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Overnight News Brexit -@JenniferMerode: EU source on Boris Johnson's refusal to meet EU leaders unless they scrap the backstop: “This choice puts us on the path towards no deal, which is the worst possible way to manage the consequences of Brexit.” Second EU source suggests Johnson is playing politics for a domestic audience: "I can't believe this is meant seriously." EU leaders, the source thinks, should try to meet Johnson to assess whether he means it. -Scottish First Min ...Sturgeon: What happens over Brexit will have an impact on decision about the timing of Scottish independence referendum; it isn’t democratic to block the right of the people of Scotland to choose; PM Johnson is pursuing a dangerous hardline strategy with EU leaders with no-deal the likely outcome -BBG: PM Johnson will spend the next couple of weeks pressing the EU to negotiate a better Brexit deal https://bloom.bg/2MoHSzz
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Weekend & O/N News Brexit: -CBI Survey (BBC): there are no areas of economic relevance where the UK, EU & biz are all sufficiently well prepared for no-deal https://bbc.in/2K8WO25 -Tsy Min Rishi Sunak(Sky News 28 Jul): the govt can afford to spend money preparing for a no deal; Chancellor Javid will set out more details on no deal spending planning this week; we aren’t planning for a GE, it’s not our desire -Labour’s Corbyn(Sky News 28 Jul): Labour will do everything it can t...o prevent the country leaving the EU w/out a deal; WRT a no- conf vote in the govt, he will look at situation after the summer recess -Michael Gove(S Times 28 Jul): a no deal (Brexit) is a very real prospect and we must ensure we are ready; the EU’s leaders have, so far, said they will not change their approach — it’s the unreformed withdrawal agreement, take it or leave it; we still hope they will change their minds, but we must operate on the assumption that they will not https://bit.ly/2GxZG7O
EZ -FT citing EU doc: the EU will this week remove some mkt access rights for 5 countries in a move that will heighten fears about UK equivalence after Brexit https://on.ft.com/2K5X6H4 -ECB’s Nowotny (ORF1 Midday Journal 27 Jul): Expects interest rates to be lower in the L/T than they have been historically; ECB should strive for normalisation -French Fin Min (27 Jul): It’s in our interests to have a fair digital tax; will be speaking with US counterpart tonight; we aren’t targeting US firms with digital tax; hopes to reach consensus on universal solution to digital tax at G7; will put in place French digital tax while it waits a universal agreement -DBRS: confirms Switzerland at AAA, stable trend -DBRS: confirms EFSF at AAA, stable trend -DBRS: affirms ESM AAA, stable trend -DBRS: confirms Netherlands at AAA, stable trend -Fitch: affirms Finland at AA+, o/l +ve
UK -Telegraph: UK Trade Min Truss: "My main priority now will be agreeing a free trade deal with the US”; will be getting on a plane in the next few weeks to move this fwd & make it clear from the outset that the NHS isn’t up for sale https://bit.ly/2MouDz0 -PM Johnson (Manchester 27 Jul): Will review planning regs, stamp duty & housing zones to build more homes; will increase education funding, invest in fibre roll out, social care needs a L/T solution; will begin to create free ports, change tax rules to incentivise investment; WRT to spending pledges, said the plans are reasonable, there’s fiscal headroom for education spending; WRT a no deal Brexit, said I don’t think we’ll end up there but we need to prepare for it; doesn’t want a no deal but we have to face the facts; if we get rid of Irish backstop we’re making a lot of progress; we’re trying to solve Brexit, that can’t happen with backstop in place -S Times/Yougov Poll: Tory’s hold 10 point lead over Labour
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Overnight News UK -@PippaCrerar: International development secretary becomes THIRD cabinet minister to confirm he will quit when Boris Johnson becomes PM -BoE Haldane: Brexit harming UK industrial strategyhttps://bbc.in/2XZZAAw -Telegraph: Boris Johnson is prepared to give tax breaks to everyone earning less than £80k & is also prepared to pause the current policy of lowering the deficit; will borrow more to fund new spending plans https://bit.ly/2LCQwuI... -UK Gvt: Postpones decision about involving Huawei in the country’s 5G network citing lack of clarity over the US import ban on the Chinese firm
