EU chief negotiator Michel Barnier has rejected the idea of the UK collecting customs duties on behalf of the trading block, according to BBC News.
Barnier confirmed that the EU would not delegate “excises duty collection to a non-member”, noting that the EU wished to retain control of its money, law and borders just as much as the UK.
Barnier and UK Brexit Secretary Dominic Raab agreed that progress has been made in talks but that “obstacles” remained to achieving a deal by October.
Raab said: “We have agreed to meet again in mid-August and then to continue weekly discussions to clear away all the obstacles that line our path, to a strong deal in October – one that works for both sides.
The concept of the UK collecting duties on behalf of the EU had been a prominent feature of UK proposals for post-Brexit trading arrangements, a Facilitated Customs Arrangement. The system would see the UK collecting tariffs for the EU in a bid to ensure frictionless trade.
Barnier said the white paper put forward by the UK government was a “real step forward” but that “we are not at the end of the road yet.”
Bank of England Governor Mark Carney has spoken out against the ‘low road’ of protectionism, saying the trend would cost jobs and growth, according to Bloomberg.
Carney said signs of strain were beginning to show on the world economy as a result of trade barriers.
The Governor said: “We can choose between a low road of protectionism focused on bilateral goods-trade balances and a high road of liberalisation of global trade in services.”
“The low road will cost jobs, growth, and stability. The high road can support a more inclusive and resilient globalization.”
Carney said the impact of US tariffs imposed in June was likely to be small, but a larger increase “would have a substantial impact” including indirect effects on the economy through reduced business confidence and poorer financial conditions.
Carney said he believed interest rates would, in the long run, return to pre-financial crash averages. This means around 5% in the UK, ten times the current level. However “a lot of things have to go right for that to be the case.”
The Bank of England head also said that in the event of a no-deal Brexit, banks would probably face a ‘disorderly Brexit stress test’ in March 2019.
The Financial Conduct Authority (FCA) has proposed a minimum interest rate for savings accounts to improve returns for loyal savers, according to BBC News.
The FCA has said savers who stay with the same bank or building society for a long time are sometimes penalised by being given poor rates. Some banks pay only 0.05% on instant access accounts.
A Basic Savings Rate (BSR) would apply to all easy access ISA cash products and savings account, applies once the account had been open for a set period, for example one year.
Christopher Woolard, executive director of strategy and competition at the FCA said: “Providers can take advantage of high levels of customer inaction to pay lower interest rates to longstanding customers.”
Citizens Advice estimates that customers lose around £48 a year by now switching accounts.
The FCA has proposed that banks would set their own BSR, which would be featured prominently on their site and materials, allowing consumers to compare rates more easily.
The FCA has attempted to address the problem before, by encouraging customers to shop around and asking banks to share information about how to switch accounts. It has also named and shamed the brands paying the lowest rates, but the problem remains.
The prolonged hot weather in the UK could impact food supplies later in the year, worsening the impact of any disruption caused by a no-deal Brexit, according to the Food and Drink Federation (FDF).
There is still no certainty about the nation’s trading relationships following Brexit, which is due to take place in March 2019.
Ian Wright, director general of the FDF, said on BBC radio: “We’re going through the most extraordinary summer and we’re already seeing farmers struggling with crops, with feed for ruminants (Cattle and sheep). There are vegetable shortages because there hasn’t been enough rain.”
Brexit-related disruption to food imports and border crossings could exacerbate the situation, according to Wright.
Brexit Secretary Dominic Raab indicated the government is making preparations to ensure a stable supply of food in the event of disruption. Around 40% of food eaten in Britain is imported, mostly either from or through the EU.
Raab said: “Those businesses importing food, ingredients and finished goods will need to get their goods across the border before March 29 to ensure they don’t suffer disruption from customs changes.”
A shortage of carbon dioxide is causing problems in the food retail sector, according to BBC News.
The gas is used to carbonate drinks and is also deployed to stun animals prior to slaughter. A shortage of CO2 is impacting the supply of beer, soft drinks and meat to supermarkets.
The Food and Drink Federation chairman Ian Wright has said supplies are not expected to return to normal for one week, and in the meantime “choice will be eroded.”
Wright said: “We will see fewer chicken dishes, fewer pork and bacon dishes. We’ll see probably less carbonated drinks and certainly bakery and other things that benefit from what’s called modified atmosphere packaging, which is plastic packaging with a tray underneath and a dish of food in them.”
Baking brand Warburton’s has blamed the gas shortage for halting production at two of its four plants, while a number of other companies have admitted their production has been disrupted.
The British Retail Consortium said: “We are aware of specific pressures in some areas such as carbonated soft drinks, beer, British chicken and British pork but the majority of food products are unaffected and retailers do not anticipate food shortages. However, it is likely that the mix of products available may be affected.”
A spokesperson for the Department for Environment, Food and Rural Affairs said: “They said: “We have been assured CO2 producers are working as fast as they can to get plants up and running again, with CO2 production set to start very shortly.”
