UK Brexit concerns rise as businesses fret

Bloomberg

UK companies are getting more worried about the economy and feeling less confident in spending money on hiring or investing, according to a new report.
The Recruitment and Employment Confederation said an index of economic conditions has fallen to the lowest this year, with a greater proportion of respondents to its survey saying things are getting worse.
Employers are still looking to hire, it said, but their confidence in doing so has diminished.
The report comes less than a week before the UK resumes talks with the European Union on its exit from the bloc, with both sides at odds again over how soon they can start working on a new trade deal.
Irish Prime Minister Leo Varadkar told Bloomberg this week that he remains “confused and puzzled” about the UK’s global trading plans after Brexit.
Oxford Economics’s Andrew Goodwin said in a report published on Wednesday that the chance of a successful separation and transition arrangement being agreed between Britain and the EU has fallen.
He added that being outside the single market during the transition would undermine the intended benefits of creating stability for companies.
“The UK has made little attempt to progress separation issues, while its ideas for transition could require yet more negotiation and risk eroding the benefits of transitional arrangements for business,” he said.
While easy access to EU markets is one worry weighing on UK companies, another is their ability to tap into the pool of EU workers they say they need.
“The government must do more to create an environment where businesses have clarity,” REC Chief Executive Kevin Green said.
“The jobs market is in a good place but employers will only continue to hire and invest if they feel assured about the future.”
Separately, Migration Watch, a group arguing for lower immigration, published a report saying that net migration from non-EU countries won’t fall significantly by the end of the current parliamentary term in 2022 without further “determined action.”
The figure stood at at 175,000 last year, accounting for 70 percent of overall net migration of almost 250,000.
Prime Minister Theresa May has vowed to cut immigration to the “tens of thousands,” though there have been warnings that such an aggressive reduction could damage the economy.

UK economy may be even weaker than it looks: UBS
Bloomberg

The UK economy may be even in worse shape than it looks. That’s the message from UBS AG, which says it’s headed for near-stagnation. Economists led by Pierre Lafourcade at Switzerland’s largest bank said their new model strips out volatility in data to show growth has “softened substantially since the beginning of the year” and is headed “close to zero in the near future.”
While Purchasing Managers Indexes plunged immediately following the result of the Brexit referendum in June 2016 but then recovered, the UBS economists say their hard-data indicator has turned down more recently. “We put less stock in soft or survey data—emotions show up in surveys but the data are the data,” they said.
The UK statistics office will probably confirm expansion of 0.3 percent in the second quarter when it publishes a new GDP reading on Thursday, which will include details on consumer spending, investment and exports. The economy is forecast to expand 1.5 percent in 2017, a slowdown from last year’s 1.8 percent when activity proved unexpectedly resilient after the vote to leave the European Union.
Lafourcade said the “striking feature” in his index is its decline since 2014, the post-Brexit steadiness and subsequent drop, all of which are masked in the quarterly gyrations of reported GDP growth.
“On the basis of the factor’s recent trend, growth seems headed only in one direction— south,” he said. The gloomy analysis comes days after a widely publicised report by a group of pro-Brexit economists.

Britain accepts ‘close’ ECJ
relationship: Brexit effect
Bloomberg

Theresa May’s government will accept a “close cooperative relationship” with the European Court of Justice, in which both past and future rulings would still apply to the UK in a concession aimed at accelerating Brexit talks.
This is a retreat from the prime minister’s pre-election rhetoric about ending the court’s jurisdiction over Britain. A position paper published on Wednesday suggested the government was open to monitoring EU case law, abiding by past ECJ rulings, taking future ones into account, and even referring decisions to it.
“There are a number of ways in which it will be possible to deal with dispute resolution in the future,” May told. “The purpose of our paper is to show that we have thought about what that might be; we’ll now obviously go into negotiations with the European Commission to discuss what is the best way forward.”
While May has said she doesn’t want to copy any other country’s relationship with the EU, the latest policy outlines point to the pursuit of model like the European Free Trade Association that has separate tribunal resolving disputes.
What’s become apparent is that while on the surface the UK wants to give the impression it’s not caving—May is adamant that Britain is taking back control—the fine print shows there is now wiggle room ahead of a new round of talks with time of the essence. The EUwithdrawal bill will incorporate most pre-Brexit EU law into UK law andthat’s why “it is inevitable that UK courts will pay some attention” to what the ECJ decides.