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Brexit latest... PM candidates set high bar for Brexit talks: no Irish backstop- Both frontrunner Boris Johnson and underdog Jeremy Hunt said on Monday that they would not be willing to accept the so-called Northern Irish backstop element of Theresa May’s Brexit deal, even if a time limit was set. https://www.reuters.com/…/pm-candidates -set-high-bar-for-br…
Conservative leadership race: May withdrawal agreement dead, Stephen Barclay tells Brussels- Stephen Barclay left Mr Bar...nier, the EU’s lead negotiator, astonished and dismayed in a “confrontational” exchange last Tuesday. “He told Barnier that the withdrawal agreement was dead — not once but five times,” a senior EU diplomat said. “If this is what is coming then we will be heading for no deal very quickly.” https://www.thetimes.co.uk/…/conservati ve-leadership-race-m…
U.K.'s Boris Johnson Warns Trump He Won't Support a War With Iran- “Diplomacy must be the best way forward,” Johnson said. “If you ask me if I think, were I prime minister now, would I be supporting military action against Iran, the answer is ‘No.”’ https://www.bloomberg.com/…/u-k-s-johns on-warns-trump-he-wo…
Conservative leadership race: Philip Hammond rules out speedy trade deal with America- Asked about the possibility of completing a trade deal within a year, Mr Hammond told CNBC: “I don’t think delivery in that kind of timescale is realistic. Trade deals are intrinsically complex. What I hear the president say is ‘America First’. The president’s idea of a trade deal may not coincide with some people in the UK’s idea of a trade deal.” https://www.thetimes.co.uk/…/conservati ve-leadership-race-p…
U.K. and EU Brexit Talks Get More Hostile as New Offer Mulled- The bloc is wary of offering Hunt, and particularly Johnson, significantly more than they gave May. However, officials say they still have some ammunition left, as they held some concessions back when it became clear that May was unlikely to get the deal through Parliament, no matter what they gave her. https://www.bloomberg.com/…/u-k-and-eu- brexit-talks-get-mor…
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Overnight News Brexit -UK PM Candidate Johnson: Not unrealistic to say can get new Brexit deal done before Oct 31st; EU have been collaborating with elements of UK gvt to keep Britain in the Bloc; wouldn’t accept a time-limited backstop; the backstop is dead, time limit won't change that; next election will be in 2022 -Deutsche Bank have raised their probability of a no-deal Brexit to 45% -BBG citing European Officials: EU weighing concessions it could offer the UK to avoid a... no-deal Brexit which could include, further commitments to look at tech solutions for the Irish border & quickly to a full trade deal, making a formal link between achieving a post Brexit future trade deal & payment of the UK financial settlement, offering to make the backstop apply only to N Ireland rather than the whole of the UK & rewriting the “political declaration”; it follows last week’s meeting between Brexit Sec Barclay & EU’s Michel Barnier which was described as one of the most difficult meetings of the last 3 years https://bloom.bg/2LkB0Uh
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Overnight/Weekend News Brexit -Gina Millar(legal campaigner 14 Jul): any attempt to suspend parliament to get thru a no deal Brexit would be unlawful & she would challenge in court if necessary (reminder she took govt to supreme court to challenge its authority to the leave the EU w/out a parliamentary vote ) -Times: PM candidate Johnson wants to negotiate a post Brexit trade deal with Pres Trump & is ready to fly to the US to do so asap if he wins the leadership contest htt...ps://bit.ly/2JG769Q -S Times: the DUP is open to exploring ideas that would avoid the need for checks on the Irish border after Brexit, inc checks on food & animals at ports in NI -S Telegraph: the next UM PM’s hopes of a post Brexit trade deal with the US depend on his willingness to fall into line with US policies on Huawei https://bit.ly/2xPeiLa
EZ -Greek CB/ECB’s Stournaras(Kathimerni 13 Jul): Greece’s participation in ECB’s APP or whatever replaces it may be feasible soon; there’s room for Greece to reduce its primary surplus targets that could lead to an acceleration of economic reforms -Il Messaggero/Repubblica(13 Jul): Italy is still at risk of GE in Sep as tensions are still simmering within the coalition govt; Dep PM Salvini is under pressure from his party to topple the govt before summer break while some in 5Star are pushing for a spring 2020 election -Turkish For Ministry(13 Jul): Turkish Cypriots have presented Greek Cypriots via the UN cooperation on exploration/exploitation of hydrocarbons around Cyprus -DBRS: Confirms Italy at BBB high, stable trend; fiscal o/l from 2020 onwards remains challenging
