CBI: UK economy ‘remains shackled by Brexit’

With so little to go on in the Spring statement, the UK’s biggest business lobby has taken the opportunity to reiterate its opposition to a no deal Brexit.

Against a hugely uncertain political backdrop the Chancellor has made an admirable attempt to set out a long-term vision for the UK economy, yet remains shackled by Brexit.

This year’s forecast downgrade brings the danger of no deal to the UK economy sharply into view. It must be avoided.

On policy specifics, the CBI gives a thumbs down to the government’s plan for a digital services tax.

Going it alone on a digital services tax is high risk, especially at a time when the UK already looks increasingly isolated. The EU has dropped their plans and got behind the OECD’s efforts – the UK should follow suit. The government needs to be doing all it can to encourage investment in the UK and adoption of new technologies, not putting up barriers.

Brexit Briefing: What do MPs want?

Brexit Briefing – our daily newsletter on all things Brexit – has just landed into inboxes. Today the FT’s James Blitz looks into what parliament will might do with the extension it is expected to vote in favour of asking for tomorrow.

The problem for the UK is that if it wants an extension, this needs to be agreed by all 27 EU member states, probably at next week’s EU heads of government meeting. And securing that agreement will not be straightforward.

So what justification for an extension can the Commons provide? And how will it reach that decision?

To sign up for the briefing, head over here.

Hammond: time for Brexit consensus

Phillip Hammond’s comments on Brexit have caused questions over the prospect of softer Brexit – in his Spring Statement, writes the FT’s Laura Hughes, he urged MPs to find a way forward after the government lost control of Brexit on Tuesday and made a thinly veiled suggestion that Theresa May might have to compromise.

Ahead of a vote on extending Article 50 tomorrow night, the Chancellor called on the Commons to “map out a way forward for bringing a consensus”.

Last night’s events mean we are not where I hoped we would be today”, he told the Commons. “Our economy is fundamentally robust. But the uncertainty that I hoped we would lift last night, still hangs over us.

We cannot allow that to continue. It is damaging our economy and it is damaging our standing and reputation in the world. Tonight, we have a choice. We can remove the threat of an imminent no-deal exit hanging over our economy.

Tomorrow, we will have the opportunity to start to map out a way forward towards building a consensus across this House for a deal we can, collectively support, to exit the EU in an orderly way to a future relationship that will allow Britain to flourish, protecting jobs and businesses.

Business leaders: Spring Statement will “barely register”

The Institute of Directors said that the Spring Statement “will barely register with most business leaders as Brexit uncertainty continues to cast a shadow over their organisations”.

Edwin Morgan, interim director general of the IoD, said:

Warm words and proposed consultations are not enough for businesses at a time when confidence is rock bottom and investment plans are eroding away, and many will find it difficult to tread water until more decisive action at the Autumn Budget.

While a ‘no deal’ would wreak certain havoc for many firms, we must also avoid being lulled into thinking an exit deal alone is a substitute for providing a real economic impetus that lowers costs, spurs productivity growth, and supports businesses as they adjust to Brexit, whatever its form.

Indeed, the fact that the OBR lowered its forecast for GDP growth this year – based on a smooth exit from the EU – highlights just how much the economy is set to fall below its potential, even in a relatively benign scenario.

Brexit debate scheduled for 3pm

The Spring Statement debate will be wound up at 2.45pm at the latest, which means that MPs will begin to debate the Brexit no-deal motion at about 3pm.

Michael Gove will open the debate for the government, rather than the increasingly hoarse Theresa May, according to Labour’s whips.


Highlights from the Spring Statement

– Growth forecasts for this year down but raised for 2020 and 2021
– Borrowing forecasts lowered for the foreseeable future
– Relaxed border procedures at airports for some nationalities
– Free sanitary products for girls at schools and colleges
– More money towards building affordable homes
– Special £100m for police to tackle knife crime

£100m for knife crime

A new £100m funding package to help police fight the surge in knife crime across the country was also announced, writes the FT’s Helen Warrell.

The pledge will provide a ringfenced fund to pay for additional overtime specifically for those working on knife crime, and for new violent crime reduction units to provide what Mr Hammond called a “new cross-agency response to this epidemic”.

