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Pound would crash and inflation soar under no-deal Brexit, says Bank of England - Politics live Pound would crash and inflation soar under no-deal Brexit, says Bank of England - Politics live
(35 minutes later)
Thanks Andrew.
John McDonnell has elaborated upon his widely reported remarks from earlier today. In an interview with the BBC’s Laura Kuenssberg he suggested that Labour would “inevitably” back a second referendum in the event of the prime minister’s Brexit deal being defeated in the Commons, so long as the party is unable to force a general election.
The shadow chancellor has now told ITV that Labour’s position on a people’s vote hasn’t changed, and that if it does eventually support another referendum it would be because the government has forced it. Resisting the temptation to reject hypotheticals, he added that he would vote Remain in such an event (back in September he did not think Remain should be on any potential ballot paper).
NEW: @johnmcdonnellMP has told @itvnews he’s not giving up the demand for a general election if PM loses meaningful vote. Says Labour’s position hasn’t changed on a people’s vote and if it does end up backing one it’ll be because the govt forces it. He says he’d vote Remain. pic.twitter.com/No3H8IrTjj
It is worth mentioning that PoliticsHome reported earlier that a senior Labour source insisted that McDonnell’s words to Kuenssberg did not represent what he or the party thinks. “Make up your own mind,” Kevin Schofield tweeted.
Senior Labour source insists John McDonnell's words to @bbclaurak do not represent what he or the Labour party thinks. Make up your own mind.https://t.co/8xVPzGPIPJ
And while we’re on the subject of a second referendum, in this week’s magazine James Forsyth, the Spectators’s political editor, speculates about Theresa May doing a U-turn and embracing the idea if she loses the vote on the Brexit deal. He says:
But what can May do, given that she wants her deal to pass? Well, there is one route that might work for her: a second referendum. If the Commons won’t back her deal, then maybe the country will.
This would require a massive volte-face from May, but it does offer a way to break the log jam in the way that another general election does not, given that two of the last three elections have delivered hung parliaments. Interestingly, a growing number of full-bore Brexiteers are optimistic that they could win a referendum in these circumstances, which means there might not be full-scale opposition to the idea of a three-question second referendum.
I’m finishing now. My colleague Mattha Busby is now taking over.
Opinion is divided about the significance of John McDonnell’s comment about it being “inevitable” that Labour will end up backing a second referendum. (See 3.08pm.) The Labour peer Andrew Adonis thinks this is significant.
John McDonnell’s statement today on Labour moving towards a people’s vote is very significantReferendum next May
But Adonis is about the most diehard supporter of a second referendum in British public life, and so he would say this. (A colleague recently recommended, as a thought experiment, trying to find anyone who thinks a second referendum is likely who does not actually want one to happen; it’s almost impossible.) Others think McDonnell was effectively just restating Labour policy, and that nothing has changed. This is from PoliticsHome’s Kevin Schofield.
Senior Labour source insists John McDonnell's words to @bbclaurak do not represent what he or the Labour party thinks. Make up your own mind.https://t.co/8xVPzGPIPJ
One problem is that the Press Association reported McDonnell as suggesting that it was “inevitable” that a second referendum would take place. That is based on McDonnell replying “that’s right” when it was put to him that it would be inevitable that there would be another vote. (See 3.08pm.) But in covering politics it is always important to bear in mind what people mean as well as what they say, and it is clear from the context that McDonnell was not predicting a second referendum. He was just accepting that Labour would end up calling for one.
That is of interest in itself, because implicitly he was accepting that the Labour strategy of trying to engineer a general election will fail. That is not something that Jeremy Corbyn or his staff have admitted do bluntly.
But it is still a huge leap from Labour backing a second referendum to one actually taking place. Here are three reasons why.
1 - Jeremy Corbyn cannot be certain to win a vote on a second referendum by telling his MPs to support one in the Commons. Other opposition parties are in favour, around a dozen Conservative MPs have publicly backed the idea, and it is thought that dozens more are persuadable. But some Labour MPs are strongly opposed, and would vote against the party whip to oppose a second referendum. If Corbyn were to whip his MPs on this issue, he would probably win - but that is not inevitable.
2 - A second referendum would require legislation, and that would only happen if the government was led by a PM committed to make it happen. Yet McDonnell seems to be accepting that an early election is not likely to happen. Perhaps Theresa May will be replaced by a Tory leader backing a second referendum. Perhaps Corbyn, or someone else, will end up leading a coalition government committed to holding a people’s vote. Or perhaps May will perform one of the biggest U-turns in history and come out in favour? None of these options seems especially likely. But unless something likes this happen, a referendum bill will not get through parliament.
