Britain's Prime Minister Theresa May
Britain cannot be bullied, Brexit minister Dominic Raab said on Monday, sharpening the government's criticism of the European Union for taunting Prime Minister Theresa May and souring difficult Brexit talks.
May's ministers have come out one by one at their party's annual conference in the city of Birmingham to warn the EU that they will embrace leaving without a deal if the bloc fails to show "respect" in the talks to end Britain's membership.
Just six months before Britain is due to leave the EU in the country's biggest shift in foreign and trade policy in more than 40 years, May faces growing criticism over her plans to leave not only in her governing party but also in Brussels.
Party unity is on ministers' minds, encouraging the faithful to direct their anger at the EU rather than at their prime minister, who some eurosceptic campaigners accuse of leading Britain towards a "Brexit in name only".
The UK's top share index lagged other European markets on Monday as investors kept an eye on developments over Brexit from the ruling Conservative Party's annual conference.Comments from finance minister Philip Hammond lifted the pound, weighing on shares in export-oriented firms, although gains among oil majors on rising crude prices provided support.The FTSE 100, whose companies make 70 percent of their earnings from abroad, added 0.1 percent by 0832 GMT, while the domestically focused mid cap index rose 0.7 percent."All eyes on sterling over the next few days as the pound will remain sensitive to news from the Conservative conference," said Peel Hunt economist Ian Williams.Hammond said the UK had the fiscal capacity to cope with leaving the European Union without any agreement but believed the mood in Brussels was to reach a divorce deal.His comments lifted the pound and that in turn sent shares in big multinationals BAT, Compass Group and Shire down between 0.5 and 1.2 percent.Oil companies Shell and BP both rose more than 0.5 percent, as Brent prices rose to their highest since November 2014 ahead of U.S. sanctions against Iran.Airlines, which have recently been hit by rising oil prices which could increase their fuel costs, were under further pressure after a profit warning from Ryanair.Europe's largest low-cost carrier cut its forecast for full-year profit by 12 percent and said there could be worse to come if recent coordinated strikes across Europe continue to hit traffic and bookings.Its London-listed shares fell 8.4 percent, wile FTSE-listed rivals easyJet and British Airways owner International Airlines Group fell 4.3 and 1.6 percent respectively.Housebuilders were another weak spot.Berkeley Group, Barratt Developments and Persimmon were among the top fallers on the FTSE, all down over 1 percent on plans by the Conservative Party to levy an extra fee on foreign buyers of homes in Britain."The UK PM has plans to impose higher taxes on foreign buyers of UK properties, roughly half of all residential transactions in Central London, which could weigh on FTSE housebuilders," said at Accendo Markets analyst Mike van Dulken.United Utilities rose 2.6 percent after a Deutsche Bank upgrade to buy.Among the smaller companies, Avocet Mining dropped 17 percent after warning that it could be broken up as the gold miner continues talks with its largest shareholder to restructure its debt.Just Group fell 9 percent after the British pensions provider said its finance chief would step down at the end of the month, days after proposed regulatory changes forced the company to delay dividend payments.
Britain's FTSE treads water, eyes on Tory conference
Other ministers, such as finance minister Philip Hammond, have moved to point out that leaving without a deal could hurt Britain's economy, the world's fifth largest.
Raab said he had called on the EU to match the "ambition and pragmatism" Britain had put forward with May's Chequers proposals, named after her country residence where an agreement with her ministers was hashed out in July.
"Unfortunately, that wasn't on display in Salzburg," he said, describing a summit last month in the Austrian city where EU leaders rejected parts of the Chequers plan.
"Our prime minister has been constructive and respectful. In return we heard jibes from senior leaders and we saw a starkly one-sided approach to negotiation."
The pound rose after Britain's finance minister said on Monday the European Union was willing to do a Brexit deal, but investors said uncertainty surrounding the ruling Conservative Party conference could quickly reverse the currency's fortunes.At her party's annual conference this week, Prime Minister Theresa May will defend her plan for leaving the EU where critics like ex-foreign secretary Boris Johnson could openly defy her.Six months before Britain is due to leave the EU, currency traders are focused on events like the conference and an upcoming EU summit for signs of whether the UK will clinch a deal."Deep divisions within the party could turn this conference into a disaster for May, which could easily have negative effects for sterling," said Thu Lan Nguyen, an FX strategist at Commerzbank AG in Frankfurt."The government might end up without any Brexit plan whatsoever. Whichever way one looks at it, the next few days will be uncomfortable for sterling."Finance minister Phillip Hammond told the BBC on Monday, "The mood is undoubtedly that people want to do a deal with the UK."The pound edged up 0.2 percent versus the dollar to $1.3050 and to 88.82 pence against the euro.Sterling came under pressure last week as optimism for a Brexit trade deal faded and the dollar surged.Other analysts said investors would refrain from trading on negative Brexit headlines that did not alter the odds of a no- deal Brexit."We would see any dips in the pound in and around the Tory Conference as an opportunity to buy the currency – with a deal on the Irish border backstop to see a sharp re-pricing to $1.36-1.38, " said ING currency strategist Viraj Patel.Hammond said on Monday that doubts about Britain's future had already hit the economy and the next few weeks would be crucial in securing an exit agreement."Many businesses are sitting on their hands, frankly, waiting to see what the outcome of this negotiation is before confirming their investment plans," he said.Businesses have expressed frustration over the government's lack of clarity on Brexit and what some see as a decision to put ideology before the economy.Last week, Britain's opposition Labour Party sought to woo business bosses, although it also proposed a raft of radical economic policies, saying the Conservatives had given them the opportunity to pitch an alternative leftist strategy .