This comes just a week after police chiefs appealed for emergency financial support at a crisis meeting with the Home Office. Official statistics released last month showed that the number of fatal stabbings in England and Wales had reached the highest level since records began more than 70 years ago. There have been a dozen fatalities from knife wounds in London alone so far this year, including the stabbing of 17 year old Jodie Chesney in East London earlier this month.

Government to issue £114bn in gilts

Britain’s Debt Management Office has said the government plans to issue £114.1bn in sovereign paper in the 2019-20 fiscal year. The overall figure is lower than the £123bn projected by City fixed income analysts in a poll conducted by Reuters.

Issuance will be spread fairly evenly between short, medium and long term debt.

The market reaction has been muted. The two-year Gilt yield was up 2.6 basis points at 0.742 per cent, while the 10-year was up by a similar margin to 1.186 per cent.

“We expect ongoing safe haven demand and sizeable QE buybacks to ensure [the] increase in issuance is easily digested by the market,” said UBS analysts ahead of the DMO report on Wednesday.

A curtailed grilling for Hammond

Speaker John Bercow says he plans to cut short the questions to the chancellor due to the other business facing the house – i.e. Brexit. He suggests wrapping up the Spring Statement questions at 2:45pm.

McDonnell: Brexit bankruptcies

Shadow chancellor John McDonnell attacks the Spring Statement, saying that Labour was seeing more “Brexit bankruptcies” than a “deal dividend”. The no-deal tariffs announcement this morning was part of a “threatening” and “calamitous” strategy. McDonnell said that it was time to take a no-deal Brexit off the table.

He also jokes about the “heavily redacted” text of the statement he received in advance of Mr Hammond standing up to present it. Here is an image of it, shared by the @labourwhips Twitter account.

Growth down for now, borrowing down for good

Growth forecasts were revised down in the short term but up in the medium term while borrowing was lowered in all five years for which the OBR produced a forecast.

Hammond sits

The chancellor concludes with a rousing appeal to MPs, pointing to plans to allow a future relationship that will allow Britain to flourish before taking his seat to listen to the Labour response.

Infrastructure and tech consultation

The chancellor has confirmed the FT’s story this morning that it will launch a consultation into new ways to of getting private investment into British infrastructure following on from the government’s decision to axe the private finance initiative last year.

Mr Hammond said he would publish a National Infrastructure Strategy alongside the Autumn budget, writes the FT’s Gill Plimmer.

Mr Hammond also said that as a first step to reforming competition in the tech sector he would ask the CMA to undertake a study of the digital advertising market.

The other tech-related commitments are: £79m in Archer II, a new supercomputer to be hosted at Edinburgh university, £45m commitment to the European bioinformatics institute and funding for a new photonics institute in Oxfordshire.


Free sanitary products at all secondary schools and colleges

The Chancellor announces that the government will fund free sanitary products at all secondary schools and colleges to stop girls from missing school due to “period poverty.”

Hammond: 30,000 affordable homes

A new £3bn Affordable Homes Guarantee scheme will deliver around 30,000 affordable homes, with £717m from the Housing Infrastructure Fund to unlock up to 37,000 new homes on sites in West London, Cheshire, Didcot, and Cambridge.

A Future Homes Standard will mandate the end of fossil-fuel heating systems in all new houses from 2025.

Global Britain and relaxed checks at airports

The UK will scrap paper landing requirements at points of entry while US, Australian, Canadian, New Zealand, Japanese, Singaporean and South Korea citizens will be able to use e-gates at airpors and Eurostar terminals.

It demonstrates the UK’s commitment to “global Britain”, Mr Hammond said.

Thin Spring Statement so far

Philip Hammond promised a fiscal “non-event” and so far he has delivered. The Chancellor’s announcements so far have mostly been reviews and consultations or already existing targets.

Andrew Bounds, the FT’s North of England correspondent tweeted:

First till ring from chancellor. £120m for the Borderlands growth deal spanning Cumbria and Southern Scotland. Talk of backing #Northernpowerhouse Rail but no specifics unless in the small print #SpringStatement

Meanwhile, here is the redacted copy of the statement that Labour’s John McDonnell received in advance, via the Labour Whips Twitter account.

