Pound slips below $1.25 on disappointing growth data

By Maiya Keidan

LONDON (Reuters) – Sterling fell below $1.25 on Tuesday for the first time in a week and reached a 14-day low against the euro after data showed Britain’s economy was recovering more slowly than forecast.

Gross domestic product rose by 1.8% in May after falling by a record 20.8% in April, the Office for National Statistics said, well below forecasts in a Reuters poll.

“You saw sterling moving lower almost immediately after the announcement and it was a big disappointment and I think that it’s also the realization that maybe the V-shaped recovery doesn’t apply to the UK to the same extent,” said Morten Lund, an analyst at Nordea.

Adding to fears was a warning from authorities that another, more deadly COVID-19 wave could kill up to 120,000 Britons over the winter.

The pound touched a low of $1.2485, down 0.5% on the day. It slipped 0.7% to the euro at 91.03 pence.

Broad dollar weakness has allowed sterling to gain around 0.7% versus the greenback this month but against the euro it has lost 0.5% since the start of July.

Consumer data also indicated a tentative recovery. The British Retail Consortium said retail sales values rose by 3.4% in annual terms in June, and Barclaycard said overall consumer spending fell 14.5% in annual terms in June, the smallest decline since lockdown began.

Money markets price in the Bank of England’s cutting rates below 0% only next March. But government two-year bond yields plumbed a record low around minus 0.16% and 10-year yields slipped 2.5 basis points to 0.14%.

FTSE mid-cap shares, which tend to be mostly domestically oriented, fell 1.6% versus a 0.6% decline for the exporter-laden FTSE100.

Investors are also waiting for more news on Britain’s negotiations with the European Union on concluding a trade deal for the post-Brexit period. Britain left the bloc on Jan. 31, with a one-year transition period to iron out a future relationship.

“My feeling is the market is not fully pricing in the likelihood of a hard Brexit,” said Colin Asher at Mizuho.

“There has been very little progress on negotiations and even if there is a deal, there’s not much time to put a lot in it.”

(Reporting by Maiya Keidan, editing by Larry King and Ed Osmond)

Europe to Britain: So long, farewell, auf Wiedersehen, adieu

ATHENS/MADRID (Reuters) – With sorrow, some support for Brexit and even hope of a return, Europeans from across the EU’s 27 remaining members bade farewell to the United Kingdom on the eve of its historic departure.

The United Kingdom leaves the European Union an hour before midnight on Friday, casting off into an uncertain future that also challenges Europe’s post-World War Two project of forging unity from the ruins of conflict.

“Farewell, bye bye my love!” said Rudolf Stockey, speaking to Reuters in German.

From across Europe, EU citizens wished the United Kingdom the best after 47 years of membership. Some expressed hopes that the British might one day return to the European fold.

“Come back. I have no idea. We are not so different,” said Madrid resident Marcos Leon.

Some expressed concern that one of Europe’s biggest powers was leaving the club.

“I am very sorry that the United Kingdom is exiting. I think it is a very, very bad thing for Europe, for the United Kingdom, for everything,” said Sara Invitto, from Milan. “Goodbye!”

“I think it’s a great waste,” said Belgian Francois Heimans, who expressed worry over populism.

But some in Greece and Poland said the British were doing the right thing.

“Have a good Brexit guys,” said Petros Papakyriakos from Greece. “They are doing what is right for their economy, and I think a lot of countries will follow their lead.”

Gdansk resident Henryk Kulesza said: “It’s good that Great Britain is leaving the European Union. It’s about time. I think that Poland should do the same thing.”

(Writing by Guy Faulconbridge; Reporting across Europe by Antonio Denti, Emily Roe, Christian Levaux, Ciara Luxton, Deborah Kyvrikosaios, Vassilis Triandafyllou, Lewis Macdonald, Dominik Starosz, Polly Rider, Ben Dadswel; Editing by Giles Elgood)

Wanted: Weirdos and misfits – aide to UK’s Johnson is hiring

LONDON (Reuters) – The senior adviser to Prime Minister Boris Johnson, who plotted Brexit and steered his boss to last month’s election triumph, is on the lookout for “weirdos and misfits with odd skills” to help bring new ideas to Britain’s government.

