See below for a roundup of recent Brexit news. Please let us know if you’d like to speak about any of this in further detail. 

Key Updates:

  • BOE announces first rate cut since 2009
  • Coalition opposing Brexit forms within House of Lords
  • European Banking Authority releases results of 2016 EU-wide stress tests
  • Brexit a frequent topic on earnings calls

Recent Freshfields Brexit Publications:

  • Post-Brexit trade-off – playing by the WTO rules – In the absence of some form of free trade agreement, what will the UK’s post-Brexit trade relationships with the EU and third countries look like? Andrew Renshaw and Tone Oeyen consider the pros and cons of being governed by World Trade Organisation (WTO) rules. This article was first published on Lexis®PSL Public Law analysis on 26 July 2016.
  • What does Brexit mean for Chinese investors? The prospect of enhanced trade with countries outside the EU was central to the debate in the run-up to the referendum. We welcomed an expert panel of speakers to our London debate in association with the China Chamber of Commerce to discuss what Brexit means for Chinese investors. This briefing summarises that session.
  • Access regular insight from our international experts on the issues, opportunities and risks emerging from the UK’s decision to leave the EU through our Brexit blog.
  • To access our previous Brexit publications, please click here.

UK News:

  • The Bank of England has announced a cut in its base rate from 0.5% to 0.25%, its first cut since 2009. That is accompanied by the establishment of a Term Funding Scheme for banks, designed to ensure that the rate cut is passed on to bank customers. The Bank has also announced an expansion of its bond-buying programme (which will include some corporate bonds) and a cut in its forecast for UK economic growth, saying that “the outlook for growth in the short to medium term has weakened markedly”.
  • Certain members of the House of Lords are forming a ‘coalition’ to attempt to block Brexit. Baroness Wheatcroft (former Editor of the Wall Street Journal Europe) speaking to The Times said that it was “imperative that we don’t press the button on Article 50”. Wheatcroft is said to be part of a group of several dozen peers who are looking at blocking, delaying or revisiting the referendum result – including rejecting any legislation that may be required before triggering Article 50.
  • Jeremy Browne, the special representative for the City of London to the EU, has warned that the UK will not be able to access the single market if it demands immigration controls.
    • He said “The City still thinks that it will be such a soft version of Brexit. I am not at all sure that the Europeans will be willing to deliver something that easy and palatable to us … I can’t see any way that any politician could interpret the referendum result in Britain as a mandate for no change whatsoever on European migration policies to Britain … So if the Europeans are telling the truth that being in the single market relies on absolute observance of the Four Freedoms, then it is not possible for us to be in the single market.”
    • Browne said that he could only see the UK maintaining single market access (similar to the Norwegian model) on a temporary basis as part of its transition.
    • Interestingly, these comments come the day after the publication of a report by The CityUK (a membership body representing UK financial and professional services) which said that European companies look to London to raise capital and for complex professional advice, and it is in the interests of Europe and the UK to maintain single market access.

EU News:

  • The European Banking Authority (EBA) published the 2016 EU-wide stress test results, which concluded that a majority of the European banks tested have significantly improved their capital strength since the 2014 stress test. The EBA noted that the “GDP shock assumed in the scenario for the EU-wide stress test is more severe than the currently available forecasts of the impact of the UK decision”.
  • The London-based Association for Financial Markets in Europe (AFME) will open a permanent Frankfurt office, with its CEO saying that “during this period of uncertainty, open lines of communication are crucial in Frankfurt, Paris, Madrid, Rome and across the EU 27”.

US News:

  • Bloomberg news reported on Monday that nearly half of US earnings calls in the last month had addressed the impact of Brexit, with the topic coming up in 70% of earnings calls in the financial sector. Reports indicated that financial institutions were seeing lower returns on asset management and investments, but higher revenues from trading in response to greater volatility in the markets.

Next steps:

  • End of August: Hollande, Merkel and Renzi meeting to discuss way forward after UK referendum result
  • 4-5 September: G20 Summit in China
  • 12 September: Juncker to give State of the Union speech
  • 16 September: EU Summit meeting on new EU priorities and Brexit negotiations (without the UK)
  • 2-5 October: UK Conservative Party Conference
  • 20 October: EU Council meeting
  • November: Commission to publish official economic forecast