Britain to spend an extra $2.6bln on no-deal Brexit planning

Boris Johnson said he will leave the EU without a deal if they don't agree to renegotiate Theresa May's deal. (File/AFP)
Updated 01 August 2019

Britain to spend an extra $2.6bln on no-deal Brexit planning

  • Boris Johnson threatened to leave without a deal if EU refuses to renegotiate the deal
  • One of the most debated topics during Brexit is the Irish border backstop

LONDON: Britain is ramping up preparations for a no-deal Brexit by spending an extra $2.6 billion to make sure the country is ready to leave the European Union with or without a divorce deal at the end of October.
Prime Minister Boris Johnson, who took power last week, has pledged to leave the trading bloc without an agreement in three months unless the EU agrees to renegotiate the deal agreed by his predecessor Theresa May.
Ministers have warned that one of the most hotly contested elements of the divorce agreement — the Irish border backstop — will have to be struck out if there is to be a deal, something the EU has repeatedly said it won’t agree to.
In his first major policy announcement, new finance minister Sajid Javid said the extra money will fund a nationwide advertising campaign, ensure the supply of vital medicines, help Britons living abroad, and improve infrastructure around ports.

“With 92 days until the UK leaves the European Union it’s vital that we intensify our planning to ensure we are ready,” Javid said. “We want to get a good deal that abolishes the anti-democratic backstop. But if we can’t get a good deal, we’ll have to leave without one.”
Wrenching the United Kingdom out of the EU without a deal means there would be no formal transition arrangement to cover everything from post-Brexit pet passports to customs arrangements on the Northern Irish border.
Many investors say a no-deal Brexit would send shock waves through the world economy, tip Britain into a recession, roil financial markets and weaken London’s position as the pre-eminent international financial center.
Supporters of Brexit say that while there would be some short-term difficulties, the disruption of a no-deal Brexit has been overplayed and that in the long-term, the United Kingdom would thrive if it left the European Union.
“Turbo-charged no-deal“
The finance ministry said the new money will “turbo-charge” no-deal preparations. Among other initiatives, 434 million pounds will be spent to ensure vital supplies of medicines and medical products can be brought into the country, including hiring additional freight capacity, warehousing and stockpiling.
To get people and businesses ready for a no-deal Brexit, 138 million pounds will be spent on one of the biggest peacetime advertising campaigns and provide extra consular support for citizens living overseas.
A total of $416.9 million will be spent on new border and customs operations, including hiring an extra 500 border force officers and doubling the support for customs agents to help companies fill in customs declarations.
The finance ministry also said a further $1.21 billion will be available for government departments and the devolved administrations in Scotland, Wales and Northern Ireland to improve their readiness.
This means the government has in total allocated $7.6 billion to prepare for a no-deal exit, including $5 billion of funding for this financial year.
Javid’s predecessor Philip Hammond, who opposed leaving the EU without a divorce deal, was accused by Brexit supporters of failing to spend enough money to get Britain ready for a no-deal Brexit, undermining its negotiating position with Brussels.
The main opposition Labour party branded the spending an “appalling waste of tax-payers’ cash” because the majority of lawmakers in parliament had made clear their intention to block an exit without a withdrawal agreement.
“This government could have ruled out no deal, and spent these billions on our schools, hospitals, and people,” said John McDonnell, the party’s finance chief.
Chief Secretary to the Treasury Rishi Sunak said more detail on the government’s spending plans would be given at a spending review and fiscal event later in the autumn.


Oil recoups losses as OPEC, US Fed see robust economy

Updated 11 min 44 sec ago

Oil recoups losses as OPEC, US Fed see robust economy

  • US-China trade deal will help remove ‘dark cloud’ over oil, says Barkindo

LONDON: Oil prices reversed early losses on Wednesday after the Organization of the Petroleum Exporting Countries (OPEC) said it saw no signs of global recession and rival US shale oil production could grow by much less than expected in 2020.

Also supporting prices were comments by US Federal Reserve Chair Jerome Powell, who said the US economy would see a “sustained expansion” with the full impact of recent interest rate cuts still to be felt.

Brent crude futures stood roughly flat at around $62 per barrel by 1450 GMT, having fallen by over 1 percent earlier in the day. US West Texas Intermediate crude was at $56 per barrel, up 20 cents or 0.4 percent.

“The baseline outlook remains favorable,” Powell said.

OPEC Secretary-General Mohammad Barkindo said global economic fundamentals remained strong and that he was still confident that the US and China would reach a trade deal.

“It will almost remove that dark cloud that had engulfed the global economy,” Barkindo said, adding it was too early to discuss the output policy of OPEC’s December meeting.

HIGHLIGHT

  • US oil production likely to grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations.
  • The prospects for ‘US crude exports had turned bleak after shipping rates jumped last month.’

He also said some US companies were now saying US oil production would grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations — reducing the risk of an oil glut next year.

US President Donald Trump said on Tuesday Washington and Beijing were close to finalizing a trade deal, but he fell short of providing a date or venue for the signing ceremony.

“The expectations of an inventory build in the US and uncertainty over the OPEC+ strategy on output cuts and US/China trade deal are weighing on oil prices,” said analysts at ING, including the head of commodity strategy Warren Patterson.

In the US, crude oil inventories were forecast to have risen for a third straight week last week, while refined products inventories likely declined, a preliminary Reuters poll showed on Tuesday.

ANZ analysts said the prospects for US crude exports had turned bleak after shipping rates jumped last month.