The Government announces preferred model for the future UK-EU relationship

Date: 9th July 2018

The Government announces preferred model for the future UK-EU relationship
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the Chequers agreement and subsequent Government announcement on their preferred model for the future UK-EU relationship.
  • At the core of the model is a free trade area for goods.
  • The UK would commit to the EU's common rulebook for goods, but there would be different arrangements for services.
  • In addition, there would be major restrictions on a swathe of other regulations including environment, climate change, social and employment and consumer protection regulations.
  • A new Facilitated Customs Arrangement (FCA) would be established, that would remove the need for customs checks and controls between the UK and the EU as if a combined customs territory.
Other recent Brexit developments have included:
  • The European Union (Withdrawal) Bill received the Royal Assent on 26 June, becoming the European Union (Withdrawal) Act 2018.
  • A National Audit Office (NAO) report concluded that HMRC had made significant progress in developing its new Customs Declaration Service (CDS). It added that, providing this work was successfully completed, HMRC would have the system capacity to handle customs declarations no matter what the outcome of exit negotiations between the UK and the EU.
On economic developments:
  • The ONS modestly revised up GDP growth in 2018Q1 to 0.2% (QOQ).
  • Services output rose 0.3% (MOM) in April.
  • The Markit/CIPS surveys suggest GDP growth was 0.4% (QOQ) in 2018Q2.
  • The better data and positive comments by the Governor of the Bank of England have raised expectations of a 0.25% increase in the Bank Rate at the August meeting.
  • It seems reasonable to expect a 50% chance of a rise to 0.75% in August. If rates do not go up in August, then there is a very good chance (90%) of a rise in November.

Ruth Lea said, 'We do not have the details of the Government's preferred model of the future UK-EU relationship - a White Paper is expected this week. But the proposals so far released suggest a Brexit with significant restrictions. If an agreement along these lines is negotiated with the EU, the UK would be restricted in its ability to reform regulations, it would be a 'rule taker' and not a 'rule maker', and the scope for free trade agreements with third countries would be significantly compromised. In addition it is not clear how the proposed Facilitated Customs Arrangement would work - or when it would be ready.'

For full story: http://www.arbuthnotgroup.com/economic_perspectives_group.html

Press enquiries:

Arbuthnot Banking Group PLC:

Ruth Lea, Economic Adviser
07800 608 674, 020 8346 3482
ruthlea@arbuthnot.co.uk
Follow Ruth on Twitter @RuthLeaEcon

Maitland:
Sam Cartwright
020 7379 4415
Jais Mehaji
020 7379 5151
arbuthnot@maitland.co.uk
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Arbuthnot Banking Group plc published this content on 09 July 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 09 July 2018 10:13:09 UTC