Brexit: Wednesday Afternoon Update

Managing Director
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Posted on June 29, 2016

Story of the Day: Corbyn Digs In
Although Labour Leader Jeremy Corbyn overwhelmingly lost yesterday’s vote of no confidence 172-40, he has vowed not to ‘betray’ his supporters by stepping down. The calls for his resignation have become increasingly vociferous from an ever-growing list of MPs and former senior Labour members. Corbyn maintains however the vote has no constitutional legitimacy. Among the most probable candidates to challenge Corbyn’s leadership are Tom Watson and Angela Eagle. Corbyn is almost certain to run and will stand a good chance of being re-elected as Labour leader even though he has decreasing support from within the Parliamentary Labour Party (PLP).
The Labour crisis continues well into its third day as a number of shadow cabinet ministers appointed in the last 48 hours have themselves begun to resign. The party is in such disarray that the Scottish National Party requested to be considered official opposition this morning at Westminster. This was refused by the Speaker of the House. In a rare outburst, we saw Cameron telling Corbyn to ‘go’ from across the ballot box in Parliament.
Conservative Party Leadership
As nominations open today, candidates to succeed Cameron in Tory leadership are declaring their intentions. Boris Johnson and Theresa May are the front-runners for the leadership, which will be announced on September 9. Other candidates include Stephen Crabb, Liam Fox and Nicki Morgan. Names need to be submitted by tomorrow at noon. If the Tories can reach early agreement on one or two candidates, the party may well be able to decide on a new leader, and therefore Prime Minister, before the summer break.
Europe
The European Union (EU) and Member States have again clearly underlined that the UK cannot access the single market unless the UK continues to accept free movement of people and pay into the EU coffers. The terms of separation still need to be hammered out – and the EU holds all the cards. They are determined at this stage that there can be no ” la carte’ agreement with the UK.
The UK Cabinet Office has announced the creation of ‘The EU Unit’, which will oversee Britain’s exit from Europe. The Unit will be headed by Oliver Robbins, currently Second Permanent Secretary at the Home Office.
Scotland
Nicola Sturgeon is in Brussels today in an effort to bring attention to her case that Scotland had made ‘a different choice’ than the rest of the United Kingdom. Scotland voted 62 per cent to 38 per cent to remain in the EU. Her reception by the institutions of the European Union was tepid as both the President of the European Commission and President of European Parliament, Juncker and Schultz respectively, agreed to meet while the President of the European Council, Donald Tusk, refused.
Meanwhile, a number of Member States including Germany have declined to meet to discuss efforts at protecting Scotland’s status in the EU. Spain is incensed as such talks will exacerbate tension among their own Catalonian separatist movement. Scotland needs to play this carefully as they are being seen by some in Europe as behaving as if they are already an independent country.
The Markets
Both sterling and the markets continue to rally. The FTSE 100 and FTSE 250 are back up to where they were in January 2016 and the pound sterling is currently stronger than it was in 2013/2014. The FTSE 100 closed today up over 3.5%. Global markets too have regained some of the losses over the last four days.
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To speak to someone on the ground in London, connect directly with our London lead Ashley Prime at aprime@navltd.com.

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