“We want to improve performance and make me much less important — and within a year largely redundant,” Dominic Cummings said in a post on his blog on Thursday.

“We do not have the sort of expertise supporting the PM and ministers that is needed. This must change fast so we can properly serve the public.”

Cummings, who has made no secret of his disdain for much of the way Britain’s civil service operates, said he had been lucky to have worked with some fantastic officials in recent months.

“But there are also some profound problems at the core of how the British state makes decisions,” he said.

Cummings was one of the senior campaigners behind the Vote Leave victory in the 2016 Brexit referendum and was described by former Prime Minister John Major as “political anarchist.”

In his blog, Cummings said rapid progress could now be made on long-term problems thanks to the combination of policy upheaval after Brexit, an appetite for risk among some officials in the new government and Johnson’s big majority in parliament.

The government was looking to hire data scientists and software developers, economists, policy experts, project managers, communication experts and junior researchers as well as “weirdos and misfits with odd skills,” he said.

“We need some true wild cards, artists, people who never went to university and fought their way out of an appalling hell hole,” Cummings said.

(Writing by William Schomberg; Editing by Lisa Shumaker)

Take Five: What’s the deal?

LONDON (Reuters) –

1/AFTER PHASE ONE COMES PHASE TWO

U.S. President Donald Trump and Chinese officials have agreed to a “phase one” trade deal that includes cutting U.S. tariffs on Chinese goods.

Washington has agreed to suspend tariffs on $160 billion in Chinese goods due to go into effect on Dec. 15, Trump said, and cut existing tariffs to 7.5%.

The agreement covers intellectual property, technology transfer, agriculture, financial services, currency, and foreign exchange, according to Washington’s Trade Representative.

Neither side offered specific details on the amount of U.S. agricultural goods Beijing had agreed to buy – a key sticking point of the lengthy deal negotiations. News of the trade deal saw U.S. stocks romp to fresh record levels. But few doubt that the rollercoaster is over yet.

While Trump announced that “phase two” trade talks would start immediately, Beijing made it clear that moving to the next stage of the trade negotiations would depend on implementing phase one first. While markets cheered the December rally, few expect the trade deal rollercoaster ride to be quite over yet.

 

2/MORE NICE SURPRISES, PLEASE!

First clues as to whether euro zone powerhouse Germany can avoid a fourth quarter recession emerge on Monday when advance PMI readings for November are released globally.

The economic activity surveys, a key barometer of economic health, come after Citi’s economic surprise index showed euro zone economic data beating consensus expectations at the fastest pace since February 2018. The latest surprise was a 1.2% rise in German exports in October, defying forecasts of a contraction.

Hopes are high that exports and private consumption, which helped Germany skirt recession, will hold up. Last month’s PMI data showed manufacturing remained in deep contraction across the bloc.

A Reuters poll showed expectations of a modestly higher 46.0 manufacturing reading in the euro zone but that’s still far below the 50-mark which separates growth from contraction. Services, which have held up better so far, are expected to grow modestly from November, at 52.0.

Graphic: Citi surprise index most positive since Feb 2018, https://fingfx.thomsonreuters.com/gfx/mkt/12/9901/9813/Citi%20index.png

3/BEWARE THE BOJ

Japan’s central bank meets on Thursday with the global economic outlook “relatively bright,” according to Governor Haruhiko Kuroda.

Growth green shoots, a possible U.S.-China trade deal and something nearing certainty on Brexit has got almost everyone expecting the BOJ will do very little: Interest rates are at -0.1% and the bank has eased off bond buying – even though the bank’s balance sheet is bursting with negative-yielding paper.

The government has flagged a gigantic $122 billion stimulus package to keep things moving after next year’s Olympics. Yet the business mood is dire with Friday’s “tankan” survey at its lowest reading since 2013. Big manufacturers – especially automakers – are gloomiest, as the trade war takes its toll.

