

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US-UK trade deal on the agenda

The US and UK have been discussing about the trade deal between the countries after the Brexit deal, which is estimated to happen latest October 31st. This is part of the state visit of the US President Donald Trump and the UK royal family & Government.

According to the news conference on Tuesday, Mr Donald Trump said that the US-UK trade deal would have “tremendous potential” and coverage, even maybe the health care system NHS.

He also mentioned that the UK Brexit deal with the EU countries “will happen and should happen” and that it is important to deliver the Brexit. The US is offering the UK a broad free-trade agreement once the country has left the EU.

The UK Prime Minister Theresa May said also in the news conference that the UK should deliver the Brexit deal as the Goverment has been negotiated and that it is now the duty of the UK Parliament.

Mrs May is leaving the Downing Street 10 on Friday and the next Prime Minister will be chosen by the Conservatives during the summer time, maybe in July in the UK.

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Brexit: What next – stocks closed up

The yesterday announcement by the UK Prime Minister Theresa May that she will step down from the Party leader position on June 7 has left some questions how to proceed after this? Mrs May, who is highly respected by her counterparts, will stay as Prime Minister until the new leader is chosen- maybe in July.

The UK decision was not a surprise for the EU leaders. In fact, they were asking swift process in order to avoid possible bottlenecks between the countries business and economic transition process. For example the French President Emmanuel Macron said that he would like more clarification about the situation while “EU cannot remain indefinitely uncertain on Brexit”. According to him, France is ready to work with the new British Prime Minister on all issues.

The German chancellor’s Angela Merkel´s spokesperson said that Germany is ready to continue the work with Prime Minister Theresa May’s successor for an “orderly exit”.

And several other EU leaders have had same kind of message as well. They want to conclude the work and the agreement agreed with the EU and Mrs May. The message is still the same: the legal text of the withdrawal agreement will not be open.

This case has also raised the possibility of the no-deal Brexit after the Mrs May decision to leave. This is a major concern for the British Industry and the City as well. The Bank of England has made also several economic estimates which show that the no-deal Brexit would be catastrophic for the UK economy and for example housing prises.

The UK and EU have extended the Brexit deadline for several times and now the deadline is at the end of October, 31st. So, the UK Parliament has this timeframe in order to decide how to proceed. There is not that much time left, while it is assumed that the new UK Prime Minister might start his/her duties July/August time. As Prime Minister Theresa May said in her speech on Friday, the new leader will have to find a compromise in the Parliament in oder to get on with the Brexit.

On the other hand, it might also be possible, that the new Party leader is not willing to make a deal, so the no-deal Brexit might increase its appearance. According to Bloomberg News, two-thirds of Conservative members want a no-deal Brexit.

But the Labour Party in the UK Parliament is against no-deal scenario, which makes this approach uncertain. And the third option is also a new referendum or general elections, which would have to be before the end of October.

Now, in the middle of EU elections, the UK Conservative party is expected to face losses and this might have also its impact for the future of the UK and the Brexit process. The results of the EU elections are to be published on Sunday evening.

The UK stock markets closed Friday slightly up and the FTSE 100 -index ended +0,65 % to 7277 points. During one year time, the yield has been -1,68%. The pound was at 1,27 US-dollars, up 0,45 % on Friday. During a five year period the pound has fallen from the 1,7 US-dollars levels.

Business Finance

Brexit: Theresa May to step down June 7

The UK Prime Minister Theresa May says she will step down on the June 7 as a party leader. This announcement was expected after the weeks long public discussion of her successor. According to Mrs May, the successor will need to find Parliament Consensus on Brexit.

The London Stock Exchange FTSE 100 -index was trading up 0,59 % to 7273 points and the pound slightly up 0,17 % to 1,2676 dollars.

 

 

 

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Stocks tumbled globally – trade conflict

The global stocks markets tumbled on Thursday trading. The main reason for the bear sentiment were the trade discussions between the US and China, which are still open. The US President Donald Trump and the Chinese President Xi Jinpeng are expected to meet in Japan in the G20 – meeting in June.

Dow Jones-index ended down 1,11 % to 25490 points, the S&P 500 -index closed down 1,18 % to 2822 points and the technology index Nasdaq down 1,58 % to 7628 points. The 10-year government bond yield dropped to lowest levels since 2017 and the energy stocks dropped by 3,13 % on Thursday trading.

Hewlett-Packard (HPE) announced its quarterly results and guided for fiscal 2019 the net EPS to be 2,04-2,11 dollars per share. The company net revenue was 14 billion dollars during the quarter, up 0,2 % from the year earlier. The personal systems accounted for 8,9 billion dollars of the sales and the profitable printing side 5,1 billion dollars. The stock ended down 2,65 % to 14,70 dollars.

The US President Donald Trump said in the White House press conference that the Goverment will help farmers with a new 16 billion dollars direct aid. He also mentioned that the US economy has done better since 2016 with the value of 8 billion dollars. In the trade talks issues he mentioned also the new deal with Japan in the agriculture products and also the new USMCA agreement with Mexico and Canada. According to the President, many democrats in the congress are also backing the USMCA deal.

In Europe the stocks ended also down with FTSE 100 -index down 1,41 % to 7231 points, the German Dax-index 1,78 % to 11952 points and the France CAC 40 -index down 1,81 % to 5281 points.

The EU and UK Brexit situation is still open and both sides are waiting for the EU elections results due to next Sunday evening. UK Prime Minister Theresa May is expected to leave her position after the Brexit deal and according to the new situation, all the options are still valid: no-deal or deal Brexit or new referendum.

The UK Goverment said that the Withdrawal Bill will be presented to the UK Parliament in early June. The US President Donald Trump is visiting the UK in early June from 3rd-5th June.

The sterling was trading down 0,04 % 1,2660 dollars and the euro was up 0,29% to 1,118 dollars. The US-dollar was down 0,72 % to 109,57 yens and euro was up 0,31 % to 0,8833 pounds.

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Brexit: May to propose new deal in June

The Brexit situation in the UK changes very rapidly. Last week the Labour Party leader Jeremy Corbyn said that the talks with the Goverment has ended due to the rising talks of the new successor to PM and due to the deal issues itself. On Sunday the Prime Minister said that she is to present a new deal to the Parliament in the early June, as she earlier said.

The successor issue to Mrs May is confusing the negotiations in the UK and according to Bloomberg News, it seems that the Labour Party is turning towards to the second referendum. For corporates and business, this means that the no-deal Brexit might still be an option.  “A messy exit could still happen by accident”, said British Chambers of Commerce according to Bloomberg.

In the London Stock Exchange, the FTSE 100 index was trading down 0,03 % to 7333 points. In Germany the DAX-index was trading down 0,15 % to 12 220 points and in France the CAC 40 -index down 0,21 % to 5426 points.

The pound was trading slightly up, 0,21 % to 1,275 dollars and euro also up, 0,04 % to 1,116 dollars. The Australian dollar was up, 0,93 % to 0,69 US-dollars.

The trade war between the US and China is one of main topics. According to Bloomberg, 34 % of the investors surveyed by the Bank of America said that they have purchased protection against a sharp decline in the equities over the next three months.

US President Donald Trump has delayed the possible auto tariffs with the EU with 6 months delay.

In Asia the week started mixed as the Hang Song index ended down 0,56 % to 27 788 points in Hong Kong, but the Nikkei 225-index ended up 0,24 % to 21 301 points in Tokyo. The Indian Sensex index increased 3,07 % to 39 095 points.

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