Hammond: no-deal will shrink economy

The chancellor is clear that the deal dividend will only be delivered if parliament votes in favour of a suitable Brexit deal. He says that a no-deal exit would mean significant disruption in the short-term, and a smaller less prosperous economy in the long term, with lower growth, higher unemployment, higher prices.

Hammond offers more spending if a Brexit deal is done

Economics editor Chris Giles:

Philip Hammond’s big carrot for MPs and the public sector is that he is offering a lot more public spending in future years if a Brexit deal is done. The 3 year spending review he announced would be completed by the Autumn would include more public borrowing than recorded in the forecasts today. In that sense, they are already out of date.

Deal dividend after 3 year review

Hammond says that assuming a Brexit deal is agreed, and the uncertainty lifted, then a full three-year spending review will be announced before summer recess that will go beyond the NHS into social care, schools, environment and police. It would have renewed focus on delivering high quality outcomes.

If we leave the EU with a deal, he says we will see a deal dividend – an economic boost from the return of business confidence and a fiscal boost.

This would be an end of austerity delivered by a Conservative government.

Borrowing revised down in every year – OBR

The Office for Budget Responsibility has revised down public sector borrowing in every year of the forecast period. The OBR believes public sector borrowing will be £6bn lower by the end of the five years than in its October forecast.

Public sector borrowing will fall to £13.5bn in 2023-24 from £29.4bn in 2019-20. The OBR had previously forecast borrowing of £19.8bn in 2023.

This means debt as a percentage of national income will fall to 73 per cent from 82.2 per cent.

FT economics editor Chris Giles says:

The public finance forecasts show a multi-billion improvement in each of the next five years as tax revenues exceed the Budget expectations. This allows Philip Hammond to promise more public spending and tax cuts later this year if a Brexit deal goes through.

Current weakness is temporary – OBR

The FT’s economics editor Chris Giles says:

The official forecasts show the independent Office for Budget Responsibility thinks the current weakness in growth is temporary. So long as there is a smooth Brexit, it thinks the shortfall of growth in 2019 will be entirely reversed in the early 2020s.

GDP lower this year but higher in years after

Hammond says that economic growth will be 1.2 per cent this year – down from 1.6 per cent forecast – but would return to 1.4 per cent in 2020 and 1.6 per cent in the two years after, slightly higher than expected.


Chancellor hails the UK economy’s performance

Mr Hammond, doing his best to smile, says the UK has now grown for nine consecutive years and is forecast to continue growing for each of the next five years. He points out a strong record of job creation and falling youth unemployment.

Chancellor stands up to deliver the spring statement

Philip Hammond is on his feet

May: no Malthouse-style period transition

The PM is asked if she will support an amendment for the so-called ‘Malthouse compromise’, which would allow a transition period using standstill agreements and financial payments in the event of a no-deal exit. But Mrs May, who is into her second day of having almost lost her voice, says that the EU had made it clear a transition period needed a withdrawal agreement.

Brexit extension has to be dealt with by leaders – EU ambassadors

Mehreen Khan, one of the FT’s Brussels correspondents, reports that “EU27 ambassadors had a long session on Brexit next steps. Countries are divided on how much their leaders should be prepared to grant an extension at next week’s summit. A small hardline camp says “do nothing”, but most want to be ready to give the UK something by 21st pending request.”

She adds that the “feeling among EU ambassadors is extension dynamics go beyond civil servants pay grade. Has to be dealt with by leaders – including legal consequences of a longer extension -12 months. Bigger member states were insistent there is no pressure on the EU to solve another UK problem. Yet.”

May to vote to block no deal

Theresa May has said she will vote tonight for her motion to block a no-deal exit on March 29, writes the FT’s Laura Hughes.

She lost control of Brexit on Tuesday night after MPs overwhelmingly rejected her revised exit deal was by 149 votes. Within minutes of her defeat she announced that the Commons would be given a free vote on Wednesday on blocking a no-deal exit on March 29.