The Bank of Japan has justified standing pat on the view that robust domestic demand will cushion the hit. It blames the weather and a sales tax for recent patchy data. But another week of dollar weakness will not have gone unnoticed in Tokyo, where a cheaper yen is much desired. A surprise on Tuesday export data forecast to show further contraction and Thursday’s inflation reading could jolt yen longs out of their slumber.

4/JOHNSON, AND MORE JOHNSON

A thumping election win for Prime Minister Boris Johnson has raised hopes that 3-1/2 years of Brexit-fuelled chaos will finally end.

Expectations that he may swing slightly nearer the centre of his Conservative Party, sidelining the fiercest eurosceptics, and ease the path towards a free-trade deal with the European Union have sent sterling and British shares surging.

Yet there are signs of caution, with sterling stalling around $1.35. Further gains will hinge on Johnson’s new cabinet, how the global growth and trade war backdrop pans out and what the Bank of England might do.

At the central bank’s Dec. 19 meeting, markets will watch for any shifts in its views on inflation, the UK economy and the interest rate outlook for 2020. While policymakers have skewed dovish of late amid a torrent of dismal data and sub-target inflation, the election result – and a hoped-for growth recovery – have seen money markets halve the probability of an end-2020 cut to 25%.

Without more clarity, investors might just be wary of chasing sterling much higher.

Graphic: UK economic indicators, https://fingfx.thomsonreuters.com/gfx/mkt/12/9958/9869/GB.png

5/SWEDEN RETURNS TO ZERO?

While most central banks are busy pondering whether to hold or cut interest rates, Sweden may swim against the tide and deliver a 25 basis-point rate hike on Dec. 19. That will end half a decade of negative interest rates in the country and make it the first in Europe to pull borrowing costs from sub-zero territory.

Policymakers flagged a rate hike in October and recent data showing inflation rising to 1.7% — just off the 2% target — cemented those expectations. The crown’s rallied to eight-month highs versus the euro, up almost 5% since October.

The proposed interest rate increase has its critics, who cite still-sluggish inflation and factory activity at its weakest since 2012.

Meanwhile, neighbouring Norway’s policy meeting, scheduled for the same day, may be less exciting as no change is expected. Investors remain baffled by the Norwegian crown’s weakness – despite policy makers delivering four rate hikes since Sept 2018, it’s at near record lows to the euro.

Graphic: Swedish crown , https://fingfx.thomsonreuters.com/gfx/mkt/12/9961/9872/crown.png

(Reporting by Alden Bentley in New York, Tom Westbrook in Singapore, Sujata Rao, Elizabeth Howcroft and Yoruk Bahceli in London, compiled by Karin Strohecker; edited by Philippa Fletcher)

Britain speeds towards Brexit as Johnson wins large majority in election

By Guy Faulconbridge and William James

LONDON (Reuters) – Prime Minister Boris Johnson won a resounding election victory on Friday that will allow him to end three years of political paralysis and take Britain out of the European Union by Jan. 31.

Brexit represents the country’s biggest political and economic gamble since World War Two, cutting the world’s fifth largest economy adrift from the vast trading bloc and threatening the integrity of the United Kingdom.

For Johnson, who campaigned on a vow to “Get Brexit Done”, victory was a vindication after anti-Brexit opponents tried one maneuver after another to thwart him during his first chaotic months in office.

“We will get Brexit done on time by the 31st of January, no ifs, no buts, no maybes,” a triumphant Johnson told supporters at a rally in London.

“Leaving the European Union as one United Kingdom, taking back control of our laws, borders, money, our trade, immigration system, delivering on the democratic mandate of the people,” he said, reprising the refrains of his successful Brexit referendum campaign of 2016.

Sterling soared, on course for one of its biggest one-day gains in the past two decades

Nearly half a century after Britain joined the EU, Johnson must now strike new international trade deals, preserving London’s position as a top global financial capital and keeping the United Kingdom together.

That last goal looks more challenging, with Scotland voting for a nationalist party that wants an independence referendum, and Irish nationalists performing strongly in Northern Ireland.

“Boris Johnson may have a mandate to take England out of the European Union. He emphatically does not have a mandate to take Scotland out of the European Union,” said Scotland’s first minister, Nicola Sturgeon.

