THE LOTUS WEEKLY BREXIT ROUND-UP
The LOTUS Weekly Brexit Round-Up
Frances Tuke summarises the recent Brexit drama gripping Westminster and its impact on the travel industry in this week’s round-up.
Strong Lates Market
TTG has reported that bookings in June and July are looking strong with pent-up demand, keen pricing, autumnal weather conditions after the heatwave and a new-found ‘sod it’ mentality are all contributing to a strong lates market.
Travel agents’ optimism reflects industry analyst GfK’s latest UK consumer confidence index, up two points, and its major purchase index, up six points.
“Consumers are marginally more bullish this month with improvements in confidence across most measures,” said client strategy director Joe Staton.
The travel trade association AITO has written to the new Prime Minister asking him not to take ‘the nuclear option and rule out a no-deal Brexit – as it would particularly hurt SMEs.
Eurostar unable to guarantee service in no-deal
The French national rail firm SNCF, which holds a 55% stake in the cross-Channel rail operator, has said ongoing uncertainties around the UK’s proposed departure from the EU meant that it could not guarantee service.
SNCF said despite taking all necessary measures to avoid a combination of “the most unfavourable factors” that would “likely culminate in a lengthy suspension of activity”, the group was unable to “guarantee its ability to continue its operations with interruption”.
“The operational risks still depend on the actual Brexit terms and conditions, particularly the review of the levels of border control for passengers and costs of compliance with the new applicable post-Brexit rules.”
Ryanair has informed staff that it will cut aircraft numbers and staffing by about 600 pilots and cabin crew for summer 2020.
Michael O’Leary, Ryanair’s CEO said that the increased likelihood of a no-deal Brexit at the end of October would damage Ryanair’s bases in the UK and Ireland.
Brexit hits Accor in UK regions
While, the French hotel giant Accor reported being on course for a record year after overall first half earnings rose by almost a third, its UK regional hotels suffered from Brexit uncertainties with London and regional cities posting “highly contrasted” performances.
Pound is under pressure
The Financial Times’ has given an analysis on the pound and says that while there are a few economists who believe that the UK could perform better in the long run out of the UK, there is a strong consensus that a deal-free departure from the EU will make a direct hit on the economy. They surmise that the pound is the Government’s unofficial opposition (if there has been signs that there will be a deal, the pound rises, while further indications of a no-deal Brexit see it fall). With the Government’s hardline on coming out of the EU ‘do or die’ – the pound has seen its sharpest decline in two years against the dollar and the Eur, its main benchmarks. While for the FTSE and stockmarket, which takes most of its earnings in dollars, this is not necessarily a bad thing, it is grim for importers and holidaymakers.
The FT continues that supposedly, a low pound is good for exporters, but not for those who have specialised supply chains across the world and carmakers such as PSA who own Vauxhall, has threatened to close production in Ellesmere Port in favour of mainland Europe if there’s a no-deal Brexit
Food prices to increase with no deal Brexit
Researchers from the Trussell Trust, the food bank charity, have reported that food prices will increase by 7% in the event of a no-deal Brexit.
Manufacturing suffers sharpest decline in seven years
Britain’s manufacturing has remained in decline for July and factory orders fell the most in seven years.
HIS Markit said orders have fallen as companies have used up materials that were stockpiled.
Seamus Nevin, chief economist at manufacturers’ organisation Make UK said on 1 August, “Today’s numbers prove that the UK economy is undeniably on a downward trajectory with output, new orders and employment all falling again.
“Companies are cutting back on both day-to-day spending and capital investment as the downturn in activity continues, reflecting growing fears of a crash-out Brexit and worrying global trade conditions.”
No EU movement on the Irish backstop
Mr Johnson wants a new withdrawal deal that removes the backstop (the clause that stops there being physical checks on the Irish border under any circumstances and ensures that the Good Friday peace agreement remains in place – but which means that Northern Ireland would effectively remain in the single market and customs union).
Yesterday, 6 August, the EU said that it was open to talks with London about the political declaration, but that the backstop was not up for negotiation.
The Irish backstop was the most controversial aspect of Mrs May’s withdrawal bill.
The UK has said that it wants to leave the single market and customs union, so after Brexit the UK would be treated as a ‘third country’ – and checks, especially on food and animals would need to be done along the EU borders to ensure that stringent health and safety standards are met and fair competition is taking place.
The big sticking point has been with the DUP – who are keeping the Conservative Government in power – and who don’t want to be treated differently from the rest of the UK. Bizarrely, 56% of the electorate in Northern Ireland voted to remain in the 2016 referendum.
Yesterday, Michael Gove, who has special cabinet responsibility for no-deal Brexit preparations, said he was “deeply saddened” that Brussels had rebuffed Boris Johnson’s request to reopen the withdrawal agreement, saying it was “not in Europe’s interests”.
A US trade deal?
Yesterday, a former US treasury secretary gave an interview on the BBC’s Today programme to say that the UK was delusional if it thought that it could strike an advantageous deal with the USA. His comments come on the eve of Dominic Raab, the Foreign Secretary visits Washington for the first time. He said that Britain was desperate and has no leverage. However, a US Republican countered this view and said that the UK was at the front of the queue for a trade deal.
The Times says that while the Trump administration is responsible for negotiating a trade deal, Congress is responsible for authorising them and this is a ‘big problem for the UK.’ Nancy Pelosi, speaker of the House of Representatives, has made clear that the Democrats will not support any trade deal if a no-deal Brexit results in a hard border in Ireland – and the Irish lobby is powerful in the US. Also, the EU is far more important to the US than the UK. In 2017 the US accounted for 18 per cent of UK exports and 11 per cent of its imports, while the EU accounted for 45 per cent and 53 per cent respectively.
Lib Dem win in by-election takes Government majority to just one
Last Thursday’s by-election in the Welsh constituency of Brecon and Radnorshire saw the Lib Dems’ Jane Dodds take the seat from the Conservatives, narrowing the Government’s majority to just one.
While some of the growing number of independents in Parliament might vote for the Government,
the result has meant that the Government is very vulnerable to a vote of no-confidence, which could bring down the Government and trigger a general election.
The Government seems to be on an election footing. Boris Johnson and his ministers have been travelling the country making spending pledges to boost the police force, the NHS and more recently to create ‘freeports’ which will give new freedoms for a number of ports or airports to create new hubs for business and enterprise for both the manufacturing and services trade.
Boris Johnson has said that he doesn’t want an election in the autumn and has said that he wants to deliver Brexit before they go to the polls. Commentators, including those at the FT say that an election before 31 October could risk Brexit by giving the voters a chance to stop it.
The FT argues that if Brexit goes smoothly, then there would be a case to call an election quickly after 31 October.
No confidence vote in the Government?
The Sunday Telegraph reported that the Prime Minister’s Chief Strategist, Dominic Cummings has given a number of briefings to MPs and officials that even if Parliament is successful in winning a no-confidence vote in September, that Boris Johnson should not resign and call an election for after Hallowe’en, once the UK has left the EU.
Mr Cummings instructed staff to prepare for a no-deal exit on the basis that EU leaders “won’t realise the Prime Minister is not bluffing until October” when it could be “too late”.
Meanwhile the Brexit Party has been announcing parliamentary candidates in the event of an election.