BREXIT NEWS: Smooth Brexit will see interest rates ROCKET, warns BOE’s Carney

Posted on Nov 3 2018 - 11:24pm by admin

The Bank of England left interest rates unchanged at 0.75 per cent, but stressed it was poised to respond “in either direction” as it awaits the outcome of Brexit talks.

Members of the Bank’s nine-strong Monetary Policy Committee (MPC) voted unanimously to keep rates on hold after August’s quarter-point hike and as it remains in wait-and-see mode amid Brexit uncertainty.

In its quarterly inflation report published alongside the rates decision, the Bank sketched out how it could respond to various Brexit scenarios, signalling that it could even be forced to raise rates should a disorderly exit send the pound tumbling.

The bank said: “The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.” 

The report also predicted business investment has screeched to a complete halt overall this year as uncertainty wreaks havoc on company spending decisions.

In a press conference following the publication of the inflation report, Bank Governor Mark Carney warned interest rates could rise in the event of a no-deal Brexit if a cliff-edge withdrawal sends the pound into freefall.

Mr Carney said there are scenarios where policy “might need to be tightened in the event of a no deal, no transition Brexit”, should a plunge in the value of the pound cause inflation to surge and impact UK production.

He stressed a no-deal Brexit was “not the most likely scenario”, but said the Bank had to be prepared for the worst case and this could mean rates moving in “either direction”.

The Bank’s boss also cautioned that monetary policy might not be able to help soften the economic blow of a no-deal disorderly Brexit.

He said: “There is little that monetary policy can do to offset large, negative supply shocks, which occur relatively rarely in advanced economies.” 

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Brexit news: The Bank of England has warned of interest rate hikes (Image: EPA )

When it comes to it, countries like France are going to do everything to make life hard for the City

City finance figure

The bank said consumer spending had been helping prop up the economy, with a summer heatwave shopping spree set to see growth accelerate to 0.6 percent in the third quarter, up from 0.4 percent in the previous three months. 

But this is likely to have been only a temporary boost, and the Bank expects growth to pare back to 0.3 percent in the fourth quarter before steadying at 0.4 percent thereafter.

This saw the Bank trim its forecast for growth overall in 2018, to 1.3 percent from 1.4 percent predicted in August, while it also nudged its 2019 outlook down to 1.7 percent from 1.8percent.

Its forecasts are based on a “smooth” exit from the EU, with financial markets pencilling in around one rate rise a year for the next three years.

However, the Bank admits the economic outlook will “depend significantly on the nature of EU withdrawal”.

It comes after it was reported Theresa May had secured another Brexit victory after the EU caved in to allow UK financial services continued access to the Brussels bloc after Britain’s exit.

UK and EU negotiators were understood to have reached a tentative agreement on their future relationship surrounding services, as well as the exchange of data, with just five months to go before Britain leaves.

But Number 10 said the reports were speculation and talks were ongoing, while the EU’s Brexit negotiator Michel Barnier hit out at “misleading” accounts.

Follow Express.co.uk for live Brexit updates below:

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Brexit news: Mark Carney speaks following the Bank of England’s statement (Image: PA )

10.30pm: Brussels ‘consdiering new Irish backstop compromise’

EU negotiators are preparing to budge on their demands for the Irish border backstop, the Financial Times has reported.

Brussels is reportedly considering ‘new’ terms which would provide a stronger guarantee that a customs border would not be needed along the Irish Sea.

The EU’s proposals would still require Northern Ireland to remain in the bloc’s customs union to avoid a hard border in Ireland in the event of a no-deal Brexit.

But the revised offer would also include a “bare-bones” customs arrangement with the EU which would apply to the rest of the UK, according to the FT.

The plan has reportedly been floated with UK officials and Britain is said to be considering the offer with a view to issuing a response next week.

6.15pm: Travellers urged to gather documents to prove residency after Brexit

An immigration lawyer has warned members of the traveller community and Roma gypsies to begin gathering official paperwork in case they are required to prove their residency status after Britain leaves the EU.

Christopher Desira said travellers should start gathering paperwork such as tax documents, education certificates, bank statements or employment contracts if they do not have a passport in case they are asked to prove they have lived in the UK for at least five years.

His warning comes after community leaders at the Traveller Movement national annual conference voiced concern over the threat of deportation after Brexit.

4pm: Ireland ‘riding roughshod’ over Good Friday Agreement with Brexit border demands

Former Northern Ireland first minister Lord Trimble has weighed in on the Irish border debate by warning Belfast could become an “EU protectorate” if the UK agrees to Dublin’s demands.

The Nobel peace prize winner blasted Leo Varadkar’s government for attempting to push for Brexit terms which “go well beyond the avoidance of a hard border”.