Asked by the UK Labour leader Jeremy Corbyn how she would vote tonight, Mrs May replied: “I will be voting for the motion in my name.”

“I want to leave the European Union with a good deal, I believe we have a good deal,” she told MPs.

May: fights for her voice and deal

The prime minister is showing a spirited defense even with a very croaky voice, putting the leader of the opposition down with a withering: “I may not have my own voice but I do understand the voice of the country.”

Hammond on way

While the Prime Minister is facing questions from MPs the Chancellor has tweeted that “I’m on my way to Parliament to deliver the #SpringStatement – the government’s response to the forecast from @OBR_UK. I’ll be setting out how we’ll invest in infrastructure, technology, housing, skills, & green energy, to capitalise on the post-Brexit opportunities ahead.”


Corbyn: rudderless government

The leader of the opposition goes on the attack, saying that Mrs May’s deal has failed, that she has no longer the ability to lead, and that she has a rudderless government at a time of national crisis. He asks her to show leader, and asks for a plan.

Mrs May says that MPs will vote on no-deal today, and on extending article 50 tomorrow. MPs have to make choices.

May: no deal better than bad deal

Ahead of the vote tonight over no deal, Mrs May says that she was committed to leaving the EU with a good deal, adding that “no deal is better than a bad deal”.

Responding to a question from leader of the opposition Jeremy Corbyn over how she will vote tonight, Mrs Mays said that she “will be voting for the motion standing in my name” – suggesting that she will try to take no-deal off the table.

MPs have been speculating this morning whether Mrs May will support taking no-deal off the table.

Prime minister’s questions begin

Theresa May starts taking questions from MPs.

Cabinet split over votes tonight

Tonight’s vote on whether to rule out a no-deal Brexit will split the Cabinet, writes the FT’s Seb Payne. Theresa May announced yesterday that it will be a free vote – collective responsibility will be suspended so ministers can vote with their consciences on whether the UK should leave the EU without a deal at the end of the March (or possibly at all).

The divide is set to go along the typical Remain/Leave lines – with chancellor Philip Hammond, work and pensions secretary Amber Rudd and justice secretary David Gauke set to vote against no deal.

On the Leave side, Brexit secretary Steve Barclay and leader of the Commons Andrea Leadsom are likely to vote to keep the option of no-deal on the table.

But there are some waverers, particularly those who have one eye on the next Conservative party leadership contest. Defence secretary Gavin Williamson will vote to keep no-deal on the table, as will the chief secretary to the Treasury Liz Truss.

But foreign secretary Jeremy Hunt will go in the other direction and is very unlikely to support a no-deal Brexit. Another crucial minister to watch is home secretary Sajid Javid, a likely leadership contender. His decision will be difficult, as he will be keen to speak to the right flank of the party’s grassroots, but his department is one of the most exposed to the effects of a no-deal.

And how will Mrs May jump? No one knows, although some in the government think she end up abstaining. “It would be peak May,” says one Tory wag.

European Commission responds to UK’s no-deal tariff plan

Brussels reporter Jim Brunsden has just shared the first reaction we’ve heard from Europe to the UK’s tariff proposals, which would be imposed in the event of a no-deal Brexit. Here’s the message, delivered by a European Commission spokesman:

“The differential treatment of trade on the island of Ireland and other trade between the EU and the UK raises concerns, and in the event of a no-deal the union has already made clear that it will apply its normal third country trade regime to all trade with the UK, and accordingly charge MFN tariffs on imports from the UK into the EU. This is essential for the EU in order to remain a reliable trading partner to the rest of the world.”

Industry hits back at no-deal tariff proposals

The general secretary of the UK’s Trades Union Congress, Frances O’Grady, takes a strong line against the government’s plan to eliminate 87 per cent of import tariffs in the event of a no-deal Brexit. She highlights the damage this could cause to UK manufacturing industries:


The Institute of Directors, which represents and sets standards for business leaders across the UK, released a statement earlier today from its head of Europe and trade, Allie Renison, in response to the government’s plans:

“The information provided… has come far too late to allow businesses to be ready in just a few short weeks. Making these tariff decisions temporary will lead to widespread confusion about what may change and when, as firms will want to know well in advance about how duties may rise. Such unpredictability may also have consequences for our trading relations with countries outside the EU as well.”