UK -Jul Rightmove House PX: -0.2% m/m vs +0.3% prev & -0.2% y/y vs flat prior -Resolution Foundation(S Times): the risk of a UK recession is at the highest level in more than 10 years ; the Think Tank has developed a recession risk indicator based on slope of yield curve which has proved to be an accurate predictor of past recessions https://bit.ly/2LPrdVA -Shadow Chancellor McDonnell (S Times 14 Jul): GBP would rise if Labour won a GE, mkt’s wouldn’t panic over the party’s plans for new taxes, nationalisation & large scale investment
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Brexit/UK -Telegraph: Boris Johnson is considering plans to reduce the size of the cabinet if he’s made PM; his supporters are asking to him review ~7 departments in order to cut costs https://bit.ly/2NrtoB9 -Speaker Bercow: Has not selected Grieve/Beckett amendment which sought to stop a no deal -Citi/Yougov: UK Households expect consumer prices to rise by 2% in the next 12 months ; Expectations for annual consumer infla in 5-10 years time rose from 3.2% in May to 3.3% i...n June -UK Fin Min Hammond: UK govt has built up a reputation for fiscal responsibility and its important we don’t throw that away; Have to live within our means and people have to be honest about consequences of spending more money or cutting taxes -UK PM candidate Hunt: it will be challenging to reach new Brexit deal with EU but I will take a different approach from Theresa May; people can live with a lot of what we have in the current Brexit agreement; Merkel has told me she would look at a new package proposed by a new British PM
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Weekend Brexit headlines In race for No. 10, Johnson and Hunt vow to splash the cash- Johnson, the favourite, vowed to increase spending on education, adding to earlier pledges to invest in transport, superfast broadband, more police and tax cuts. “Believe me there is cash now available,” Johnson told Sky News. “(And) I’m prepared to borrow to finance certain great objectives but overall we will keep fiscal responsibility.” https://www.reuters.com/…/in-race-for-n o-10-johnson-...and-hun…
Johnson Refuses to Rule Out Suspending Parliament: Brexit Update- The two candidates competing to become U.K. prime minister faced the media on Sunday, with Boris Johnson once again refusing to rule out suspending Parliament to force through a no-deal Brexit. In a separate interview, his rival, Jeremy Hunt, reiterated that he would be prepared to take the U.K. out of the European Union without a deal. https://www.bloomberg.com/…/johnson-ref uses-to-rule-out-sus…
UK Brexit negotiator Robbins to leave role: The Sunday Times- Robbins had been criticized by Brexiteers for helping negotiate Prime Minister Theresa May’s Brexit deal, which has been rejected by lawmakers. Robbins is overdue a move and is prepared to stay and do a smooth handover, a source told Reuters. https://www.reuters.com/…/uk-brexit-neg otiator-robbins-to-l…
PM contender Hunt sets out plans to prepare Britain for no-deal Brexit- A Jeremy Hunt government would set aside a 6 billion pound ($7.6 billion) war chest to protect fishing and farming, and prepare an emergency budget to cut taxes under plans designed to get Britain ready for a dramatic no-deal Brexit. https://www.reuters.com/…/pm-contender- hunt-sets-out-plans-…
UK firms hit the brakes as Brexit and bad weather weigh: CBI- The balance of firms reporting growth sank to -13%, according to the CBI’s monthly Growth Indicator. https://www.reuters.com/…/uk-firms-hit- the-brakes-as-brexit…
Brexit and global slowdown hit UK factories in second quarter: BCC- Factories also showed the weakest picture for export orders in four years in the April-June period while a slight pick-up for services firms was not strong enough to make up for a weak start to the year, the British Chambers of Commerce said. “These results indicate that underlying economic conditions in the UK remain decidedly downbeat,” BCC economist Suren Thiru said. https://www.reuters.com/…/brexit-and-gl obal-slowdown-hit-uk…
Irish factory activity contracts in June for first time since 2013 – PMI- The AIB manufacturing purchasing managers index (PMI) slipped to 49.8 in June from 50.4 in May, below the 50 mark that separates growth from contraction. https://www.marketscreener.com/…/Irish- factory-activity-co…/
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Overnight News Europe -Italian Tsy: To sell up to €6b in Bonds at auction on June 27th; Max €2.75b 10y, €2.25b 5y, €1.0bn Floating bonds; To offer new 3yr BTP maturing 2023 in Q3; To offer new 10yr BTP Maturing April 2030 in Q3 -08.30bst: Italian Fin Min Tria speaks near Rome
