Please see below for today’s update on key Brexit news items:

  • The EU has warned that it is “vital” for Britain to spell out in detail its stance on paying a divorce bill from the bloc if it wants talks to advance. Michel Barnier, the EU’s chief Brexit negotiator, also warned that after a week of talks, there is still a “fundamental split” over how to treat EU citizens living in the UK, and UK citizens in the EU, after Brexit. Speaking to reporters alongside David Davis, the UK Brexit minister, Mr Barnier said the question of what Britain would need to pay was “inseparable from other exit issues” and that the UK would have to engage with this question before any discussion of its future trading relationship with the EU. (Financial Times)
  • The sharp fall in sterling triggered by the EU referendum result is having an adverse effect on Britain’s public finances but has yet to bring about the expected improvement in the trade deficit, a Guardian analysis of the economic news of the past month shows. The latest data suggests the first official estimate of growth in the second quarter, due on Wednesday, will show a modest pickup from the 0.2% recorded in the first three months of 2017 but will not match the robust expansion recorded in the first six months after the Brexit vote. (The Guardian)
  • The International Monetary Fund has downgraded its forecast for Britain’s economy, describing its recent performance as “tepid”. In a summer update to its twice yearly forecasts, the fund said the UK economy was slowing and likely to grow only 1.7 per cent this year, down 0.3 percentage points from its forecast in April. In contrast, it expects the Eurozone to grow 1.9 per cent this year and outperform the UK. Maurice Obstfeld, the IMF’s chief economist, said: “Our projection for the United Kingdom this year is…lowered, based on the economy’s tepid performance so far”. (Financial Times)
  • Liam Fox, the international trade secretary, has stated that he has no ideological objection to interim arrangements to minimise disruption after Brexit in 2019. But he added that any interim arrangements must end by the time of the next election, scheduled for 2022. The cabinet is said to be united behind a transition although reports it could last four years have been downplayed. (BBC)
  • Ryanair has warned it could move its planes out of the UK if no post-Brexit aviation deal is reached by next year. The budget airline has almost 90 aircraft based at British airports, and relies on the EU “Open Skies” agreement to fly them to dozens of European destinations. Announcing its first quarter results, the Irish airline warned “if we do not have certainty about the legal basis for the operation of flights between the UK and the EU by autumn 2018, we may be forced to cancel flights and move some, or all, of our UK based aircraft to Continental Europe from April ’19 onwards.” (Independent)