EU leaders say they will respond firmly to US protectionism and have plans to introduce a law for screening foreign investments, according to Reuters.
Leaders of EU Member States met in Brussels for a summit that included trade issues and immigration. The consensus was that US tariffs imposed on imports of steel and aluminium were unjustified and should be challenged by the European Commission, with duties levied against US products in the meantime.
In a statement, the leaders said: “The EU must respond to all actions of a clear protectionist nature.”
EU leaders said they would continue to seek trade agreements with partners, following the recent provisional deals with Japan and Mexico. Similar free trade deals are sought with the Mercosur group (Argentina, Brazil, Paraguay and Uruguay) and with Australia and New Zealand.
There was also acknowledgement that the EU wished to protect its own key industries and retain technology to guard against unfair competition. China has been criticised for unfair trade practices such as dumping and state subsidy.
The EU leaders called for a legislative proposal on scrutiny of foreign investments within the bloc, to address concern about Chinese acquisitions in Europe.
Costa coffee has reported a 2% fall in sales compared to 2017 for the first quarter of 2018, according to BBC News.
The coffee chain said total UK sales were up 5.2% following the opening of new stores, but like-for-like sales were down.
Parent group Whitbread pledged in April to demerge Costa from the group. Early morning trading in London saw the company shares rise 1% to £39.36.
Whitbread head Alison Brittain said: “Our stores remain highly profitable and deliver an excellent return on capital.”
A statement from the company said: “The UK like-for-like sales decline resulted principally from footfall weakness in traditional shopping locations, whereas travel locations continued to show good growth.”
Recent months have seen a number of well-known UK chains struggle to cope with challenging economic circumstances and online competition. Brands including Marks & Spencer, House of Fraser, Mothercare, New Look, Byron, Jamie’s Italian and Prezzo have announced plans to close stores.
Companies Maplin, Poundworld and Toys R Us have entered administration.
House prices rose at their slowest annual rate for five years this month, according to figures from Nationwide reported by Reuters.
The mortgage lender said the slowdown was linked to relatively low economic growth and pressure on household spending. UK house prices were 2.0 percent higher in June 2018 than June 2017, a reduction from May’s 2.7 percent rate.
The slowdown is the largest falling off in five years but still lower than a recent 1.7 percent predicted in a Reuters poll. June saw prices rising 0.5% compared to a predicted 0.3% rise.
Nationwide economist Robert Gardner said: “There are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent.”
Nationwide said it expected house price rises to slow by 1 percent in 2018 as whole. Economists expect the Bank of England to raise interest rates by 0.25% to 0.75% in August, the second increase since the global financial crisis.
A parliamentary committee has said that the government has underestimated the payment to be made to the European Union following Brexit by at least £10bn, according to Reuters.
Negotiations between the UK and EU have settled on a payment of between £35bn and £39bn to discharge ongoing liabilities, to be spread over the next few decades. The issue has been a political hot potato, with Brexit campaigners claiming the UK should not make any payment at all.
The Public Accounts Committee said the figure was an underestimate of the actual cost to the public and that the government needed to be more transparent.
Chairwoman Meg Hillier said: “The true cost of Brexit is a matter of outstanding public interest. Government must provide parliament and the public with clear and unambiguous information.”
Hillier continued: “Government’s narrow estimate of the so-called divorce bill does not meet this description. It omits at least 10 billion of anticipated costs with EU withdrawal and remains subject to many uncertainties.”
For example, the headline divorce bill figure does not include £3bn in payments to the European Development Fund, which provides overseas aid. The Prime Minister has confirmed that Britain will honour its commitments to the fund.
A Treasury spokesperson said: “The National Audit Office confirmed in April that our estimated figure is a reasonable calculation. Now we are discussing what our future relationship looks like.”
The European Union has announced a range of tariffs to be levied against US exports, according to BBC News.
The move is in retaliation to US tariffs on steel and aluminium revealed earlier in June. The EU tariffs target US products such as blue jeans, motorbikes and bourbon whiskey. Trade Commissioner Cecilia Malmstrom acknowledged that the EU “did not want to be in this position.”
The tariffs, which also target cranberries, orange juice, sweetcorn and peanut butter, responds to the 25% tariffs on steel and 10% on aluminium. President Trump has justified the tariffs on security grounds.
South Korea, Australia, Argentina and Brazil have agreed to impose voluntary limits on exports to the US while Canada has unveiled its own retaliatory measures. Mexico has also imposed tariffs on American products such as steel, pork and bourbon.
The EU tariffs will impact around €2.8bn of US goods, whereas the US tariffs impact €6.4bn of EU exports. The EU tariffs will be cancelled if the US tariffs are removed.
The EU selected products to have the greatest political impact. Bourbon whiskey is a prime product of Kentucky, the state of Senate majority leader Mitch McConnell. Orange juice is important for Florida, a key swing state.
IMF director Christine Lagarde said a trade war would result in “losers on both sides” and could have a “serious” impact.