Her Scottish National Party (SNP) won 48 of Scotland’s 59 seats in the national parliament.

RED WALL CRUMBLES

In England, the Conservatives won large numbers of seats in the opposition Labour Party’s so-called Red Wall, declining industrial heartlands once hostile to Johnson’s party.

Brexit, which has shattered old party loyalties and divided Britain along new fault lines, was the cause of the shift. In the Red Wall, a majority of voters favored leaving the European Union and rejected Labour leader Jeremy Corbyn’s ambiguous stance on the issue.

In a symbolic win, the Conservatives took Sedgefield, once held by former Prime Minister Tony Blair, Labour’s most successful leader.

Educated at Eton, the country’s most elite private school, and known for his bombastic rhetoric, Johnson seemed to critics to be an unlikely candidate to win over working class communities, but Brexit helped him redraw the electoral map.

In his victory speech, he struck a rare note of humility as he addressed voters who had deserted Labour in his favor.

“Your hand may have quivered over the ballot paper before you put your cross in the Conservative box, and you may hope to return to Labour next time round, and if that is the case, I am humbled that you have put your trust in me,” he said.

U.S. President Donald Trump was quick to congratulate Johnson.

“Britain and the United States will now be free to strike a massive new Trade Deal after BREXIT. This deal has the potential to be far bigger and more lucrative than any deal that could be made with the E.U.,” Trump wrote on Twitter “Celebrate Boris!”

European politicians were less enthusiastic.

German lawmaker Norbert Roettgen of Chancellor Angela Merkel’s party said “the British people have decided and we have to accept their choice. With Johnson’s victory Brexit has become inevitable”.

NO MORE DELAYS

Johnson, 55, will now be able to lead Britain out of the EU by Jan. 31, 10 months after the original deadline of March 29, which was repeatedly pushed back as a gridlocked parliament failed to take any clear decisions on Brexit.

However, with the complex task of negotiating his country’s future relationship with the bloc still ahead of him, he may struggle to reunite a divided nation.

Many voters regard him as a populist charlatan who played fast and loose with the facts and made unrealistic promises.

But his landslide win marks the ultimate failure of the anti-Brexit camp, who tried to thwart the 2016 referendum vote through complex legislative maneuvers and could not convert huge anti-Brexit street protests into a coherent political strategy.

With Labour split and unclear on Brexit, the strongly anti-Brexit Liberal Democrats had hoped to do well but they won only 11 seats, a crushing result. Party leader Jo Swinson lost her seat in Scotland to the SNP and resigned.

With results in from all but one of the 650 parliamentary seats, the Conservatives had won 364, their biggest election win since Margaret Thatcher’s 1987 triumph.

Labour, led since 2015 by the veteran socialist Corbyn, had won just 203 seats, the party’s worst result since 1935.

Corbyn’s offer of nationalizations and big state spending failed to win over voters, while his equivocal position on Brexit left many angry and confused, especially in Red Wall areas where large majorities had voted for Brexit in 2016.

Corbyn said he would quit as Labour leader after a “process of reflection”.

The party now faces a brutal battle between Corbyn’s socialist followers and his centrist critics.

A SOFTER BREXIT?

After Jan. 31, Britain will enter a transition period during which it will negotiate a new relationship with the EU.

This can run until the end of 2022, but the Conservatives have pledged not to extend the transition beyond 2020.

A big majority may allow Johnson to extend trade talks beyond 2020 because he could overrule the Brexit hardline European Research Group (ERG) faction in the party.

“The bigger the Tory majority of course the less influence over this the ERG and Eurosceptics will have,” said hardline Brexiteer Nigel Farage, whose anti-EU campaigning played a major part in persuading former Conservative Prime Minister David Cameron to call the 2016 referendum.

“It will be called Brexit but it won’t really be,” Farage said.

Johnson was helped by Farage’s Brexit Party, which stood down hundreds of candidates to prevent the pro-Brexit vote from being split. The insurgent party poached a significant number of voters from Labour.

In his victory speech, Johnson gave no details of how he would handle Brexit after Jan. 31. Instead, he made a typically light-hearted offer to his supporters.

“Let’s get Brexit done but first, my friends, let’s get breakfast done.”

