The ghosts of crises past
Written by Javier Maquieira, Associate
Edited by David Gaffney, Partner
Good morning,
For those wondering if a global pandemic would be enough to bring Brexit to a halt, at least temporarily, the answer appears to be no.
After the second round of negotiations finished with disappointingly “limited progress” in April, talks between the UK and the European Union over a post-Brexit trade deal resumed yesterday ahead of the next summit in June.
One of the most pressing decisions both sides will need to make by then is whether the current negotiation deadline should be extended beyond 31 December.
Unsurprisingly, the UK government opposes any extension to the transition period, even if the bloc requests one. The official position is that Britain will “continue to negotiate constructively to achieve a balanced solution”, and any frustration coming from the EU is based on the UK’s determination to defend its own vision of the future relationship.
Some opposition parties, including the Scottish National Party and the Liberal Democrats, have called on the UK government to request an extension in light of the Covid-19 outbreak, as they fear exiting the EU on the current trajectory will compound the economic damage caused by the pandemic. Labour leader Sir Keir Starmer, however, said on Monday that he would seek “to ensure that the negotiations were completed as quickly as possible”, even when he didn’t think it practical to agree a deal by the end of the year.
Meanwhile, in Brussels, the EU’s trade commissioner Phil Hogan said that British negotiators are showing “no real sign” of approaching the talks “with a plan to succeed”, as they seem to be prepared to blame the coronavirus for the fallout from Brexit.
In response to reports that the UK’s decision to open trade negotiations with the United States would work as leverage against the EU in the Brexit talks, the EU ambassador to London, João Vale de Almeida, said he felt “no pressure” and insisted that a deal could still be done this year.
Surely, Brussels is determined to push Britain beyond its own core concerns, including energy and aviation, and avoid a slowdown in important areas for the 27 members of the bloc, such as fishing and competition. But as disagreement mounts and calls for an extension are turned down, fears of a second wave of Covid-19 infections in the autumn bring the spectre of no-deal Brexit back – if indeed that shadow had ever gone.
If this pandemic hasn’t made the case for international cooperation, then what will?
News
Boris Johnson sought to clarify his return to work message at Monday’s press briefing, saying that he didn’t expect a "sudden big flood" of people going back to the workplace after the release of new coronavirus guidance. The prime minister insisted that employers would need to prove they met a new safety standard, dubbed “Covid secure”, and called on them to be sympathetic to workers with no access to childcare.
Donald Trump stormed out of yesterday’s Rose Garden press conference after a contentious exchange with an Asian American reporter who had asked the US president why he saw Covid-19 testing a as a global competition. Trump replied “Don’t ask me. Ask China that question” before ending the press conference abruptly. The exchange came after the White House had ordered officials to wear masks inside the building, as two staffers tested positive for the coronavirus.
More than 100 new Covid-19 cases have been linked to Seoul’s nightclub district, raising fears of another wave of infections in South Korea, a country that has been praised for its innovative efforts to contain the pandemic. Meanwhile, new coronavirus clusters have been reported in Wuhan, where the disease first emerged, and another Chinese city near the Russian border, sparking unease about a fresh wave of infections in China.
Business and economy
P&O Ferries plans to lay off 1,100 of its employees as a result of the reduced number of vessels and a downturn in business. The ferry operator, which had previously requested £257m in aid to avoid collapse, said the headcount reduction was a necessary step to ensure the viability and sustainability of the company.
Sir Richard Branson is set to sell $500m (£405m) in Virgin Galactic shares to support Virgin Group’s portfolio of global leisure, holiday and travel businesses, including Virgin Atlantic. The billionaire was previously criticised for seeking financial help from the taxpayer for the airline.
Chancellor Rishi Sunak is expected to set out the future of the government’s job retention scheme later today, amid calls to extend it beyond its current deadline in June. The chancellor, who had already warned that the scheme was not “sustainable” at its current rate but promised no “cliff edge” cut off, will update MPs as the government tries to get more people back to work.