Lord Trimble said Dublin is “riding roughshod” over the terms of the Good Friday Agreement and “violating its spirit”.

Harvey Gavin taking over form Rebecca Perring on live reporting.

Lord Trimble

Nobel peace prize laureate Lord Trimble warned Northern Ireland could become an ‘EU protectorate’ (Image: GETTY IMAGES)

2.39pm update: Ed Miliband describes Brexit vote a ‘cry of pain’ 

The former Labour leader said the Leave result was “a cry of pain at loss of hope and the loss of a sense of community” – in part derived from the fall in social housebuilding.

He added: “There’s nothing more likely to unite people across the divide than long-term investment in social housing.”

2.16pm update: Britain may not have time to negotiate a new deal if MPs decide to amend any Brexit agreement – senior minister

Commons Leader Andrea Leadsom said the Government would “take action” on any amendments to the Brexit deal motion approved by MPs but added that it may not be possible for ministers to “proceed on the basis of an amended vote”.

Her remarks came after Conservative former cabinet minister Ken Clarke warned the Government against offering MPs the choice of deal or no deal.

1.34pm update: Leading economists have cast doubt on Hammond’s claim that a Brexit “deal dividend” will provide a boost to the UK

In Monday’s Budget, the Chancellor said that a Brexit agreement would deliver a double boost to the economy, as businesses and households were freed from uncertainty and the Treasury was able to spend some of the £15.4 billion buffer it is holding in reserve to cope with a possible no-deal outcome.

However, experts from business organisation the CBI and the Institute for Fiscal Studies (IFS) played down the prospect of a major boost.

IFS director Paul Johnson acknowledged there were “some forecasters in the City” who believed that agreement with Brussels could unlock some additional investment if the “disaster” of a no-deal Brexit is avoided.

Ed Miliband

Former Labour leader Ed Miliband said a lack of social housing contributed to Brexit (Image: GETTY IMAGES)

12.46pm update: Barnier and Downing Street have played down speculation about a breakthrough in Brexit talks

Reports that a Brexit deal could safeguard the City’s access to EU markets led to an increase in the value of sterling.

But Number 10 said it was speculation and talks were ongoing, while the EU’s Brexit negotiator Michel Barnier hit out at “misleading” accounts.

12.31pm update: The Bank of England has left interest rates unchanged at 0.75 percent

But stressed it was poised to respond “in either direction” as it awaits the outcome of Brexit talks.

Members of the Bank’s nine-strong Monetary Policy Committee (MPC) voted unanimously to keep rates on hold after August’s quarter-point hike and as it remains in wait-and-see mode amid Brexit uncertainty.

In its quarterly inflation report published alongside the rates decision, the Bank sketched out how it could respond to various Brexit scenarios, signalling that it could even be forced to raise rates should a disorderly exit send the pound tumbling.

The bank warned: “The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.” 

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Brexit news: Arron Banks has been referred to the National Crime Agency (Image: PA )

12.16pm update: Leave campaigner Arron Banks referred to National Crime Agency

The Electoral Commission referred Mr Banks for “suspected criminal offences committed during the EU referendum”.

The probe has been launched after the elections watchdog said it had reasonable grounds to suspect that Mr Banks was not the true source of £8 million worth of loans made during the campaign.

Leave.EU, co-founded by Mr Banks, its chief executive Elizabeth Bilney and the organisation that ran it, Better for the Country, are also being investigated by the NCA after a review carried out by the Electoral Commission.

Bob Posner, the Commission’s director of political finance, said: “We have reasonable grounds to suspect money given to Better for the Country came from impermissible sources and that Mr Banks and Ms Bilney, the responsible person for Leave.EU, knowingly concealed the true circumstances under which this money was provided.

“This is significant because at least £2.9m of this money was used to fund referendum spending and donations during the regulated period of the EU referendum.

12.04am update: Almost two-thirds of Scots believe a second vote on Brexit would result in the UK remaining in the EU

Research by Survation found 64 percent found a so-called People’s Vote would reverse the result of the 2016 referendum.

The results, published to coincide with the launch of the Scotland for a People’s Vote campaign, also found almost three-fifths of Scots (59 percent) support having a vote on the terms of the UK’s final Brexit deal, with 41 percent against this.

Overall support for staying in the European Union was slightly stronger in Scotland than it was in 2016 referendum.

That ballot saw the UK as a whole narrowly vote to leave, despite 62 percent of voters north of the border backing remain.

In the poll, 63 percent of people said they supported staying in the EU, with 37 percent opposed to this.

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Brexit news: The UK and EU have agreed on a financial services deal (Image: GETTY )

10.29am update: Fury at Madrid as Gibraltar ‘handed’ to May in EASY Brexit victory

The Spanish government has come under fire after handing Britain a significant Brexit victory by conceding in its bid for joint control of Gibraltar.