Spain’s PM uses Brexit for domestic purposes

In an editorial in Spanish newspaper EL Pais, Spain’s socialist prime minister Pedro Sánchez used the parliamentary drubbing of Theresa May’s Brexit plan as a chance to warn against the danger of the nationalist right and simplistic referendum votes. These are issues that dogged his own government and pushed him to dissolve parliament and call snap elections for April, Ian Mount writes from Madrid.

The op-ed says:

It is impossible to understand the Brexit without taking into account the conjunction of three factors…A nationalism that advocates withdrawal based on the exaltation of myths and false nostalgia; the advance of the extreme right; and the simplification of democracy to the figure of a referendum that offers simple answers to complex problems.

Mr Sánchez’s administration collapsed when the Catalan separatist parties that had supported him voted against his 2019 budget plan over his refusal to negotiate an agreed referendum on independence for the wealthy region. His uneasy coalition with the Catalan parties also boosted support for the far-right Vox party, which in December won its first regional seats in the parliament of Andalucia and helped Spain’s rightwing opposition end 36 years of socialist control of the country’s most populous region.

Mr Sánchez said Spain, which is home to some 300,000 British residents, would continue to be an ally, however.

His editorial continues:

After its withdrawal, the United Kingdom will leave the European Union, but not Europe…it will continue to be a very important partner, especially for Spain, the first country in the EU by number of British residents and tourists.

MEPs battle with Farage

During this morning’s session in Strasbourg, the European Parliament’s chief Brexit negotiator Guy Verhofstadt has been taking aim at Nigel Farage, the former UKIP leader who is also an MEP.
Mehreen Khan writes that Mr Verhofstadt is arguing against a long Brexit extension on the basis that this will allow Leavers such as Mr Farage to take over the Brexit process.

Sitting within earshot of the former UKIP leader, Mr Verhofstadt has said:

I don’t want a long extension. We will give a new mandate to Mr Farage. That’s exactly what he wants. He can continue to have a salary that he can transfer to his offshore company and do his dirty work in EU politics.

The former Belgian prime minister then urged the Tories to strike a cross party agreement for a Brexit deal, saying:

Queen and country have to be put first over party politics.

Mr Farage then turned his ire towards the EU’s chief Brexit negotiator Michel Barnier, saying to the Frenchman: “I told you so. You pushed your luck too far. “

Farage then said EU27 leaders should reject an extension request from the UK government. On the prospect of the UK joining the upcoming EU elections, he says: “you don’t want me coming back here.”

Boris shares his view

British politician Boris Johnson, speaking live on LBC this morning (and sporting a new haircut), says he’s sure that the UK will leave the EU on “good terms” and doesn’t understand why Remainers are feeling jubilant about last night’s result against May’s Brexit deal.

He adds that he doesn’t believe there will be a second referendum if a no-deal were voted down this evening: “I just don’t think that’s where MPs are right now.”

Czech support for a second referendum

Czech prime minister Andrej Babis said on Wednesday that Britain should not rule out a second referendum on EU membership, James Shotter writes.

Mr Babis tweeted that he had spoken to Mrs May about Brexit on Saturday and told her the best option was for the UK to remain in the EU, and that therefore it would be worth calling a second referendum. “She rejected this, but in my opinion it is still not ruled out,” he tweeted in Czech.


The Labour party position

Peter Dowd, an MP for Britain’s main opposition party, says in a BBC interview that Labour’s Brexit position remains unchanged after the drama of last night’s vote. Labour wants Britain to stay in the European customs union and single market, removing some of the so-called red lines Mrs May put in place to govern the terms on which Britain would leave.

“If those red lines that the prime minister set are actually moved or got rid of,” Mr Dowd says, Brussels could reopen negotiations on an alternative withdrawal treaty. “I’m not quite sure what the period of time [would be] but you’ve got to try,” he says.