 

(Reporting by Alistair Smout, Elizabeth Piper, David Milliken, Kate Holton, Kylie MacLellan, Andy Bruce, Paul Sandle, William James, Michael Urquhart, Tommy Reggiori Wilkes, Costas Pitas and Andy MacAskill in London and Michel Rose in Brussels; Writing by Guy Faulconbridge, Michael Holden and Estelle Shirbon; Editing by William Maclean and Giles Elgood)

 

 

UK PM Johnson makes final Brexit offer to cool EU reception

By Elizabeth Piper, William James and Kylie MacLellan

MANCHESTER, England (Reuters) – Prime Minister Boris Johnson made a final Brexit offer to the European Union on Wednesday and said that unless the bloc compromised, Britain would leave without a deal at the end of this month.

In what supporters cast as a moment of truth after more than three years of crisis, Johnson stuck to his hard line on Brexit, giving some of the first, albeit vague, details of what he described as “constructive and reasonable proposals”.

With the Oct. 31 Brexit deadline moving closer, Johnson’s aides cast the proposals to be delivered to Brussels as London’s final gambit to try to break the deadlock – principally over arrangements for the Irish border – and find a path to a smooth departure from the EU.

“We are coming out of the EU on October 31, come what may,” Johnson told party members, after expressing “love” for Europe in a speech that focused mostly on domestic issues such as health, the economy and crime.

“We are tabling what I believe are constructive and reasonable proposals which provide a compromise for both sides,” Johnson said. “Let us be in no doubt that the alternative is no deal.”

Many diplomats fear the United Kingdom is heading towards a no-deal or another delay as they say the British proposals are not enough to get an agreement by Oct. 31. Johnson said further delay was “pointless and expensive”.

The initial reaction from other European capitals was cool. Berlin and Paris said they were awaiting details.

EU diplomats and officials in Brussels were less polite with one calling the reported proposals “fundamentally flawed”.

“If it’s take it or leave it, we better close the book and start talking about the modalities of an extension,” a senior EU official told Reuters.

“Essentially it is a non-runner,” said another EU diplomat.

NO DEAL?

Quitting the EU is Britain’s most significant geopolitical move since World War Two. It is, though, still uncertain if it will leave with a deal or without one – or even not leave at all.

Deutsche Bank said it saw a 50 percent chance of a no-deal Brexit by the end of the year. This would spook financial markets, send shockwaves through the global economy and divide the West. It could also bring chaos to British ports and disrupt supply lines in goods from food products to car parts.

Despite Johnson’s repeated promises to deliver Brexit on Oct. 31, parliament has passed a law stating that Britain must request a delay if it does not have a deal by Oct. 19. Johnson has repeatedly refused to say how he will get around the law.

A senior British official said: “The government is either going to be negotiating a new deal or working on no deal – nobody will work on delay.”

Ireland, whose 500 km (300 mile) land border with the United Kingdom, will become the frontier of the EU’s single market and customs union, is crucial to any Brexit solution.

The problem is how to prevent Northern Ireland becoming a back door into the EU market without erecting border controls that could undermine the 1998 Good Friday Agreement that ended decades of sectarian violence in Northern Ireland in which more than 3,600 people were killed.

The Withdrawal Agreement that former Prime Minister Theresa May struck last November with the EU says the United Kingdom will remain in a customs union “unless and until” alternative arrangements are found to avoid a hard border.

Johnson said Britain had compromised in putting forward a proposal to try to change that so-called backstop, an insurance policy to ensure there is no return to a hard border.

Giving little detail on his proposals, Johnson said there would be no checks at or near the Irish border. He said London would respect the 1998 peace agreement. He did not explain how.

IRELAND

Britain would “protect the existing regulatory arrangements for farmers and other businesses on both sides of the border” while Northern Ireland would leave the bloc alongside the rest of the United Kingdom, he said.

“By a process of renewable democratic consent by the executive and assembly of Northern Ireland,” Johnson said. “We will go further and protect the existing regulatory arrangements for farmers and other businesses on both sides of the border.”