... UK -PM Candidate Johnson (BBC): The existing deal negotiated by Mrs May is now dead; insists its poss to negotiate a new deal with the EU before the end of Oct because the political landscape in the UK/Continent has changed; he also said MPs could be more willing to back a revised deal as both main parties face the realisation of extinction if Brexit stalled https://bbc.in/2X6AYpq
North America -Fed's Kaplan [NV]: 'wise' to take time to consider if need to change rates; downside risks to U.S. economic outlook have increased; too early to judge if trade, global growth uncertainties will hurt U.S. economic growth; he's concerned that adding monetary stimulus would contribute to build up of excesses, imbalances; U.S. interest rates 'in the neighbourhood' of neutral; he will monitor U.S. and global economies, financial conditions in coming weeks, months; monthly job U.S. gains of 60-120k would mean 'strong' jobs market; tight labour market exerts upward push on inflation; trade tensions likely contributing to softening global growth -Fox News Chad Pergram: Talks to secure a 2 yr spending caps deal and raise the debt ceiling appear to have stalled. That means the sides could face the prospects of an interim spending bill or a shutdown on October 1. A shutdown this fall could make last winter's shutdown look like choir practice; Mnuchin/Mulvaney have proposed a year-long Continuing Resolution (CR) to fund gov't & a year-long debt ceiling hike. By its nature, CR’s simply renew current funding at existing levels. There would also be a one-year suspension of the debt ceiling. Democrats oppose the proposal -Pres Trump (The Hill interview): Repeats he has the power to fire Fed Chair Powell but has no intention to do so; said Powell is incorrect that he’s entitled to serve a 4 year term to 2022 https://bit.ly/2Lcx0o1
Trade -@HuXijin_GT: Current atmosphere between China and the US is not good. What I have learned about China's stance now is: holding constructive and positive attitude toward upcoming China-US summit, but fully preparing for its failure and an escalating trade war. -China VP Liu had call with USTR Lighthizer & Tsy Sec Mnuchin-agreed to maintain communications -US Official: Trump/Xi meeting at G20 seen as opportunity to maintain engagement and see where China is on trade dispute
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Tory leadership contest latest...
The awesome foursome Five and their current price 1.Boris Johnson: 1.12/1.13 2.Jeremy Hunt: 15.0/16.0)... 3.Michael Gove: 28.0/30.0 4.Sajid Javid: 100/130 In yesterday’s ballot, the vote for Boris Johnson was equal to the other three remaining candidates’ combined total – it looks like the leadership remains his to lose. However, the party is said to want to avoid a ‘coronation’ and at this stage; it looks like the contest will go on, with its 160,000 party members voting on not only who they want to be their next leader, but also the PM. By the end of today, we will know who the final two contenders will be. Timeline Thursday June 20: The fourth (1000 to 1200) and fifth ballots (1530 to 1730) continue, until just two candidates remain. The results will be announced at 1300 and then 1800. Friday June 21, 1200: Deadline for candidate withdrawal. Saturday June 22: Conservative Campaign Headquarters will begin the hustings process for party members. The party will aim for hustings in all 12 regions of the UK. The two candidates will have a month to win over the party faithful. Week commencing July 22: The new leader will be announced following the ballot of the Conservative Party’s 160,000 members.
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UK Politics:
There will be plenty of noise today, with the 3rd round of the Tory leadership contest taking place. Labour will also apparently announce its latest cunning plan to get into power. The six candidates for the Tory leadership took part in a TV debate last night, and they were all pretty unimpressive. The best performers were Jeremy Hunt and Michael Gove, while Rory Stewart came across as the outsider who believes he knows all the answers – that may well be true, bu...t it didn’t do him any favours; the price on him winning has moved out to 27/30 this morning. Meanwhile, the Times reports that “Jeremy Corbyn will back a move today for Labour to change its Brexit policy and support a second referendum in all circumstances”. It seems that he has decided it is time to stop sitting on the fence. It all looks just a little bit opportunistic.
