No Way Out of Brexit, But One Way Forward
- Theresa May’s cabinet has been bitterly divided for months over what kind of future ties it wants with the European Union.
- If there’s white smoke on Friday after her cabinet gathers at the Prime Minister’s country residence at Chequers, it means she’s ended the divisions. For now.
- Whatever happens Friday, there’s no getting around the fact that the one thing Britain needs — and Europe too if it wants to avoid a British exit without a deal — is more time.
- She made the fatal mistake of triggering article 50 before her government had the foggiest idea what it really wanted out of the negotiations.
- Getting a consensus in the cabinet — deeply divided over the kind of customs agreement it wants, among other things — is hard. Getting to a deal with the EU is another leap; getting there by October, the EU’s deadline, or even December (last chance saloon) almost defies gravity.
- An extension would give Britain more time to work out its positions. The EU might also view a longer Article 50 process, so obviously painful for the U.K. both politically and economically, as a deterrent to other EU members who are having similar thoughts.
- May has survived this long largely because she has managed to fudge the big issues dividing her own party. If getting a consensus now is too high a hurdle, she can at least try to play for more time.
UK high street sales fall for fifth month running
- Brick and mortar retailers have endured the worst first half year of trading in more than a decade.
- UK high street sales fell 1.7% year-on-year in June, the fifth consecutive month of falling sales.
- The bleak and crippling start to the year shows no sign of abating, with deep discounting set to eat into profit margins that are already being stretched paper-thin by poor sales and rising costs, including the much discussed issue of unfair business rates on high street retailers.
- A shift to online shopping and low consumer confidence have already led to a series of high street failures with well established chains including House of Fraser, New Look, Marks & Spencer and Carpetright all closing dozens of shops.
- Business leaders say rates, the tax levied on the value of a commercial property, unfairly discriminate in favour of online specialists such as Amazon, ASOS and Ocado.
- The chancellor warned in a letter published on Friday there would be no quick relief on business rates.
- Further consideration of a new digital tax was needed before considering any changes to business rates.
Fed on lookout for recession but still sees strong economy: minutes
- The central bank is impressed by the U.S. economy’s strength and confident in its plans to continue raising rates, but also concerned with what could push the economy off its upward course.
- Many of the Fed’s contacts across the economy said they were worried that a recent increase in tariffs levied by the United States and its trading partners was weighing on investment.
- Fed policymakers also had a wide-ranging discussion on whether the recently slim spread between short-term and long-term interest rates might be a sign of an impending recession.
- They also discussed a number of global factors potentially weighing on the economy or its outlook, including “political and economic developments in Europe and some (emerging market economies).”
- Generally they agreed recent economic data showed a strong economy that was evolving in line with their expectations.