He said the United Kingdom “whole and entire” would withdraw from the EU, with London keeping control of its own trade policy from the start. Technology could offer a solution, he said, without giving details.

“I hope very much that our friends understand that and compromise in their turn,” said Johnson, who took office in July after May stood down.

With the EU already pouring cold water on some of the reports of his proposal, the likelihood of a no deal appears to be rising – something Johnson’s opponents say they believe is the prime minister’s overriding goal.

John McDonnell, finance policy chief for the opposition Labour Party, described Johnson’s proposals as “a cynical attempt to force through a no-deal Brexit”.

Johnson has repeatedly said he wants a deal.

(Additional reporting by John Chalmers and Gabriela Baczynska in Brussels; Writing by Elizabeth Piper and Guy Faulconbridge; editing by Angus MacSwan)

Britain will introduce points-based immigration system: interior minister

MANCHESTER, England (Reuters) – British interior minister Priti Patel will say on Tuesday the government will end free movement and introduce an Australian-style points-based immigration system once the country leaves the European Union.

In a speech at the Conservative Party’s annual conference, Patel will say her Brexit mission is “to end the free movement of people once and for all. Instead we will introduce an Australian-style points-based immigration system.”

“One that works in the best interests of Britain. One that attracts and welcomes the brightest and the best. One that supports brilliant scientists, the finest academics and leading people in their fields. And one that is under the control of the British Government,” she will say, according to an advanced copy of her speech.

(Reporting by Elizabeth Piper, editing by William James)

Brexit ‘inferno’ lays bare a divided United Kingdom

By Guy Faulconbridge and Elizabeth Piper

LONDON (Reuters) – The fury of Britain’s Brexit “inferno” is so intense that it could encourage violence unless politicians tone down their rhetoric, the husband of a lawmaker murdered a week before the 2016 EU referendum said on Thursday.

Parliament reached boiling point on Wednesday when Prime Minister Boris Johnson and his opponents engaged in hours of vitriolic argument over Brexit, with lawmakers hurling allegations of betrayal and abuse of power across the chamber.

Jo Cox, a 41-year-old parliamentarian from the opposition Labour Party, was murdered on June 16, 2016 by Thomas Mair, a loner obsessed with Nazis and extreme right-wing ideology. She was the mother of two young children.

Cox’s husband Brendan said he was shocked by the inflammatory language on display and both sides should ponder the impact of the words they used.

When asked how his late wife might have responded, Cox said: “She would have tried to take a generosity of spirit to it and thought about how at this moment you can step back from this growing inferno of rhetoric.”

“To descend into this bear pit of polarization is dangerous for our country,” he told the BBC. “It creates an atmosphere where violence and attacks are more likely.”

Brexit has illustrated a United Kingdom divided about much more than the European Union and has fueled soul-searching about everything from secession and immigration to capitalism, empire and Britishness itself.

The rage and ferocity of the Brexit debate have shocked allies of a country that has prided itself as a confident – and mostly tolerant – pillar of Western economic and political stability.

Cox was clear that the language across the Brexit schism was troubling and that the United Kingdom needed to come together rather than tear itself apart.

Some on both sides of the debate are now using the politics of contrived outrage to argue their point. Johnson says parliament is betraying the will of the people over Brexit, while opponents cast him a dictator who has ridden roughshod over democracy to take the United Kingdom to the brink of ruin.

Parliamentary speaker John Bercow told lawmakers to stop treating each other as enemies, saying the atmosphere in the House of Commons was the worst he had known since he was elected 22 years ago.

“The culture was toxic,” Bercow said in parliament.

BREXIT SCHISM

Johnson returned to the chamber on Wednesday after the Supreme Court ruled that his decision to suspend parliament earlier this month was unlawful.

He goaded his opponents either to bring down the government or get out of the way to allow him to deliver Brexit. His opponents roared “resign” and some cast him as a cheating dictator who should stand aside after the court ruling.

Johnson provoked anger by repeatedly calling a law that forces him to ask the EU for a Brexit delay unless he can strike a deal as “the Surrender Bill”. Speaking to Conservative lawmakers on Thursday, he defended his use of the term and received support from the party.