Sterling rises despite fears of Tory Brexit conflict
"What is unthinkable is that this government, or any British government, could be bullied by the threat of some kind of economic embargo, into signing a one-sided deal against our country's interests," Raab said.
Instead of the much-hoped-for staging post, the Salzburg summit has become a byword for a sharp deterioration in the atmosphere of the talks, when British government officials felt May was ambushed by the other EU leaders over Brexit.
A tweet by European Council President Donald Tusk showing him offering May a selection of cakes with the comment: "A piece of cake, perhaps? Sorry, no cherries" "certainly had an impact", one official said.
"GET SERIOUS"
With no divorce deal and a standoff over the shape of any future relationship, the possibility of a "no deal Brexit" has increased, with some businesses preparing for what they see as a worst case scenario.
British finance minister Philip Hammond said on Monday the United Kingdom had the fiscal capacity to cope with leaving the European Union without any agreement but believed the mood in Brussels was to reach a divorce deal.Britain's exit from the European Union next March has increased uncertainty for employers, with talks about the future relationship between the world's fifth largest economy and its largest trading partner becoming increasingly fraught."I'm clear that we will have the fiscal capacity to support the British economy if we were unfortunately to find ourselves in a no-deal situation," he told Sky News.However, Hammond said the doubts about the future had already hit the economy and the next few weeks would be crucial in securing an agreement with the EU."The mood is undoubtedly that people want to do a deal with the UK. People want to minimise the disruption of the UK's departure from the European Union, they want to continue having a relationship with us and smooth trading partnership in the future," he told BBC TV."Clearly there has been a hit to the economy through the uncertainty the Brexit process has caused. Many businesses are sitting on their hands frankly waiting to see what the outcome of this negotiation is before confirming their investment plans."Reassuring businesses they remain at the heart of the centre-right Conservatives Party's plan for the economy will be the focus of Hammond's speech to his party's conference on Monday.The business community has expressed frustration over the government's lack of clarity during the Brexit process and what some see as a decision to put ideology before the economy."We back business, as the cornerstone of a successful economy, as a force for good in our society, and as an essential expression of our values," Hammond will say in his speech to the Conservative Party's annual conference in Birmingham.The British Chambers of Commerce said it wanted the Conservatives to overcome their internal divisions and "to deliver real-world, practical answers to business’s ongoing questions around Brexit – and avoid a messy and disorderly exit from the EU."Foul LanguageRelations suffered earlier this year when then-foreign minister Boris Johnson was quoted dismissing business leaders' concerns about Brexit, using foul language, in a meeting with EU diplomats.Johnson, the bookmakers' favourite to succeed May, has become a cheerleader for hardline Brexit supporters in the Conservative Party who have denounced her so-called "Chequers" proposals and has put forward his own plans for an alternative free trade deal.Hammond said Johnson's idea was not on offer from the EU."What Chequers does is offer an in-the-middle solution, down the centre, taking the best from both models, and proposing a way forward which delivers on the mandate of the British people in the referendum but also protects British jobs and British businesses," he told Sky News.Last week, Britain's opposition Labour Party sought to woo business bosses even as it unveiled a raft of radical economic policies, saying the Conservatives had given them the opportunity to pitch an alternative leftist strategy.Despite Brexit dominating political discussions, polls suggest it lags behind the state-run National Health Service as Britons' greatest concern and Hammond said people would have to pay more in tax to fund extra investment."The prime minister was very clear and very honest with the public that if we want in the future a growing NHS to support our ageing population of course we'll have to accept a little more tax to fund that service," he said.
Britain's Hammond says UK can cope with no-deal Brexit
But one source close to the government said there was now a sense that the EU had realised that the tone set in Salzburg was "perhaps a bit off" and, behind the scenes, conservations between the two sides were more constructive.
Hammond, for one, was keen to set a more positive tone.
"The mood is undoubtedly that people want to do a deal with the UK," he told BBC TV.
"Clearly there has been a hit to the economy through the uncertainty the Brexit process has caused. Many businesses are sitting on their hands frankly waiting to see what the outcome of this negotiation is before confirming investment plans."
British finance minister Philip Hammond said the European Union was in the mood to do divorce deal, though he said uncertainty over Brexit had already hit the United Kingdom's economy."The mood is undoubtedly that people want to do a deal with the UK," Hammond told the BBC on Monday. "Clearly there has been a hit to the economy through the uncertainty that the Brexit process has caused.""Many businesses are sitting on their hands frankly waiting to see what the out turn of this negotiation is before confirming their investment plans," he said. "I believe when the prime minister lands this deal and brings it back there will actually be a boost to the economy."
UK's Hammond says EU is in the mood for a Brexit deal
But his softer line won less support at the conference than those adopted by Raab, trade minister Liam Fox and foreign minister Jeremy Hunt, who on Sunday compared the EU with the Soviet Union which could turn into a prison from which not only Britain would want to escape.
It was Raab, winning a standing ovation for his story about his father's journey from then Czechoslovakia after the Nazi invasion, who summed up Britain's new combative stance.
"The EU's theological approach allows no room for serious compromise," he said. "If the EU want a deal, they need to get serious."