By Rishi Shah and Neel Shah
BREXIT WITHDRAWAL AGREEMENT: THE MAY-HEM EXPLAINED
This week was pivotal in the Brexit negotiations, as a draft Brexit deal has emerged, one both (tentatively) agreed by Theresa May and the EU. This was followed by a cabinet meeting, where among a flurry of resignations, we saw the deal being pushed through. The 585-page document sets out how the UK will leave the EU, on 29th March 2019, with a transition period lasting until 31st December 2020. However, this transition period is one where the UK will have no say in EU regulations or laws, but will still have to dutifully abide by them. The highly topical “divorce bill”, a term coined as the amount that the UK government will have to pay the EU to settle all obligations, wasn’t given quantitatively, but experts estimate it to be around £39bn.
On the bright side, the resident’s rights have been protected such that UK citizens in the EU, and EU citizens in the UK, will retain their residency and social security rights after Brexit. Moreover, this doesn’t just end here, citizens who move into another EU country during the transition period (including the UK) will be allowed to stay in that country after the transition.
Northern Ireland: Perhaps the most crucial part of the budget, the backstop. This is t a plan to avoid a hard border between the Republic of Ireland and Northern Ireland, even in the unfortunate scenario that no long-term trade deal is agreed by the end. This will be a backstop including a single customs territory between the European Union and the United Kingdom. Northern Ireland will be in a deeper customs relationship with the EU than the rest of the UK; and hence it will also be more closely aligned with the rules and regulations of the EU single market. This essentially forms a temporary customs union and, hence it would ensure that completely frictionless trade could continue across the Irish border.
The flurry of resignations seen, two Cabinet ministers, two junior ministers and two parliamentary aides had quit, was primarily due to the anger at the backstop on Ireland/Northern Ireland. The key players who have left the Tory party are: Brexit Secretary Dominic Raab (replaced by Steve Barclay), who has been leading Brexit negotiations with the EU, was the first Cabinet minister to quit, followed rapidly by Work and Pensions Secretary Esther McVey. They were also accompanied by two junior ministers, two ministerial aides and the Conservative party's vice chairman all of whom also resigned.
The future: given that the cabinet has approved this plan, the draft will now be discussed at an emergency EU summit, before going through the voting process in the UK parliament. If, and only if, the draft passes all these hurdles, then it will be ratified in EU parliament and implement.
Let’s see what the future beholds…
ECONOMIC GROWTH - IS ANYONE DOING WELL?
Several EU nations have released their growth figures for the third quarter of 2018. However, two nations stand out from the crowd; the UK and Germany. They comprise the two largest economies within the European Union and influence the continent as a whole.
The UK economy grew by 0.6% in the third quarter, bearing the fruits of the excellent weather, particularly in July. This is the highest rate since late 2016, a positive sign amidst the negativity surrounding Brexit proceedings. However, the question remains whether or not the UK can sustain this growth, particularly since business investment has fallen for three consecutive quarters as a result of looming uncertainty.
Germany’s economy shrank by 0.2% in the same period, a direct consequence of the global trade war sparked by President Trump. This marks the first fall since 2015, particularly due to falling exports and rising imports. However, research by the ZEW suggests the situation is unlikely to recover rapidly, with potential issues surrounding exports and the car industry.
WAGES - A GLIMPSE OF HOPE?
Wages have grown at the fastest rate in nearly a decade, rising by 3.2% excluding bonuses. Adjusting for inflation, this marks a wage increase of 0.9%, a positive glimpse for several workers. However, unemployment also rose from 4% to 4,1% due to a slowdown in job creation to just 2,900 per month.
However, it is also important to note that the number of EU workers have fallen as a result of the Brexit vote, with 132,000 less EU nationals working in the UK in quarter 3 of 2018 compared to the previous year.
OFCOM: TAKING A STAND AGAINST THE TELECOM OLIGOPOLY
Non-Brexit related news (yes it does exist!): The phone broadband providers EE and Virgin Media have been fined £13.3m by the regulatory watchdog Ofcom for over-charging customers who quit broadband and phone contracts early. The fines are used as a disincentive and a punishment to punish the current exploitation of consumer and prevent future exploitation. The regulator explained how around 400,000 EE customers who ended their contracts early were over-billed and paid up to a massive £4.3m too much. Moreover, 82,000 of Virgin customers were overcharged by almost £2.8m. The charges billed to consumers were disproportionately higher than that agreed in the contract. This reduced the credit rating of many unfortunate consumers and had many negative effects. However, the fine is being contested by both firms and it is now referred to the appeals board.