Tory Leadership Timeline • Wednesday June 19, 1500-1700, the third ballot. Results expected around 1800. Candidate with fewest votes is eliminated • Thursday June 20: The fourth (1000 to 1200) and fifth ballots (1530 to 1730) continue, until just two candidates remain. More ballots can be held, but the 1922 Committee doesn’t think that will be necessary. The results will be announced at 1300 and then 1800. • Friday June 21, 1200: Deadline for candidate withdrawal. • Saturday June 22: Conservative Campaign Headquarters will begin the hustings process for party members. The party will aim for hustings in all 12 regions of the UK. The two candidates will have a month to win over the party faithful. • Week commencing July 22: The new leader will be announced following the ballot of the Conservative Party’s 160,000 members. The Contenders, yesterday’s votes and their current price 1. Boris Johnson: 126 1.15/1.16 2. Jeremy Hunt: 46 15.5/16.5 3. Michael Gove: 41 36.0/38.0 4. Rory Stewart: 37 27.0/30.0 5. Sajid Javid: 33 90.0/110.0
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Tory Leader Cheatsheet: Into the end game
The Contenders and their current price 1. Boris Johnson: 1.18/1.19 2. Rory Stewart: 13.5/14.5... 3. Jeremy Hunt: 20.0/24.0 4. Michael Gove: 46.0/48.0 5. Sajid Javid: 110/160 6. Dominic Raab: 95/120 Timeline • Monday June 17: Second round of hustings begin. Johnson remains the clear favourite, despite not taking part in a TV debate on Sunday. The price on Stewart has shortened, but it remains to be seen how he would fare with the broader Tory membership if he does make it to the final cut. • Tuesday June 18: 1500-1700, Second ballot. Candidates will need 33 votes to remain in the contest. If all candidates receive at least 33 votes, the one with the lowest total will be eliminated. Results are announced 1800 UK time. The BBC will host a debate entitled Our Next PM at 2000 UK time. Johnson will take part. • Wednesday June 19, 1500-1700, the third ballot. Results expected around 1800. Candidate with fewest votes is eliminated • Thursday June 20: The fourth (1000 to 1200) and fifth ballots (1530 to 1730) continue, until just two candidates remain. More ballots can be held, but the 1922 Committee doesn’t think that will be necessary. The results will be announced at 1300 and then 1800. • Friday June 21, 1200: Deadline for candidate withdrawal. • Saturday June 22: Conservative Campaign Headquarters will begin the hustings process for party members. The party will aim for hustings in all 12 regions of the UK. The two candidates will have a month to win over the party faithful. • Week commencing July 22: The new leader will be announced following the ballot of the Conservative Party’s 160,000 members.
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Overnight News EZ -11.15bst: BOI Dep Gov Panetta attending Frankfurt conf -French Fin Min Le Maire: EU mins have agreed to EZ budget -Rtrs(citing draft document): EZ Fin Mins ae discussing new rules that would make it easier to restructure EZ sovereign bonds, a move that could increase the yields of high debt states; if agreed it would allow bonds issued on /after Jan 1 2022 & with maturities above 1 year; its proposed structure would allow decisions over bond restructuring t...o inc all bonds issued by a state https://reut.rs/2IePAK6
Brexit/UK -UK Top Civil Servant Sedwill: We did a lot of work on no deal before the Mar deadline & we continue to do so; we’re in pretty good shape for no-deal Brexit -DUP Spox: Time limit needed on backstop; could last for a no. of years -DUP lawmaker Donaldson: Party’s clear position is to seek changes to backstop such as a time limit -@Barnes_Joe: EU27 ambassadors met tonight. Source tells me France didn’t intervene, leaders prepared to welcome new PM and political declaration is where negotiations are focused.; This means Brexit will only feature at next week’s European Council if Emmanuel Macron wants to raise a point or Donald Tusk encourages leaders to have a debate -@bbclaurak: Javid and Hancock met this afternoon after the vote result - Hancock still in it tonight but 'mulling over' whether to continue in the race and might make a decision tomorrow - Javid committed for now