3 - The EU would have to agree to suspend article 50 to allow time for a referendum to be held. An excellent Constitution Unit paper (pdf) on this subject published last month concluded that passing the legislation and then holding the referendum would take 22 weeks. (See below.) EU leaders want the UK to stay, and article 50 can be suspended by unanimity. But European parliamentary elections are taking place in May and if the referendum were to take place after then (which would probably be inevitable, given the timetabling issues), then having the UK as a member of the EU but without MEPs starts to create enormous problems. As the Constitution Unit says:
While a short delay to the UK’s participation in the election of MEPs might be possible without causing huge problems, a lengthy delay would be more problematic. As the European Parliament does not sit in August, muddling through without UK representatives in July might be possible. A delay extending into the autumn would be more difficult to accommodate, and legal and political difficulties would mount.
All of which means a second referendum is anything but inevitable. A slim possibility would be a better description.
And here is more from the Press Association report about the Bank of England Brexit analysis.And here is more from the Press Association report about the Bank of England Brexit analysis.
In the event of a disruptive Brexit, where there is no change to border trade or financial markets, GDP may fall 3% from its level in the first quarter in 2019.In the event of a disruptive Brexit, where there is no change to border trade or financial markets, GDP may fall 3% from its level in the first quarter in 2019.
In this scenario, the unemployment rate will hit 5.75% and inflation rises to 4.25%.In this scenario, the unemployment rate will hit 5.75% and inflation rises to 4.25%.
House prices decline 14% and commercial property prices fall 27%. The pound would fall by 15% against the US dollar to £1.10.House prices decline 14% and commercial property prices fall 27%. The pound would fall by 15% against the US dollar to £1.10.
However, major British banks have “levels of capital and liquidity to withstand even a severe economic shock that could be associated with a disorderly Brexit”, the Bank concluded from tests of banks’ financial resilience.However, major British banks have “levels of capital and liquidity to withstand even a severe economic shock that could be associated with a disorderly Brexit”, the Bank concluded from tests of banks’ financial resilience.
Britain’s banking system is “strong enough to continue to serve UK households and businesses even in the event of a disorderly Brexit”, the Bank said.Britain’s banking system is “strong enough to continue to serve UK households and businesses even in the event of a disorderly Brexit”, the Bank said.
My colleague Graeme Wearden is covering the Bank of England announcement in more detail on his business live blog.My colleague Graeme Wearden is covering the Bank of England announcement in more detail on his business live blog.
The Press Association has snapped these headlines.The Press Association has snapped these headlines.
The Bank of England has warned the pound would crash, inflation will soar and interest rates would have to rise in the event of a no deal disorderly Brexit.The Bank of England has warned the pound would crash, inflation will soar and interest rates would have to rise in the event of a no deal disorderly Brexit.
In the event of a disorderly no deal, no transition Brexit, Britain’s GDP could fall by 8% from its level in the first quarter of 2019, according to analysis of a worst case scenario by the Bank.In the event of a disorderly no deal, no transition Brexit, Britain’s GDP could fall by 8% from its level in the first quarter of 2019, according to analysis of a worst case scenario by the Bank.
The unemployment rate would rise 7.5% and inflation would surge 6.5%. House prices are forecast to decline 30%, while commercial property prices are set to fall 48%. The pound would fall by 25% to less than parity against both the US dollar and the euro.The unemployment rate would rise 7.5% and inflation would surge 6.5%. House prices are forecast to decline 30%, while commercial property prices are set to fall 48%. The pound would fall by 25% to less than parity against both the US dollar and the euro.
The Bank of England has now published its Brexit impact assessment.The Bank of England has now published its Brexit impact assessment.
Here is the 87-page report (pdf).Here is the 87-page report (pdf).
Here is a chart with the key findings.Here is a chart with the key findings.
MPs are debating the offensive weapons bill this afternoon. The government has just won a vote removing from the bill a section originally in the bill banning high-powered military-grade rifles. As we reported last week, the government backed down in response to pressure from Tory Brexiters and the DUP.MPs are debating the offensive weapons bill this afternoon. The government has just won a vote removing from the bill a section originally in the bill banning high-powered military-grade rifles. As we reported last week, the government backed down in response to pressure from Tory Brexiters and the DUP.