MEPs: do not take the idea of a Brexit extension for granted

Even arch Brexiters such as backbencher Jacob Rees Mogg have warmed to the idea of taking longer than the March 29 exit date to hammer out arrangements for Brexit.

But as British lawmakers from both sides of the Brexit divide move towards agreement that more time is needed, members of the European parliament are pointing out that this is not a purely British decision.

MEPs in Strasbourg are also lining up to warn the UK government there has to be a majority in place for a Brexit extension, writes Mehreen Khan in Strasbourg

Parliamentarians don’t get a say over the extension – that is voted on by EU27 leaders by unanimity – but any long extension would impact the European Parliament. The UK would be obliged to hold an EP election if it remains a member state after May. Manfred Weber, leader of the biggest centre-right party in the EP, said the House of Commons vote was a “diaster”.
“There is no need for a single day of prolongation if we get no clarification from the British side about what they want”, said Mr Weber, who is running to becoming president of the commission.


Barnier: the risk of no deal has never been higher
An exasperated Michel Barnier is now telling MEPs that there is a real risk of a no deal by “accident” if the UK does not agree a House of Commons majority for what to do next, Mehreen Khan writes from Strasbourg.

Waving around the 585-page Withdrawal Agreement already signed by Theresa May and Brussels, he not only says the deal “is and will remain the only available treaty” that will secure the UK’s orderly exit from the EU.He is also urging MPs to find a “constructive majority on a proposal.”

On the Northern Irish backstop – a plan for the border to stay open between Northern Ireland and EU member Ireland if no Brexit transition arrangement is agreed – Mr Barnier stresses his team has “done everything to explain” to the UK of the need to avoid a hard border in Ireland.

He says of the British government:

They have to tell us what they want. What will their choice be? What will be the clear line they take? That is the question we need an answer to now. That has to be answered before a decision on an extension. Why would we extend ? We have the WIthdrawal Agreement. We are waiting for an answer. We are at a critical point.

On the divisions in the House of Commons, Mr Barnier says:

Some want a second referendum, others want a no deal and this runs counter to all our assurances. But these guarantees are significant and we agreed them with the support of the UK government.

And on the idea of extending Article 50 to allow the UK to leave the bloc after the March 29 date set down by the legislation, he says:

Why would we extend these discussions? The discussion on article 50 is done and dusted. We have the withdrawal agreement. It is there.

His position is basically that there can be no transition deal or Article 50 extension without a withdrawal agreement, and no withdrawal agreement without a backstop.

Michel Barnier speaks in Strasbourg

The EU’s chief Brexit negotiator is now starting to give his views on the latest Brexit developments.

He’s pressing for a withdrawal agreement that is in the interest of citizens of the UK and the EU. More soon…

EU dismay

You can sense the frustration in Europe this morning. Most of what we’re hearing from EU leaders is there’s little more they can do right now, other than watch from the sidelines.

Here’s some notes from the FT’s Brussels correspondent Mehreen Khan:

EU leaders will be debating Brexit among MEPs this morning in Strasbourg. Romania’s Secretary of State for European Affairs, Melania-Gabriela Ciot, who holds the rotating presidency, has repeated that the UK needs to give a “credible” reason for any Brexit extension: “To be frank, given the additional assurances we have provided, it is difficult to see what more we can do”

Frans Timmermans, the EU Commission’s first vice president, adds: “We are in the hands of the British political system. We have to take it from there.”

Don’t forget the Spring Statement

During the political maelstrom of the past few days, the fact that chancellor Philip Hammond will present his twice-yearly assessment of the country’s finances at lunchtime has fallen down the news agenda. The event, of course will be highly political. He also is not planning to make any tax changes or public spending announcements.

Mr Hammond said at the weekend that if MPs did vote for Mrs May’s amended Brexit deal – which of course fell by the wayside last night – he would then move on to considering the case for increased spending on public services, cutting taxes, and reducing the deficit.

He is now expected to highlight OBR and government assessments that the economy would be hit hard by a no-deal Brexit.

He has described the possibility of Britain crashing out of the EU as “very bad” for the economy, limiting his ability to find extra funding for police, schools and defence.