UK -BBC Source: Health Sec Matt Hancock is considering pulling out of the Tory leadership race; Pol Ed Laura Kuenssberg said a decision could come within hours https://bbc.in/2IInbv5 -UK Fin Min Hammond: Vital we do not throw ... away" reputation for fiscal competence during conservative leadership campaign; Asking conservative leadership candidates to give a clear commitment to existing fiscal rules -Guardian: Tory leadership rivals met last night to discuss forming an alliance to stop BoJo; Matt Handcocks team spoke to advisors from Gove & Javid y’day; candidates that wish to drop out before next Tuesday’s vote have been asked by the 1922 to inform them by lunchtime today https://bit.ly/2XTGR5q -Times: Andrea Leadsom may back Sajid Javid in the leadership race; she’s expected to make a decision regarding her support over the weekend https://bit.ly/2X9wv4t
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Tory Leadership Contest
On Friday June 7, Theresa May stepped down as Conservative Party Leader. She will continue as acting PM until her successor is chosen. The 1922 Committee will oversee the process. Conservative MPs will select two candidates to present to the whole membership of the party. They vote on a ‘one member, one vote basis’. A total of 10 candidates are standing; these will be whittled down to just 2 through a series of ballots. Conservative Party members will... then vote who will be leader.
The Contenders and their current price 1. Boris Johnson: 1.7/1.72 2. Jeremy Hunt: 6.6/7.0 3. Andrea Leadsom: 9.2/9.4 4. Michael Gove: 16.5/17.0 5. Rory Stewart: 20.0/22.0 6. Dominic Raab: 42.0/44.0 7. Sajid Javid: 36.0/40.0 8. Matt Hancock: 110/150 9. Mark Harper: 170/220 10. Esther McVey: 170/280 Timeline • Wednesday June 12: Boris Johnson and Sajid Javid launch their leadership campaigns. Labour to table a ‘Business of the House Motion’ to try and gain a slot to bring legislation to stop a No Deal Brexit. 1600 to 1800, leadership hustings continue. • Thursday June 13, 1000 to 1200: First ballot of MPs. Candidates need at least 17 votes to proceed to the next round. Results are expected around 1300. • Friday June 14: 1300 – deadline for candidate withdrawal. 1400-1430. Ballot for second hustings. • Sunday June 16: TV debate with those still in the contest on Channel 4 • Monday June 17: Second round of hustings • Tuesday June 18: 1500-1700, Second ballot. Candidates will need 33 votes to remain in the contest. If all candidates receive at least 33 votes, the one with the lowest total will be eliminated. Results are announced 1800 UK time. The BBC will host a debate entitled Our Next PM at 2000 UK time • Wednesday June 19, 1500-1700, the third ballot. Results expected around 1800. Candidate with fewest votes is eliminated • Thursday June 20: The fourth (1000 to 1200) and fifth ballots (1530 to 1730) continue, until just two candidates remain. More ballots can be held, but the 1922 Committee doesn’t think, at this stage, that will be necessary. The results will be announced at 1300 and then 1800. • Friday June 21, 1200: Deadline for candidate withdrawal. • Saturday June 22: Conservative Campaign Headquarters will begin the hustings process for party members. The party will aim for hustings in all 12 regions of the UK. The two candidates will have a month to win over the party faithful. • Tuesday June 25: The proposed date to bring legislation to stop No Deal. • Week commencing July 22: The new leader will be announced following the ballot of the Conservative Party’s 160,000 members.
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Overnight News Brexit -Times: According to senior European sources, Germany & most EU gvt’s would back another delay to Brexit regardless of who becomes PM; most European gvt’s believe that the future tory leader would be forced to use extra time for a 2nd ref to break the Westminster deadlock; the final deadline expected to be as late as next Spring https://bit.ly/2WNeA3r
EZ...