MPs are now voting on the Govt’s Amdt 26 which removes their own ban on .50 caliber rifles. This is a failure to act in the national interest. @UKLabour are opposing Govt’s u-turn on the ban of these powerful weapons which is supported by police & security services. Result 345MPs are now voting on the Govt’s Amdt 26 which removes their own ban on .50 caliber rifles. This is a failure to act in the national interest. @UKLabour are opposing Govt’s u-turn on the ban of these powerful weapons which is supported by police & security services. Result 345
Govt pass Amdt to not ban .50 caliber rifles by 309 votes to 274. https://t.co/xzAUsOsLksGovt pass Amdt to not ban .50 caliber rifles by 309 votes to 274. https://t.co/xzAUsOsLks
As the Evening Standard’s Kate Proctor reports, the government is proposing an alternative.As the Evening Standard’s Kate Proctor reports, the government is proposing an alternative.
The Government has tabled an amendment that effectively reverses their proposed outright ban on these weapons. Instead they want to focus on their safe storage and security. There's not many of them - 159 licences for 0.50 calibre, and perhaps five of these anti-tank guns.The Government has tabled an amendment that effectively reverses their proposed outright ban on these weapons. Instead they want to focus on their safe storage and security. There's not many of them - 159 licences for 0.50 calibre, and perhaps five of these anti-tank guns.
And here is Business Insider’s Adam Bienkov with an assessment of what this means.And here is Business Insider’s Adam Bienkov with an assessment of what this means.
You know a government is in a weak position when it can't even ban the possession of *checks notes* "anti-tank guns." https://t.co/SIkZLifizyYou know a government is in a weak position when it can't even ban the possession of *checks notes* "anti-tank guns." https://t.co/SIkZLifizy
A senior Airbus executive gave evidence to the Commons business committee this morning. As the Labour MP Rachel Reeves, who chairs the committee, reports, she said the company had had to spend €15m on no deal contingency planning.A senior Airbus executive gave evidence to the Commons business committee this morning. As the Labour MP Rachel Reeves, who chairs the committee, reports, she said the company had had to spend €15m on no deal contingency planning.
"Airbus has spent 15 million euros on preparing for #NoDeal. I would much rather that money had been spent into research and technology or more skills..."Katherine Bennett, Senior Vice-President of Airbus UK.@CommonsBEIS #Brexit #Aerospace pic.twitter.com/37ta4Yu0R5"Airbus has spent 15 million euros on preparing for #NoDeal. I would much rather that money had been spent into research and technology or more skills..."Katherine Bennett, Senior Vice-President of Airbus UK.@CommonsBEIS #Brexit #Aerospace pic.twitter.com/37ta4Yu0R5
This morning Politico obtained a copy of the Number 10 media grid for the fortnight running up to the meaningful vote - the diary of key issues that Downing Street was planning to highlight in between now and December 10, starting with today’s economic impact assessment.This morning Politico obtained a copy of the Number 10 media grid for the fortnight running up to the meaningful vote - the diary of key issues that Downing Street was planning to highlight in between now and December 10, starting with today’s economic impact assessment.
Since then, it appears there has been some high speed reshuffling of the plans, on account of the the fact that was one rueful official admitted the grid “was accurate at the time it was leaked”. Somebody in Number 10’s will have had a busy morning to maintain an element of surprise in the coming days.Since then, it appears there has been some high speed reshuffling of the plans, on account of the the fact that was one rueful official admitted the grid “was accurate at the time it was leaked”. Somebody in Number 10’s will have had a busy morning to maintain an element of surprise in the coming days.
In case you missed it, this was the official Brexit issue by issue timetable, as of 7.30am.In case you missed it, this was the official Brexit issue by issue timetable, as of 7.30am.
SCOOP: No10’s new Brexit grid, seen by me:Nov 28: EconomyNov 29: SecurityNov 30: Int tradeDec 1: DigitalDec 2: The Brexit dealDec 3: MoneyDec 4: ImmigrationDec 5: TransportDec 6: Industrial strategyDec 7: Brexit for the whole UKDec 8: ConsumersDec 9:Dec 10: Ag & fishSCOOP: No10’s new Brexit grid, seen by me:Nov 28: EconomyNov 29: SecurityNov 30: Int tradeDec 1: DigitalDec 2: The Brexit dealDec 3: MoneyDec 4: ImmigrationDec 5: TransportDec 6: Industrial strategyDec 7: Brexit for the whole UKDec 8: ConsumersDec 9:Dec 10: Ag & fish
John McDonnell, the shadow chancellor, has suggested it is “inevitable” that Labour will back a second referendum if Theresa May’s Brexit deal is defeated in the Commons but the party is unable to force a general election. McDonnell told the BBC:John McDonnell, the shadow chancellor, has suggested it is “inevitable” that Labour will back a second referendum if Theresa May’s Brexit deal is defeated in the Commons but the party is unable to force a general election. McDonnell told the BBC:
We want a deal that will protect jobs and the economy. If we can’t achieve that - the government can’t achieve that - we should have a general election but that’s very difficult to do because of the nature of the legislation that David Cameron brought forward.We want a deal that will protect jobs and the economy. If we can’t achieve that - the government can’t achieve that - we should have a general election but that’s very difficult to do because of the nature of the legislation that David Cameron brought forward.
