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Thursday's Business and Politics round-up

27 Apr 2017
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Insider Media - IoD creates North East ambassador network

Brexit in the City

Barclays chief executive Jes Stanley has warned that access to talented workers after Brexit will be 'tremendously important' for the UK's financial sector and suggested that immigration, rather than trade, will be the biggest issue for the City of London as the UK leaves the EU. Speaking at a conference in London yesterday alongside HSBC chairman Douglas Flint, Mr Stanley said that securing immigration was more important than retaining EU passporting rights, which allow banks to serve clients across the EU without the need for licenses in individual countries.

Mr Stanley continued to say that 'Intellectual capital is the most important asset that London as a financial centre has. If other countries limit the free flow of talent, we'd hope the UK does not follow that trend.' He added that banks are increasingly becoming technology companies and therefore they need the best engineers - one of the areas where there is a lack of British-grown specialists. Keeping the talent from the EU, as well as the rest of the world, should be a top priority for the Government, said Barclays boss.

These comments suggest that there has been a shift in priorities for the financial sector, as up until now it has been assumed that retaining passporting rights was the priority for the City. Both Mr Stanley and HSBC's Mr Flint said that contingency plans to deal with the passporting issue are going to be triggered soon.

Meanwhile, France has warned Britain should not assume that the financial sector will be included in any free trade deal after Brexit and that continued easy access to EU markets must bind the country with continued regulations and supervision from Brussels. These amendments were made to the draft EU document outlining EU's negotiating terms on Monday. It will be reviewed by ministers today and is expected to be signed off at Saturdays EU27 summit.

Among other amendments, diplomats said the document would say that the EU wants Britain to pay Brussels a share of financial commitments made from the bloc's seven-year budget until the end of 2020 - nearly two years after Brexit takes effect on March 30, 2019.

Mr 'Mugwump'

Foreign Secretary Boris Johnson has made his first intervention against Labour leader Jeremy Corbyn, accusing him of being a threat the UK and describing him as 'mutton-headed, old mugwump.' Writing in the Sun, Mr Johnson criticised Mr Corbyn for his expressed reluctance to use lethal force, opposing nuclear weapons and campaigning against Nato. The Foreign Secretary also commented that with Mr Corbyn as prime minister, Britain would be ill-equipped to deal with an assertive Russia, North Korea's 'semi-deranged regime' and the so-called Islamic State. 'He seems to have no grasp of the need for this country to be strong in the world,' added Mr Johnson.

In an interview on Sunday, the Labour leader insisted that he supported Britain's military forces and said that he would not recall 850 British troops sent to Estonia as part of a Nato deployment on Russia's eastern side. He also insisted that he was not planning on getting rid of Britain's nuclear deterrent, although he commented that he was opposed to the 'first strike' use of nuclear weapons.

Mr Johnson has framed the election as a straight choice between Theresa May and Jeremy Corbyn. In a speech to foreign diplomats yesterday, he said that the Conservative government was committed to 'upholding the country's values and strengthening Britain's national interests' around the world.

Made in America

US President Donald Trump's administration has proposed corporate tax cuts of 20%. Treasury Secretary Stephen Mnuchin yesterday unveiled that corporation tax would be cut from 35% to 15%, which would boost economy and bring jobs back to the country. The reduction would give the United States one of the lowest corporate tax rates in the West - the UK's corporation tax is currently set at 20%.

The decision will now face Congress, where Mr Trump is expected to receive criticism from Democrats in both Houses, especially because he has been refusing to publish his own tax paperwork. Critics are also likely to highlight that the move would benefit his businesses and save him millions. Democratic Party chairman Tom Perez renewed the call for Mr Trump to release his tax returns so that the country could see how much he would benefit from the tax cuts.

The cost of the plan is another issue that has arisen following the announcement. Mr Mnuchin and Gary Cohn, director of the White House National Economic Council, did not provide much detail on how much the cuts would cost the federal government. Mr Mnuchin commented that the tax plan would pay for itself 'through growth, through deductions and closing loopholes.' However, economists have said that the policy would add trillions of dollars to the deficit over the next decade.

Other suggestions outlined in the plan include some sort of repatriation tax, giving big companies an incentive to bring back money they hold overseas; tax breaks for childcare incentives; a cut in individual rates; and elimination of seven existing tax brackets, which would be replaced with three brackets at rates of 10%, 25% and 35%.

Saturday will mark President Trump's 100 days in office - the New York Times has called the period 'the worst on record'.

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