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Overnight News Europe -Italy New Car Sales: -1.9% in May -Italian PM Conte: Underestimated the impact of constant electioneering on his gvt; wants to strengthen investment & modernize infrastructure; gvt hasn’t stalled; will work of new conflict of interest law; next budget will be complex; EU rules will stay in force until we can change them; country needs confidence of fin mkts; has excellent relations with all his mins; unfortunately bad atmosphere lingers after EU electio...n; can’t work if gvt attacking each other on social media; Can’t be certain how long gvt will last; EU disciplinary action would be very bad for Italy; askes coalition leaders to decide if they want to pursue gvt contract; coalition leaders need to decide if they want new election; has no intention of staying in job without loyalty of coalition parties; seeks rapid clear decision from coalition partners; will do his best to protect interests of Italy in EU negotiations; Country can’t allow itself political uncertainty -Italian Dep PM Salvini: We want to carry on & not waste time -Italian Tsy: State sector budget deficit at €900m, vs €7.94b deficit in May’18 -11.00bst: Fin Min Tria attends conf on Southern Italy’s economy
UK -Telegraph: 1922 committee to set out plan for electing new leader tomorrow; plans to “cull” anyone from the race after the 1st round who fails to get more than 10 votes by fellow MP’s; 4 rounds are planned with the final 2 candidates selected by June 20th https://bit.ly/2Kq8kry -UK May BRC LFL Retail Sales: -3.0% y/y vs 0.8% cons; biggest fall since Dec’08 excluding Easter periods; May total R/S -2.7% vs +4.1% prior biggest fall on record excluding Easter distortions, although BRC note that the fall should be seen in context of very strong rise of +4.1% in May 2018
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Overnight News/Brexit... Brexit: -Times: Tory leadership candidates back US stance to block Huawei from Britain’s communications network https://bit.ly/2WgWGXk -Pres Trump(to reporters as he was leaving US for UK visit 2 Jun): there’s an opportunity for a very big trade deal with the UK at some point in the near future; we’ll see how that works out -Pres Trump (S Times 2 June): Send in Nigel Farage to negotiate Brexit; go for a no deal if the EU doesn’t give the UK what it wa...nts; the new UK PM should refuse to pay the Brexit divorce bill & leave talks if the EU doesn’t bow to UK demands
EZ: -Replicca(3 June): PM Conte will today launch an ultimatum to ruling parties to speed up govt action or face his resignation ; he will say he does not intend to undertake an EU disciplinary procedure -Italian Fin Min Tria(Corriere 2 Jun): regarding a leaked draft of his letter to the EC: there’s no doubt it damages negotiations with the Commission; that text wasn’t definitive, it was an incomplete draft with various open options; it wasn’t for publication & shouldn’t have got out -SPD’s Nahles(2 Jun): To resign leadership of Social Dem Party & parliamentary group -EU’s Moscovici(2 Jun): EC will make proposals next week on Italy’s budget deficit, prefers dialogue to sanctions -Italian Fin Min Tria (RTRS interview 2 Jun): Reiterates 2019 deficit/GDP ratio will be below the gvt’s 2.4% f/c; Italy isn’t seeking a clash with the EU over budget rules & is confident it can avert disciplinary steps from Brussels; thinks Italy will eventually reach a compromise with the EC -Fitch: Affirms Austria at AA+, o/l +ve
UK: -Former Min for Universities Sam Gyimah enters Tory party leadership race -UK BDO Survey: Mfg growth has slowed over the past couple of months; European Co.’s diverting supply chains away from the UK in fear of Brexit complications; o/p & orders continued to grow but at a slower rate than earlier this yr; weakening of hiring & investment intentions
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Overnight News Brexit: -Labour’s Corbyn (RTE): any new Brexit vote should be on basis of what can be renegotiated with the EU -PM Candidate Hunt (ITV): he would seek a new Brexit deal that changes or removes the Irish backstop from existing agreement
... Europe -Italy’s Conte: Positive that gvt will continue -ANSA: Italian gvt will reply to EU letter by May 31st -16.00 BST: Fin Min Tria speaks at economic festival in Trento -La Stampa: Italian 5STAR movement ready to have the league party pick a new economy min -Messaggero: Italy to tell the EC that budget tightening would be a mistake
UK -Tsy Source: UK Fin Min Hammond to warn today against Conservative leader candidates pitching tax cuts & deregulation -UK PM candidate Hunt: Would rather delay Brexit beyond Oct 31st than risk a GE -SMMT: UK Apr Car prod 70.97k units -44.5% y/y, biggest fall since 2009; drive in UK car prod reflects vast cost of Brexit shutdowns & global trade uncertainty
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