Madrid had threatened to veto the entire Brexit deal over sovereignty of the Rock but instead rolled over and stopped in its challenge for the British Overseas territory.

Spanish Prime Minister Pedro Sanchez was accused of failing to make the most of a “historic opportunity” to “decolonise” Gibraltar, according to angry opposition politicians.

10.01am update: Arch-Remainer John Major has been accused of ‘HIDING facts’ on Maastricht Treaty

The former Prime Minister was slammed over comments he made about Danish proposals on the controversial and fiercely opposed treaty in October 1992.

The treaty – that established what we now know as the European Union – took almost a year to be ratified as Sir John battled with Labour and Conservative eurosceptics to push it through.

Now, on the 25th anniversary of ratification, a statement accusing the former Tory leader of “misleading the country” has re-emerged.

9.26am update: Michel Barnier is under growing pressure to crack and finally accept Theresa May’s Brexit proposals

Senior European sources disclosed on Wednesday night that the EU’s chief Brexit negotiator is being pressured to compromise with the UK.

It comes as EU members states privately voiced their concerns over Mr Barnier’s “backstop” agreement, as they claim it will never be accepted by Theresa May.

Under the current EU offer, Northern Ireland would be locked in the EU’s customs union and its single market for goods.

The plan has caused uproar amongst Brexiteers and the Democratic Unionist Party, whose 10 Northern Irish MPs prop up the Prime Minister’s minority Government with a supply and confidence agreement.

9.10am update: EU says London will still be key finance hub 

Brussels looked to calm Brexit concerns by telling traders London will remain a key finance hub – even if Britain tumbles out of the bloc without a deal. 

European Commission Vice President Vladis Dombrovskis made the commitment to traders across the continent, reassuring them they will be able to use crucial UK derivatives clearing services regardless of the outcome of Brexit negotiations.

But Mr Dombrovskis, who is also responsible for financial regulation, warned the relief allowing EU banks and companies to continue using UK-based clearing houses to process derivatives trades if talks with Brussels collapse, would only be short term.

He told the Financial Times this would also have to linked to a willingness from the UK to remain close to European Union regulatory and supervisory standards.

The European Commission Vice President warned: “Should we need to act, we would only do so to the extent necessary to address financial stability risks arising from an exit without a deal, under strict conditionality and with limited duration.”

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Brexit news: The victory will come as a blow to France (Image: GETTY )

8.53am update: Scotland rallies to hold second vote on Brexit 

A Scottish campaign calling for people across the UK to have the final say on Brexit will be launched at an event in Edinburgh today. 

There have been cross-party calls for a so-called People’s Vote before the UK formally departs the European Union in March 2019.

Scotland voted by 62 percent to remain in the EU when the referendum was held in June 2016.

Hundreds of campaigners attended a rally in Scotland’s capital in August to call for the UK Government’s eventual Brexit deal to be put before the country.

The event in Edinburgh, organised by the Scotland for a People’s Vote campaign group, will feature speakers including Dr Kirsty Hughes, the director of the Scottish Centre on European Relations and John Edward, the former head of the European Parliament Office in Scotland.

8.40am update: Small firms voice “deep concern”  over prospect of having to check the eligibility of EU workers if there is no Brexit deal

The Federation of Small Businesses (FSB) said smaller companies would struggle to cope with the “additional burden”.

It comes after Immigration Minister Caroline Nokes earlier this week that employers will be expected to check whether EU nationals have the right to work in the UK if there is a no-deal Brexit.

FSB chairman Mike Cherry said: “Small businesses are not the Home Office and should not be expected to undertake their job.

“The reality is that many of these businesses wouldn’t have the first idea of where, or how, to check whether or not their EU staff have the right to work here.

“Most small firms don’t have HR or legal departments to deal with complex immigration procedures, or the time and resources to deal with the additional administrative burden this would bring.”

8.21am update: Victory for Theresa May as UK and EU agree deal on financial services 

With five months to secure a Brexit deal before Britain is due to leave the EU, business leaders are demanding certainty over the kind of trade terms the divorce will deliver.

The services deal would give UK companies access to European markets as long as British financial regulation remained broadly aligned with the EU’s, The Times reported. 

Mrs May’s principal Europe adviser, Oliver Robbins, is understood to be continuing negotiations in Brussels.

Senior figures in London’s financial district welcomed the news but warned of the complications over delivering detail on the deal in a legal trade agreement.

One told the newspaper: “When it comes to it, countries like France are going to do everything to make life hard for the City.

“It is one thing to have warm words in a political declaration that is not binding and tying it down in a legal document.”

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