Columns of note
Tineke Frikkee writes in theFinancial Times that the coronavirus crisis is likely to bring about the remaking of global supply chains towards improved visibility and security. However, he warns that not all companies will be able to show enough resilience and agility to thrive. Frikkee argues that rebuilding the infrastructure will take time and money, with financially strong firms and those with more balanced supply networks best placed to manage the risk of transition. (£)
Writing inCity AM, Anders la Cour argues that the banking sector needs to embrace technology to gear standard lending solutions and practices towards SMEs, making financial inclusion for them a priority. He concludes that the current situation should be seen as an opportunity for the industry to evolve its position.
Source: The Times
Markets
What happened yesterday?
London stocks finished marginally higher on Monday, with the FTSE ending the day up 0.06% at 5,939.73 as investors tried to make sense of the government’s latest Covid-19 guidance. Sterling was weaker both against the dollar by 0.67% at $1.2327 and versus the euro by 0.43% at €1.1399. In the US, Wall Street rebounded from early losses after New York’s governor, Andrew Cuomo, said parts of the state were ready to reopen.
There was a poor showing in the airline sector, amid news that the UK will impose a 14-day quarantine on travellers arriving in the country from June. Budget airline easyJet was 5.91% lower, while British Airways parent IAG lost 2.89%.
In other corporate news, technical products specialist Diploma gained 4.01%, even as it reported just one per cent underlying revenue growth in the six months to 31 March as a result of a four per cent rise in interim pre-tax profits to €41.6m.
What's happening today?
Finals
Inspecs Group
Land Secs.
Vodafone Grp.
AGMs
Fid.euro.val., Gli Finance, Hg Capital, Iwg, M Winkworth, Macfarlane Grp., Mobeus I&g, Reckitt Ben. Gp, Std Life Aber, X5 Retail
UK economic announcements
(07:00) GDP (Preliminary)
(07:00) Index of Services
(09:30) Industrial Production
(09:30) Balance of Trade
(09:30) Manufacturing Production
Int. economic announcements
(07:00) Wholesale Price Index (GER)
(13:30) Consumer Price Index (US)
Did you know?
Aluminium beer cans used to be 40% thicker and much stronger, which is why we see people crushing beer cans as a display of strength in older movies.
Parliamentary highlights
House of Commons
Oral questions
International Trade
Defence
Motions
To approve a Statutory Instrument relating to the Draft Criminal Justice Act 2003 (Early Release on Licence) Order 2020 - Robert Buckland
To approve a Statutory Instrument relating to the Abortion (Northern Ireland) Regulations 2020 - Brandon Lewis
Renewal of the temporary Standing Orders on Hybrid Proceedings
House of Lords
Oral questions
Measures to protect vulnerable populations during the COVID-19 pandemic - virtual proceeding - Baroness Bull
How the Coronavirus Business Interruption Loan Scheme for small and medium sized businesses is operating - virtual proceeding - Lord Razzall
The ability of schools to deliver the new compulsory elements of the personal, social, health and economic education curriculum from September 2020 - virtual proceeding - Baroness Massey of Darwen
When the £76 million funding to support vulnerable people during COVID-19 will be distributed - Baroness Burt of Solihull
Orders and regulations
Draft Census (England and Wales) Order 2020 – virtual proceeding - Lord True
Health Protection (Coronavirus, Restrictions) (England) Regulations 2020; Health Protection (Coronavirus, Restrictions) (England) (Amendment) Regulations 2020 - virtual proceedings - Lord Bethell
Debate
Report from the EU Committee 'Beyond Brexit: how to win friends and influence people' - virtual proceeding - Lord Boswell of Aynho
Scottish Parliament
Topical Questions (if selected)
Scottish Government Debate
Suppressing COVID: The Next Phase
Committee Announcements
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