Johnson told the 1922 Committee: “It IS a surrender act,” arguing that it hurt Britain’s negotiating stance with the EU. The prime minister added that he took threats to lawmakers very seriously.

But some were still furious over his response on Wednesday to a question about Jo Cox.

Labour’s Paula Sherriff told the House she had received death threats, some of which echoed the prime minister’s own rhetoric. Johnson replied: “I have never heard so much humbug in my life”, sparking uproar.

It was not just politicians who were angry. Johnson’s own sister Rachel described her brother’s words as a “particularly tasteless” way to refer to the memory of a murdered lawmaker.

“Words like collaborationist, traitor, betrayal, my brother using words like surrender, capitulation, as if the people who are standing in the way of the blessed will of the people as defined by 17.4 million votes in 2016 should be hung, drawn, quartered, tarred and feathered,” she told Sky News.

“I think that it highly reprehensible language to use.”

In the 2016 referendum, 17.4 million voters, or 52 percent, backed Brexit while 16.1 million, or 48 percent, voted to remain.

But after more than three years of crisis since then, it remains unclear how, when or even whether the country will leave the bloc it joined in 1973.

Nicholas Soames, grandson of Britain’s World War Two leader Winston Churchill, said the atmosphere in the chamber was the most poisonous he could remember in 37 years in parliament. “I despair, to be frank,” Soames, 71, said.

(Writing by Guy Faulconbridge; editing by Andrew MacAskill, Angus MacSwan and Giles Elgood)

Britain won’t run out of toilet paper but fruit could be in short supply after Brexit

By Alistair Smout and Noor Zainab Hussain

LONDON (Reuters) – Britain is unlikely to run out of essentials like toilet paper in the event of a no-deal Brexit but some fresh fruit and vegetables could be in short supply and prices might rise, warned supermarket bosses on Thursday.

Retailers John Lewis and Co-Operative Group and the government’s reluctant publication of a report late on Wednesday shed light on what shoppers might expect to find, or not find on supermarket shelves after October 31.

The government has demanded that supermarkets prepare for a potentially chaotic no-deal Brexit by stockpiling food, but supermarket bosses say it is almost impossible to store fresh food for any length of time and people might not find everything they want on the shelves.

Steve Murrells, Chief Executive of the Co-op, said that the firm had secured extra storage space but he expected shortages in some fresh food and subsequent price rises.

“We are very clear on where we think inflation will come through, which will be, in the main, fruit,” he said.

“We would be stockpiling the essential items that you would expect. Water, toilet paper, long life cans.”

Murrells said that fruit like apples, pears, blueberries and strawberries might have to be transported more expensively via air freight from the Southern hemisphere to avoid congested ports.

The availability of vegetables in Britain is also at risk as the European Union provides some 86% of lettuces and 70% of tomatoes, according to the British Retail Consortium (BRC).

“Clearly… in short-life fresh produce that’s imported from Europe, that would be harder, if the flow of stock is interrupted,” Rob Collins, the managing director of John Lewis’ supermarket group Waitrose, told reporters.

Prime Minister Boris Johnson has pledged to take Britain out of the European Union with or without a deal on Oct. 31, and has said he will not ask for a delay despite lawmakers voting that he seeks one to avoid a no-deal Brexit.

The “Operation Yellowhammer” report on the worst-case scenario released by the government pointed to potential problems snarling up cross-Channel trade routes and disrupting supplies of fresh food.

John Lewis Chairman Charlie Mayfield said the assessment chimed with what his department store and supermarket group expected from a no-deal scenario.

“The publication of the Yellowhammer documents gives a bit more insight, but frankly I don’t think it tells us anything particularly new that we didn’t already know,” Mayfield told reporters after warning that the impact of a no-deal Brexit could be “significant”.

Mayfield went on to say that the continuing uncertainty meant that consumer confidence had taken a battering and John Lewis was seeing a reluctance by consumers to make big-ticket purchases in its department stores.

David Potts, Chief Executive of grocer Morrisons, agreed that consumer confidence was weak but the grocer is somewhat shielded from any Brexit chaos as two-thirds of what it sells is British.