If that’s not possible, we’ll be calling upon the government then to join us in a public vote. It’s difficult to judge each stage, but that’s the sequence I think that we’ll inevitably go through over this period.If that’s not possible, we’ll be calling upon the government then to join us in a public vote. It’s difficult to judge each stage, but that’s the sequence I think that we’ll inevitably go through over this period.
BBC political editor Laura Kuenssberg asked the shadow chancellor: “It is inevitable that if a vote of no confidence didn’t bring down the government and a general election, it is inevitable - to use that word that you just used - that there’d be another vote?” McDonnell replied:BBC political editor Laura Kuenssberg asked the shadow chancellor: “It is inevitable that if a vote of no confidence didn’t bring down the government and a general election, it is inevitable - to use that word that you just used - that there’d be another vote?” McDonnell replied:
That’s right. Our policy is if we can’t get a general election, then the other option which we’ve kept on the table is a people’s vote.That’s right. Our policy is if we can’t get a general election, then the other option which we’ve kept on the table is a people’s vote.
Is McDonnell stepping more closely to another referendum? sounds like it here... listen for yourself https://t.co/L4kIIEYAbLIs McDonnell stepping more closely to another referendum? sounds like it here... listen for yourself https://t.co/L4kIIEYAbL
In advance of Theresa May’s visit to Scotland this afternoon, the Scottish government’s constitutional relations secretary, Michael Russell, has accused the prime minister of trying to “cover up” the damage done by Brexit in the just-published Brexit analysis. Russell said:In advance of Theresa May’s visit to Scotland this afternoon, the Scottish government’s constitutional relations secretary, Michael Russell, has accused the prime minister of trying to “cover up” the damage done by Brexit in the just-published Brexit analysis. Russell said:
The UK government is now wilfully and disgracefully pressing ahead with a policy it knows will hit living standards and the economy.The UK government is now wilfully and disgracefully pressing ahead with a policy it knows will hit living standards and the economy.
Worse, it is trying to cover up the scale of the damage by modelling proposals it put forward in the summer that the EU has already rejected, instead of the blindfold Brexit they are actually proposing.Worse, it is trying to cover up the scale of the damage by modelling proposals it put forward in the summer that the EU has already rejected, instead of the blindfold Brexit they are actually proposing.
Meanwhile, the Westminster Brexit publicity blitz continues with May’s deputy David Lidington booked to give evidence to a joint meeting of Holyrood’s finance and Europe committees tomorrow afternoon. Lidington visited Edinburgh last Friday but was rebuked by first minister Nicola Sturgeon for giving her too little notice to arrange a meeting. We’re still waiting to hear whether Sturgeon will manage to meet May while she is in Scotland today.Meanwhile, the Westminster Brexit publicity blitz continues with May’s deputy David Lidington booked to give evidence to a joint meeting of Holyrood’s finance and Europe committees tomorrow afternoon. Lidington visited Edinburgh last Friday but was rebuked by first minister Nicola Sturgeon for giving her too little notice to arrange a meeting. We’re still waiting to hear whether Sturgeon will manage to meet May while she is in Scotland today.
The European court of justice will deliver the opinion from its advocate general in the case about whether the UK can revoke article 50 next Tuesday.The European court of justice will deliver the opinion from its advocate general in the case about whether the UK can revoke article 50 next Tuesday.
#Brexit: Case C-621/18 Wightman on revocation of Article 50 - Advocate General Campos Sánchez-Bordona will deliver his opinion on 4th December#Brexit: Case C-621/18 Wightman on revocation of Article 50 - Advocate General Campos Sánchez-Bordona will deliver his opinion on 4th December
UPDATE: I’ve corrected this. The opinion from the advocate general is not the same as the court’s judgement, which is how I described it earlier.UPDATE: I’ve corrected this. The opinion from the advocate general is not the same as the court’s judgement, which is how I described it earlier.
