British Prime Minister Theresa May (L) met European Commission President Jean-Claude Juncker (R) who warned that the Brexit divorce could not be renegotiated. Picture: AFP

Economic tensions as Theresa May promises to deliver deal

Britain’s Prime Minister Theresa May gave the EU’s Donald Tusk a firm slap down after he sparked a huge row with Brexiteers.

The PM fronted up the EU boss and told him his outrageous comments were “not helpful” and caused “widespread dismay” in the UK.

After talks with several EU leaders she told reporters before heading back to Britain: “I’ve raised with President Tusk the language that he used yesterday, which is not helpful and caused widespread dismay in the United Kingdom.”

Mr Tusk sparked uproar by saying there was a “place in hell” reserved for Brexiteers who campaigned to leave without a plan.

Ms May vowed on Thursday that she would reach a deal to ensure Britain leaves the European Union on schedule on March 29, after talks with EU leaders.

“I’m going to deliver Brexit, I’m going to deliver it on time. I’ll be negotiating hard in the coming days to do just that,” Mrs May told reporters in Brussels.

European Union leader Jean-Claude Juncker and May agreed on Thursday to hold further talks on Britain’s withdrawal from the bloc, after what they described as a “robust” meeting.

EU negotiator Michel Barnier will meet Britain’s Brexit Minister Stephen Barclay on Monday in Strasbourg and May and Juncker themselves will get back together before the end of February, a spokesman said.

In a joint statement issued after Prime Minister May met Juncker at EU headquarters in Brussels, the pair confirmed that the European Commission president had warned the British premier that the Brexit withdrawal deal cannot be renegotiated.

But he “expressed his openness to add wording” to a parallel political declaration laying out ambitions for future EU-UK ties if London wants to seek a “more ambitious” closer relationship after Brexit.

May, however, urged that the withdrawal agreement itself be changed, and reminded Juncker that the British parliament had mandated her to seek “a legally binding change to the terms of the backstop.”

This is a clause in the withdrawal agreement, signed last November, that would keep Britain in the EU customs union even after a post-Brexit transition period if no way is found to keep the Irish border open.

“The discussion was robust but constructive,” the joint statement said. “Despite the challenges, the two leaders agreed that their teams should hold talks as to whether a way through can be found that would gain the broadest possible support in the UK parliament and respect the guidelines agreed by the European Council.”

If no agreement is reached on the withdrawal deal, which has yet to be approved by either the British or EU parliaments, Britain will “crash out” of the union with no follow-on trade arrangements on March 29.

Describing the approximately 90-minute meeting between Juncker and May as “robust but constructive,” Juncker spokesman Margaritis Schinas said that the EU and Britain had already “made significant concessions to get a deal.”

May and Juncker are due to meet again before the end of the month.

The British economy is set to grow at its slowest rate since the global financial crisis a decade ago as the “fog of Brexit” causes heightened uncertainty, the Bank of England warned Thursday.

With Britain due to leave the European Union in just 50 days, the central bank said that questions over Brexit are weighing so much on the economy that there’s a one-in-four chance it could slip into recession this year – even if a Brexit deal is reached.

Bank of England Governor Mark Carney said the “fog of Brexit” is weighing heavily on businesses’ investment decisions, while households are starting to spend less.

“Given the dynamics of the negotiations, we are now assuming uncertainty remains elevated for a while and that financial conditions stay tighter for longer,” he said in a press briefing after the bank’s nine-member policy committee kept its main interest rate at 0.75 per cent.

“Although many companies are stepping up their contingency planning, the economy as a whole is still not yet prepared for a no-deal, no-transition exit,” he said.

The Bank of England said that the Brexit uncertainties and a weaker global economy overall mean that British growth this year is likely to be 1.2 per cent. That’s down sharply from the 1.7 per cent predicted in November and below 2018’s 1.4 per cent. It would make for the worst year in Britain since a 4.2 per cent contraction in 2009.

The economy is slowing despite a modest boost from firms stockpiling as they prepare for a potential “no-deal” Brexit, which could lead to tariffs on exports to the EU and serious disruptions to the flow of goods.

Carney said that the possibility of a “no-deal” Brexit has gone up since the aftermath of the Brexit vote in 2016, when it was considered unlikely. “It’s a statement of the obvious,” he said.

Britain is due to leave the EU on March 29 but last month the national parliament overwhelmingly rejected the deal that Prime Minister Theresa May had agreed on with the EU.

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