Friday, 09 June 2017 06:16

Brexit in Doubt as UK Election Shocks

(London)

Everything was expected to go very smoothly in the British election. The dominant Conservative party, led by Theresa May was expected to cruise to a huge majority in parliament. However, yesterday everything went wrong, as Labour (the left) gained a huge share of parliamentary seats and stripped the Conservatives of their majority. May may be compelled to resign as PM, potentially setting the stage for another election in the near-term. The lack of a majority means there is a “hung parliament”, which will force a coalition government. All of this is leading to doubts over the Brexit negotiations with the EU, and even Brexit itself. On the whole, it seems the coalition government will lead to a significantly “softer” Brexit, where the country might stay in the single market.


OxWFD: This was a shocking development. The Pound dropped on the news, but in the long run it is probably good news for the economy (i.e. a softer Brexit).

Source: Financial Times

Published in Economy
Tuesday, 23 May 2017 02:43

Massive UK Terror Attack Rocks Europe

(London)

A deadly incident being treated as a terror attack struck the UK last night. Immediately following the end of an Ariana Grande concert (an American singer), fans leaving an arena in Manchester heard a reportedly “massive” explosion. So far the situation is short on details, but apparently there are currently 19 dead and a total of 60 wounded. If the incident does turn out to be a terror attack it will be the largest in the UK since the London tube bombings of 2005.


OxWFD: This is a high body-count attack and it may prove jarring for the UK people and impact the outcome of the election.

Source: Financial Times

Published in Europe

(London)

A couple of days ago UK prime minister Theresa May called a surprise snap election in the UK. Unexpectedly, she announced that she would seek Parliament to approve a general election on June 8th. Parliament has now approved that request with a dominant majority. That means the Labour party will have just a few short weeks to mount a campaign against the Conservatives. May believes an election is needed now in order to ensure a strong mandate, and thus bargaining position, with the EU as she negotiates for a good Brexit deal.


OxWFD: May proved herself to be very shrewd. The election is so close, it is not nearly enough time for the opposition to mount a well-executed campaign.

Source: Wall Street Journal

Published in Europe

(New York)

The Trump administration has been murmuring for some time about the idea of bringing back a version of Glass-Steagall. The idea is supported by Treasury Secretary Mnuchin and Gary Cohn, Trump’s economic adviser and former Goldman Sachs executive. There does not seem to be a lot of support in Washington for the move now (according to this article), so there could be a third way compromise. That would be adopting the UK model of “ring fencing”, or creating boundaries around retail and investment banking within the same bank.


OxWFD: This article (from the FT in the UK) says that there is not much political support in the UK, but another recent article we ran said the opposite, contending Glass-Steagall has bipartisan support.

Source: Financial Times

Published in Banking
Wednesday, 29 March 2017 10:40

The UK Officially Starts Brexit

(London)

After nine months of posturing, arguing, deliberating and legal wrangling, the UK officially triggered its exit from the EU today. The legal mechanism for the the UK to leave the EU is called Article 50, and today PM Theresa May officially triggered it by sending a formal letter to the president of the EU notifying of the UK’s intention to leave. The triggering means there is exactly two years until the UK departs the EU, a period which will be full of negotiations between them. The Pound rose on the news.


OxWFD: While there is still some debate over whether Article 50 is revocable, this is pretty final—the UK is leaving the EU.

Source: Independent

Published in Europe

(London)

Get ready for a nasty fight to start in Britain. Scotland voted strongly in favor of staying in last year’s Brexit referendum, and this week the country formally requested permission from the UK to hold its own independence referendum late next year before the UK triggers its exit from the EU. However, the UK has rejected the request, saying no referendum can be held until at least early 2019—a date after the UK’s exit from the EU has been finalized. That means Scotland would not have a chance to decide its fate before being carried out of the EU by the UK. A leader of Scotland’s SNP party commented “Scotland’s referendum is going to happen and no UK prime minister should dare to stand in the way of Scotland’s democracy”.


OxWFD: This is going to get very ugly before any solution is hammered out. It is not inconceivable that Scotland will simply hold this on their own and then appeal to the EU for membership. Uncharted waters.

Source: Financial Times

Published in Europe
Tuesday, 14 March 2017 10:46

Brexit to be Triggered Any Day

(London)

British PM Theresa May’s Brexit bill has cleared all its Parliamentary hurdles, paving the way for the PM to formally trigger Brexit any day. This article says she is planning to do so in the last week of March. However, the event is being overshadowed by Scottish leader Nicola Sturgeon’s call for permission for a second referendum before the UK actually leaves the EU. May, however, wants the vote to take place after March 2019, when Britain actually leaves the bloc.


OxWFD: Scotland and England are at loggerheads. Why would Scotland want to wait to get force-fed the terms of London’s exit when it could vote prior to the actual departure? This will be messy.

Source: Financial Times

Published in Europe
Monday, 27 February 2017 09:58

Get Ready for a New Scottish Referendum

(Edinburgh)

We have stayed away from covering too much of the in-fighting currently going on in Britain over Brexit and how to proceed in negotiating with the EU. However, something potentially very troubling came out this weekend that could weigh on global markets—there may be another Scottish referendum in the near future. Scotland has been furious over Britain wanting to leave the EU (Scotland is heavily pro-EU), and it has complained that London has not listened to its questions and concerns about Brexit. Therefore, the country is mulling over planning a new referendum on UK membership, and UK PM May has reportedly said it was okay so long as it occurred after the UK leaves the EU.


OxWFD: British political logic is confounding to outsiders, so it is hard to say how this may play out. However, we suspect Scotland will not want to wait until after the UK leaves the EU to have its referendum.

Source: Bloomberg

Published in Europe

(New York)

There is a lot of political risk in the US, UK, and Europe at the moment, but that may not be stopping investors from putting their money there. This is especially true for investors in those countries. Even when things look rocky at home, investors have been choosing to sell holdings abroad and keep money at home, trading the complication of foreign politics for difficulties at domestically. The piece cites figures to support the claim, such as how the British invested in their own shares after Brexit even as foreign managers quickly withdrew money from the country.


OxWFD: We run this story because it could have important implications for the stock market. US investors are famously domestic in focus, and with rates rising, domestic stocks might still be the best option even if things are looking poor.

Source: Wall Street Journal

Published in Markets

(London)

In what comes as a very ironic potential twist of fate, the decision over how, if, and when to do Brexit could come down to the European Court of Justice. The UK Supreme Court has already ruled that Parliament will have to vote to enact Article 50, or the measure which officially starts Brexit, but a key facet to the enactment and following negotiations may need to be resolved by the European courts. That would be to determine whether Article 50 is revocable once enacted, meaning can Brexit actually be reversed. Numerous other aspects of Brexit may also have to be decided in European courts.


OxWFD: The fact that the UK will have to resort to European Courts on a number of matters regarding Brexit is almost macabre, but it also highlights how deeply intertwined the UK is with Europe and how messy it will be to disentangle the two.

Source: Financial Times

Published in Europe
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