Hi Andrew, the opinion of the Advocate General isn't exactly the same as the ruling. I believe @davidallengreen compared it to Mark Lawrenson giving his premier league predictions earlier...Hi Andrew, the opinion of the Advocate General isn't exactly the same as the ruling. I believe @davidallengreen compared it to Mark Lawrenson giving his premier league predictions earlier...
FURTHER UPDATE: In the comments LostinBruges has more on the significance of the advocate general’s opinion. S/he posted this:FURTHER UPDATE: In the comments LostinBruges has more on the significance of the advocate general’s opinion. S/he posted this:
The Court of Justice of the European Union (CJEU) has one judge from each Member State, assisted by eleven advocates general whose role is to consider the written and oral submissions to the court in every case that raises a new point of law, and deliver an impartial opinion to the court on the legal solution. Although Advocates General are full members of the court, they do not take part in the court’s deliberations, and the Advocate General’s opinion is not binding on the court. Although the court reaches the same solution as the Advocate General more often than not, it cannot usually be stated that the advocate general’s opinion has been ‘followed’ in any given case, because the court may have reached the same conclusion via different legal reasoning. The role of Advocate General is created by Article 19(2) of the Treaty on European Union and Articles 253 and 254 of the Treaty on the Functioning of the European Union.The Court of Justice of the European Union (CJEU) has one judge from each Member State, assisted by eleven advocates general whose role is to consider the written and oral submissions to the court in every case that raises a new point of law, and deliver an impartial opinion to the court on the legal solution. Although Advocates General are full members of the court, they do not take part in the court’s deliberations, and the Advocate General’s opinion is not binding on the court. Although the court reaches the same solution as the Advocate General more often than not, it cannot usually be stated that the advocate general’s opinion has been ‘followed’ in any given case, because the court may have reached the same conclusion via different legal reasoning. The role of Advocate General is created by Article 19(2) of the Treaty on European Union and Articles 253 and 254 of the Treaty on the Functioning of the European Union.
Jeremy Corbyn’s spokesman was keen to pour cold water on the idea that John McDonnell’s comment at a Guardian Live event last night, that a second referendum was an option Labour could “seize upon”, could mark a shift in Labour’s stance.Jeremy Corbyn’s spokesman was keen to pour cold water on the idea that John McDonnell’s comment at a Guardian Live event last night, that a second referendum was an option Labour could “seize upon”, could mark a shift in Labour’s stance.
Asked about it after PMQs, he gave a prolix recitation of Labour’s position, as agreed at the party’s conference in Liverpool, that should the government lose the vote, and a general election not be called, “all options would be on the table”.Asked about it after PMQs, he gave a prolix recitation of Labour’s position, as agreed at the party’s conference in Liverpool, that should the government lose the vote, and a general election not be called, “all options would be on the table”.
However, he insisted that, “we do not regard no deal as any kind of option” and declined to set out any others, aside from trying to rally parliament behind Labour’s alternative approach.However, he insisted that, “we do not regard no deal as any kind of option” and declined to set out any others, aside from trying to rally parliament behind Labour’s alternative approach.
We’ve set our alternative plan for a deal that would work for the whole country. The key point is that the option of Labour’s alternative plan has to be on the table, and we believe there is majority support for it in parliament, and it would also command majority support in the country, across both Leave and Remain voters.We’ve set our alternative plan for a deal that would work for the whole country. The key point is that the option of Labour’s alternative plan has to be on the table, and we believe there is majority support for it in parliament, and it would also command majority support in the country, across both Leave and Remain voters.
Asked whether Labour would immediately table a vote of no confidence in the government, if the vote on 11 December falls, he said:Asked whether Labour would immediately table a vote of no confidence in the government, if the vote on 11 December falls, he said:
If the government is unable to get its deal through parliament on something that’s absolutely crucial to its entire programme and to the future of the country, it will have lost the confidence of parliament in any case.If the government is unable to get its deal through parliament on something that’s absolutely crucial to its entire programme and to the future of the country, it will have lost the confidence of parliament in any case.
Corbyn’s spokesman repeated Labour’s opposition to a Norway-style deal - an option that appears to be gaining ground in Westminster. “We’ve said in relation to the Norway option that we just don’t think it works for Britain and we’ve said that all along,” he said.Corbyn’s spokesman repeated Labour’s opposition to a Norway-style deal - an option that appears to be gaining ground in Westminster. “We’ve said in relation to the Norway option that we just don’t think it works for Britain and we’ve said that all along,” he said.