Brexit: Chancellor announces one-year spending review (BBC)

  • Britain’s Chancellor of the Exchequer, Sajid Javid, has announced a one-year spending review to provide financial certainty to government departments in preparation for Brexit. This will involve a one-year Spending Round to fund the department’s 2020-21 activities and the next full multi-year Spending Review will be carried out in 2020.
  • The spending review will therefore be carried out ahead of the Budget and the chancellor will be making spending plans prior to updating his forecasts for the economy and in advance of setting tax policy.
  • The focus on fiscal preparation follows Mr Javid’s announcement last week to set aside as extra £2.1bn for the eventuality of a no-deal Brexit.
  • Labour’s Shadow Chancellor of the Exchequer, John McDonnell, has warned that the Conservative government is making a public display of spending commitments but risks opening the door for more austerity in the event of a no-deal Brexit.

Top bankers shift tone over horror of no-deal Brexit (FT)

  • Despite declarations by some banking executives that a hard Brexit would be a disaster for the UK, the FT reported that some senior bankers have changed their position since Boris Johnson became prime minister.
  • The FT suggests that this optimism may be opened due to a greater level of preparedness amongst banks, many of which have set up new entities in Paris, Frankfurt and Ireland and identified staff that will move in the event of a hard exit. One executive also pointed that the proposed spending spree could ameliorate the economic impacts of Brexit, particularly given that Britain has a comparatively low fiscal deficit as a percentage of GDP.
  • Nevertheless, the change in attitude of some bankers does not necessarily represent a change in consensus in the City of London.

Corbyn seeks clarity on ‘unconstitutional’ election-time no-deal (BBC)

  • Labour leader, Jeremy Corbyn, said that once Commons returns from summer recess on 3 September, his party would propose a no-confidence vote.
  • Under the Fixed Term Parliaments Act, if the Prime Minister loses no-confidence vote, he would have another 14 days to win a vote of confidence, and if he should lose a second vote of no-confidence, a general election would be called on a date advised by the Prime Minister.
  • The Government has said that a no-confidence vote would not in itself prevent the Prime Minister from taking the UK out of the EU. Boris Johnson could, for example, call an election after the Brexit deadline of 31 October.
  • Dispute would likely ensue as to whether or not a caretaker government ought to be prevented from implementing a no-deal Brexit. The UK’s withdrawal from the EU has been the default legal position since MP’s triggered Article 50 in March 2017, however, purdah rules may restrict the government’s ability to make last-minute preparations for a no-deal exit, for example in the form of a public information campaign. However, these eventualities are untested and it is difficult to predict any likely outcome.