Reuters has reported on a piece of news in the Independent (reporting on a Financial Times piece) that the UK Finance Minister, Sajid Javid, has admitted businesses will be hit by Brexit as he fired off a warning to manufacturers that "there will be no alignment" with EU rules.
Lead paragraphs
- With less than two weeks until the Brexit deadline, the chancellor said the Treasury would not support manufacturers that favour EU regulations as firms have had three years to prepare for a new trading relationship.
- Hammering out the future relationship with Brussels will be critical for the government over the coming months, with trade talks to begin once the UK officially leaves the bloc on 31 January. The EU wants the UK to remain closely aligned to its rules in exchange for a bumper trade agreement – but Boris Johnson has repeatedly said he wants to break free from Brussels.
- Mr Javid told the Financial Times: "There will not be alignment, we will not be a rule taker, we will not be in the single market and we will not be in the customs union – and we will do this by the end of the year." He added: "There will be an impact on business one way or the other, some will benefit, some won't."
Key notes
- Senior EU figures have warned that Prime Minister Boris Johnson's timetable for trade talks is too short, as he has ruled out extending the transition period beyond December 2020.
- John McDonnell, Labour's Shadow Chancellor, said it was clear that Conservative promises of frictionless trade were "not worth [the] paper they were written on". He said: "There are now real fears about food price increases and threats to jobs in the motor industry and manufacturing. This is right wing ideology overriding common sense."
- The UK is on course to leave the EU on 31 January after MPs overwhelmingly approved the prime minister's Brexit deal in the Commons. The legislation, known as the Withdrawal Agreement Bill, is undergoing scrutiny in the Lords where pro-EU peers are expected to give the bill a rougher ride.
GBD/USD implications
Hard Brexit fears will weigh on the value of the pound. Considering the Bank of England's recent dovish shift, the cable could come under pressure into the BoE's next meeting, Jan 30, where odds of a rate cut have increased. A break of the 1.30 this week runs risks to the downside as breaking a bullish structure's support line with risk to the 1.28 handle.
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