In terms of what he can say, Mr Hammond is expected to launch a consultation into new ways to fund Britain’s infrastructure in his Spring Statement on Wednesday, following on from his decision to axe the government’s controversial private finance initiative last year.

What next?

Here’s a visual reminder for what will happen after tonight’s vote:

Some hopeful words from Europe

Germany’s Federal Minister for Economic Affairs and Energy, Peter Altmaier, thinks that May’s defeat yesterday could be a turning point in the Brexit process. Could Brits and Europeans now begin to stand united?


The Independent Group campaigns for a People’s Vote

To recap, MPs are voting today on whether Britain should leave the EU without a deal, in the absence of parliament being able to agree on a transition arrangement.

The Independent Group, a set of MPs who broke away from their own parties to campaign against a hard Brexit, have tabled an amendment to the motion that will be voted on in the Commons this evening.

Basically, they want the Commons to get more time to debate how Brexit should happen, for MPs to agree on the way forward, and then for this to be put to the public in a second referendum.
Here is their spokesman, Chuka Umunna, explaining their position on Twitter:


Cameron tells us how he really feels

David Cameron shows his frustration over MPs who have been calling for Brexit to happen, yet keep voting against it: “It’s exasperating for the prime minister”

Mr Cameron — then prime minister and Tory party leader — allowed the 2016 Brexit referendum to go ahead, following pressure from Eurosceptics within the party, but he was also in favour of remaining in the EU.


Conservatives debate the way forward

Former Brexit secretary Steve Baker and Conservative remainer Nick Boles are airing their opposing views on the way forward in a joint interview on the Today programme.

This follows a rejection of Mrs May’s new EU withdrawal deal by the Conservative Brexiters’ European Research Group and Northern Ireland’s Democratic Unionist Party, which props up the prime minister’s minority government in Westminster. Both the ERG and the DUP felt that the agreement did not go far enough to allow Northern Ireland to exit with the rest of the UK, as it still provides for an open border on the island of Ireland in the event of no deal.

Mr Baker, with support from Nigel Dodds of the DUP and ERG figurehead and Tory backbencher Jacob Rees Mogg, has suggested postponing Brexit day from March 29 to May 22 to allow businesses to prepare for a new tariff regime.

Mr Baker told Today:

We are in the business of trying to unite all wings of hte party and the DUP.

But Mr Boles countered this with concerns that the Conservative Party and the DUP were talking among themselves instead of thinking about what Brussels will agree to.
He said:

I won’t be able to support it because it is basically a no-deal exit. The EU has made it crystal clear that the transition is not available without the withdrawal agreement [being approved by London and Brussels]and without the backstop.

He said Brussels would offer a standstill “for money, plus the withdrawal agreement and the Irish backstop.

Mr Boles added:

This is very late stage. It is incredibly important for all of us to stick to things

that actually can be delivered, that are on offer, and not try to come up with new > schemes…that just simply won’t fly.

Earlier on Today, Rebecca Long-Bailey, Labour’s shadow business secretary, said on the BBC’s Today programme that it would not be “very difficult” to find a soft Brexit “consensus” in parliament, and called on Mrs May to allow Conservative MPs a free vote on different options.

Business speaks out on tariffs

Carolyn Fairburn, director general of business lobby group the CBI, is expressing frustration at the sudden plan to change Britain’s import regime in the event of Britain leaving the EU without a deal.

Ms Fairburn told BBC Radio 4’s Today programme:

This tells us everything that is wrong with a no-deal scenario.

[This is] the biggest change in terms of trade this country has faced since the mid-19th century being imposed on this country, with no consultation with business, no time to prepare.

This is no way to run a country. What we potentially are going to see is this imposition of new terms of trade at the same time as business is blocked out of its closest trading partner. This is a sledgehammer for our economy.

Dave Potts, chief executive of supermarket chain WM Morrison, has indiciated to our retail correspondent Jonathan Eley that consumers will have to pay higher prices unless retailers can cut their own costs of doing business.

Tariff is just another word for tax and we’ll be collecting those taxes and playing our part.

Ultimately it falls to retailers to continue that competitive framework that allows British consumers to benefit from low prices.

