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Thursday's Business and Politics round-up

21 Feb 2019

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Good morning,

Prime Minister Theresa May and President of the European Commission Jean-Claude Juncker met in Brussels yesterday to discuss legally-binding guarantees about the Irish border.

Mrs May and Mr Juncker released a joint statement last night in which they outlined measures to change the Brexit withdrawal deal package. It included reassuring “the temporary nature” of the Irish backstop through “appropriate legal assurance” and changes to the non-binding political declaration on the future relationship between the UK and EU to “increase confidence in the focus and ambition of both sides”.

Both sides have also agreed to look at “the role alternative arrangements could play in replacing the backstop in the future” to address concerns of MPs who fear that the insurance policy would result in the UK being trapped in a customs union with the EU indefinitely.

Negotiators will now start detailed work on the agreed revisions, as they seek to get the backing of enough MPs. The Prime Minister will attend an EU-Arab League summit in Egypt this weekend, which will give her a chance to press her case with European leaders.

While this certainly appears to be a positive development, with just more than five weeks to go until the Brexit date, Mrs May said that “time is of essence”.

Downing Street haven’t confirmed if they would be holding a meaningful vote on the deal next week, but an official added that they “hope we’ll be able to show significant progress by that point”.


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Should I stay or should I go?

The momentum behind the new Independent Group of MPs is continuing, after three Conservative Party MPs resigned from the party yesterday to sit in Parliament as independent members. The MPs – Anna Soubry, Sarah Wollaston and Heidi Allen - have written to the Prime Minister confirming their departure and criticised the Government’s “disastrous handling” of Brexit and “shift to the right”. In their statements following the announcement, the MPs expressed concerns that Brexit had undone “all the efforts to modernise” the Tory party. They are all outspoken opponents of Brexit and support another EU referendum.

In response, Mrs May said she was “saddened” by her colleagues’ departure, but did not agree that the party had moved to the right, saying they will continue to offer “decent, moderate and patriotic politics that I believe people of the UK deserve”. The departure has reduced the Government’s working majority to nine MPs.

The Independent Group, which was launched by seven Labour MPs on Monday, is aiming to seize the centre ground of British politics and now has more MPs than the Democratic Unionist Party and is the same size as the Liberal Democrats.

There are speculations that more MPs could join the group in the coming weeks, with Ms Allen saying “a third” of Tory MPs were fed up with the direction in which the party is going, while former attorney general Dominic Grieve said he would quit if there was no-deal Brexit. Same goes for Labour, with MP Ian Austin reportedly saying he would think “long and hard” about his future in the Labour party.

Merger danger

The Competition and Markets Authority (CMA) has expressed “extensive concerns” about Sainsbury’s proposed acquisition of Asda, saying that the move could result in “higher prices, reduced quality and choice, and a poorer overall shopping across the UK”. The regulator said it could block the sale or would have to force the sale of a large number of stores, but added that it is “likely to be difficult” for the companies to “address the concerns”.

The takeover, worth £7.3bn, was agreed back in April, but has been awaiting the decision from the CMA who have been investigating the impact the move would have on consumers. Sainsbury’s and Asda, the merger of which would overtake Tesco as the leading supermarket in the UK, have insisted that the combination would drive prices down. However, the regulator disagreed – the CMA identified 629 areas where they believe competition in supermarkets would be significantly reduced.

Responding to the findings, both companies said the regulator “fundamentally misunderstands how people shop”, while Sainsbury’s boss called the findings “outrageous”. Sainsbury’s and Asda will now have a chance to respond to the CMA’s provisional findings before the final decision is published on 30 April.

Come shop with me

A Committee of MPs has urged the Government to “level the playing field” for High Street retailers by raising taxes for online companies like Amazon, as town centres risked becoming ghost towns as a result of changing shopping habits. The recommendations include an online tax, increase to VAT, a sales tax and taxes on deliveries and packaging for online retailers. 

The report by the Housing, Communities and Local Government Committee also called for lower business rates and more regeneration in town centres. “The burden of business rates falls unfairly. High street retailers are paying more than their fair share ... while online retailers are not contributing enough,” it said.

A fifth of retail sales in the UK are processed online, according to the report, and it is expected that the number will continue to grow. In response, the Government said it was investing in towns to ensure that high streets “adapt and thrive for generations”.


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