United Kingdom

ALEX BRUMMER: Stirring up No Deal Brexit fears

Last December's election, the exit from the EU on January 31 and the colossal damage being done to the UK and continental economies by Covid-19 have done little to take the edge off the Brexit divide.

The manner in which the discredited management of Nissan chooses to use its Sunderland plant as a political pawn is disconcerting.

It inflicts terrible uncertainty on those whose livelihoods are dependent on the car maker, and places Brexit centre stage. 

 The Bank of England's reiteration of the need for the banking system to be prepared for No Deal shows an additional concern

Global motor manufacturing is in deep trouble as a result of overcapacity and the battle to conquer green technology.

Throwing Nissan a bone, as Theresa May's government attempted, is not the UK's best way of combating the Japanese car maker's threat.

Instead, the Government should ramp up R&D spend and support for green tech for cars, including fuel cells and e-drive systems pioneered by Melrose-GKN.

Boris Johnson owes an electoral debt of gratitude to the North East. But motors are not the only area of tension with the EU.

The Bank of England's reiteration of the need for the banking system to be prepared for No Deal shows an additional concern. 

In his previous role as chief executive of the Financial Conduct Authority, the Bank's Governor, Andrew Bailey, was deeply involved in making sure that the City was prepared and could survive No Deal.

The coronavirus has required special measures. Rainy day capital has been committed to pandemic lending and new audit rules mean banks quantify risk exposures more speedily, as was seen with first-quarter provisions.

It is impossible for any UK government to brush aside the need for more certainty on financial services – financial sector exports to the continent are worth £26billion a year.

Britain could get by with a simple 'equivalence' financial regime over the short-haul, which would require aping EU rule making. 

But a binding joint approach with Brussels would be the gold standard if certainty is the goal. Hopefully, it won't come down to a trade-off between fishing and finance.

The other No Deal worry for the UK is the current desolate state of the global trade enforcer, the World Trade Organisation.

Its director-general, Roberto Azevedo, resigned last month amid chaos over enforcement of trade rules, aggravated by American distrust.

Even for enthusiastic Brexiteers, the prospect of reverting to the rules of a dysfunctional organisation makes No Deal look far more daunting.

Defensive play

One hesitates to draw attention to the lesser known jewels of UK's defence and aerospace for fears of stoking the interest of private equity or Chinese predators.

Chemring Group shows that there is life for Britain's high-tech sectors in the age of pandemic. 

The shares shot up by more than a quarter after it reported a 46 per cent lift in revenues, a 24 per cent jump in profits and a 95 per cent-filled order book.

Strength in sensors and countermeasures used on US defence equipment for the US Navy and on Husky military vehicles, which help detect improvised explosive devices, means Chemring is in the frontline in protecting the West. 

The biggest threat could be a cut in defence budgets as governments pay for Covid-19.

All the more reason for the UK to ramp up support for the Tempest fighter project.

Woodford detritus

The suspension, never to come back, of Neil Woodford's Equity Income fund on June 3 last year is by no means the end of the story.

The Financial Ombudsman Service is investigating 107 complaints against the fund, advisers and platforms such as Hargreaves Lansdown (HL), which favoured Woodford's empire. 

The outcome of a Financial Conduct Authority probe into the Woodford collapse also is awaited.

RGL Management and class action legal specialists Wallace are launching a separate action against HL, alleging its house funds sold down Woodford holdings while promoting them on its Wealth 50 best buy list.

For their clients, they are seeking compensation caused by the liquidation of the Woodford flagship fund and loss of alternative savings opportunities.

Remarkably, a year later HL is still to unveil its much previewed plans for reforms of the best buy list and more rigorous investment decisions. To do so might look like an admission of culpability.

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