No real winners

In today’s FT News Briefing podcast our chief political correspondent Jim Pickard describes the sombre mood in parliament last night, after the vote.

Why? Because MPs, even those who voted against the deal, know their future hopes around Brexit are still not guaranteed. The future of Brexit is still unclear.

May’s game plan today

For her sake, let’s hope Theresa May has her voice back, since there’s a lot more on her plate today.

Our political correspondent Henry Mance tells us what’s in store:

Wednesday is now set to be one of the busiest – and potentially most influential days – of the Brexit process. Mrs May will chair a cabinet meeting at 8am. Europhile ministers want the prime minister to consider a customs union with the EU and possible membership of the single market, while Eurosceptics want her to back a no-deal Brexit.

After the weekly prime minister’s questions at midday, the chancellor Philip Hammond will deliver his spring statement. Mrs May will then open the debate on her Brexit motion, ahead of votes around 7pm. Mrs May will face a variety of attempts to amend her Brexit motion on Wednesday, which if successful would further undermine her authority.

Tariff plan to limit no-deal damage

The government has released plans to slash import duties to zero on 87 per cent goods brought into Britain as part of a temporary no-deal plan.

This is designed to prevent a £9bn price shock to business and consumers.

But some imports from Europe will now be taxed, with price rises potentially being passed on by retailers to their customers.

Read more here from our chief political correspondent Jim Pickard and Whitehall editor James Blitz.

What happens now?

It is another busy day in parliament as Theresa May, whose altered deal for the terms on which Britain should leave the European Union was resoundingly rejected by MPs last night.

As that failed, MPs will vote later on whether the UK should now leave the EU with no deal at all.

Here is today’s schedule, courtesy of Politico:

8 a.m.: Theresa May hosts special meeting of the Cabinet.

9 a.m.: Boris Johnson hosts LBC Radio phone-in.

9.30 a.m.: European Parliament in Strasbourg debates Brexit ahead of next week’s EU summit.

10.30 a.m.: Deadline for MPs to submit amendments for tonight’s vote.

12 p.m.: PMQs.

12.30 p.m.: Chancellor’s spring statement.

2.30 p.m.: Office for Budget Responsibility press conference on U.K. economic outlook.

Mid-afternoon: Theresa May opens no-deal Brexit debate.

7 p.m.: MPs vote on whether to pursue no deal.

7.30 p.m.: Theresa May sets out next steps in the Commons, following the no-deal votes.

What the papers are saying

It was difficult to ignore May’s raspy voice last night — and all-too-easy to link her wavering vocal chords with a (second) failure to get backing for her Brexit deal. The Sun decided to focus on this for their front page headline: “Croaky horror show”

Sterling ticks higher

The pound is up 0.3 per cent at $1.3115 after a whipsaw run in the previous session took it as high as $1.3288 and as low as $1.3003, Michael Hunter writes.

Analysts argue that the currency’s ability to hold the $1.30 level depends on some the avoidance of a disorderly Brexit, with further room to rally depending on the terms of a deal.

Says Stephanie Kelly, senior political economist at Aberdeen Standard Investments:

I would strongly expect that parliament rejects No Deal by a large majority. That really sets the stage for approval of an extension of Article 50 by the end of the week.

Sterling should perform well in this scenario as the technical risk of No Deal subsides.

Ms Kelly continues:

The interesting question is how long the extension is and what, if any, conditionality the EU attaches since it requires unanimous approval in Brussels. This will condition the market response.

What happened last night?

Here’s a recap: Theresa May suffered another damning defeat in the House of Commons over her second attempt to get approval for her Brexit deal (a deal she said was improved). The defeat wasn’t quite as historically large as the first vote in January, but it was still overwhelmingly rejected by a difference of 149 votes.

If you want to catch up on our coverage of the event, here’s some of the best reads for you this morning:
— The reaction from Europe: there’s “no more” the EU can do
— How MPs voted: one quarter of Tories voted against the deal

— Robert Shrimsley, our political columnist gives a run-through of what could happen next: “one last heave for May’s deal is also still in the mix”
— The FT’s editorial board gives its view on the future (or lack of) for May’s deal