Business Politics UK

Brexit Business: Divorce is hitting the economy, even with weak pound

The Brexit divorce is hitting the UK market as the weakened pound is turning investment away.

Brexit talks resume next week after Prime Minister Theresa May’s government released a series of position papers on its ambitions for the divorce and afterwards. With the stability of the financial markets a pressing issue.

The British government has said it wants the “freest and most frictionless trade possible.” To achieve that, it asked that goods placed on the market before exit day continue to be sold in the U.K. and the EU afterwards. To avoid repeated compliance checks, the paper also proposed products that received approval before Brexit still be valid after the point of departure. In simple terms the less red tape the better.

The U.K. wants to maintain something close to what the customs union membership for an interim period, granting goods exporters tariff-free, bureaucracy-light commerce with the EU while both sides sort out their future relationship. Industry lobby groups welcomed this. The U.K. also said it wants to be allowed to spend the transition lining up trade deals with other countries. With 50% of the investment trade with North America, it is important for the UK to set it’s targets early and have them in place as soon as possible.

The devalued pound is doing little to boost the appeal of British assets as Brexit uncertainty hangs over the economic outlook. There were 44 foreign acquisitions of U.K. companies in the second quarter, the fewest in almost two years, according to figures from the statistics office. The value of such deals fell to 2.9 billion pounds ($3.8 billion) and was outstripped by disposals for the first time since 2002. (Bloomberg)

Germany’s Finance Minister Wolfgang Schaeuble reiterated the European Unions stance on Brexit saying there’s “no free lunch” in Brexit talks and that the reality of the divorce is sinking in among U.K. policy makers.

In Brussels, ambassadors of the 27 remaining EU countries met briefly for only about five minutes on Wednesday to discuss Brexit, according to two participants, adding to signs that there’s no sense of urgency in the bloc to reach a swift conclusion.

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