While supermarkets say they are restricted in what goods they can stockpile, there might be some solace in the fact that they say so far, customers have shown little sign of panic-buying.

(Reporting by Alistair Smout in London and Noor Zainab Hussain in Bengaluru; Additional reporting by James Davey; Editing by Elaine Hardcastle)

‘Absolutely not’: PM Johnson denies lying to Queen Elizabeth in Brexit crisis

Britain's Prime Minister Boris Johnson visits the NLV Pharos, a lighthouse tender moored on the river Thames to mark London International Shipping Week in London, Britain September 12, 2019. Daniel Leal-Olivas/Pool via REUTERS

By Andrew MacAskill and Guy Faulconbridge

LONDON (Reuters) – Prime Minister Boris Johnson on Thursday denied lying to Queen Elizabeth over the reasons for suspending the British parliament after a court ruled his decision was unlawful and opponents called for lawmakers to be recalled to discuss Brexit.

Since Johnson won the top job in July, Britain’s Brexit crisis has spun more furiously, leaving investors and allies bewildered by an array of decisions that have pushed the once stable political system to its limits.

Parliament was prorogued – suspended – on Monday until Oct. 14, a move Johnson’s opponents said was designed to thwart their attempts to scrutinize his plans for leaving the European Union and to allow him to push through Brexit on Oct. 31, with or without an exit deal to smooth the way.

Scotland’s highest court of appeal ruled on Wednesday that the suspension was not lawful and was intended to stymie lawmakers, prompting opponents to question whether Johnson had lied to Elizabeth who must formally order the prorogation.

“Absolutely not,” Johnson said when asked by a TV reporter if he had misled the queen, who is the world’s longest reigning monarch and is widely respected for more than 67 years of dedicated service during which she has stayed above the fray of politics.

Johnson said the current session of parliament was longer than any since the English Civil war in the 17th century, adding that lawmakers would have plenty of time to again discuss Brexit after an EU summit on Oct. 17-18.

He says parliament was suspended to allow the government to present its legislative program.

With less than 50 days until the United Kingdom is due to leave, the government and parliament are locked in conflict over the future of Brexit, with possible outcomes ranging from leaving without a deal to another referendum.

A “no-deal” Brexit could snarl cross-Channel trade routes, disrupting supplies of medicines and fresh food while protests spread across Britain, according to a worst-case scenario reluctantly released by the government on Wednesday.

The “Operation Yellowhammer” assumptions, prepared six weeks ago just days after Johnson became prime minister, form the basis of government no-deal planning.

Britain is unlikely to run out of essentials like toilet paper in the event of a no-deal Brexit but some fresh fruit and vegetables could be in short supply and prices might rise, supermarket bosses warned on Thursday.

‘SIGNIFICANT GAPS’

Johnson has repeatedly said he will seek to strike a deal at the EU summit to remove the Irish border backstop, an insurance agreement to prevent the return of border controls between Northern Ireland and the Irish Republic after Brexit.

Opponents of the backstop in the British parliament worry it would lock the United Kingdom into the EU’s orbit for years to come.

The European Union would respond positively if the British government shifts its position in Brexit talks in the coming weeks, Ireland’s Foreign Minister Simon Coveney said.

But Coveney said that there were “significant gaps” between British proposals and what Ireland and the EU would consider. He said the threat of a no-deal Brexit might help make the British debate “more honest”.

Belfast’s High Court dismissed on Thursday a case arguing that a British exit from the European Union without a withdrawal agreement would contravene Northern Ireland’s 1998 peace accord.

Johnson said the government is waiting to hear an appeal next week against the Scottish court ruling on the suspension of parliament in the Supreme Court, the United Kingdom’s highest judicial body, and he respected the independence of the judges.

Last week, the High Court of England and Wales rejected a similar challenge by campaigners, saying it was a political not a judicial matter.

“Indeed, as I say, the High Court in England plainly agrees with us, but the Supreme Court will have to decide,” Johnson said. Buckingham Palace has declined to comment on the ruling, saying it is a matter for the government.

But the publication of the government’s no-deal Brexit scenario prompted calls from Labour and other opposition parties for parliament to be recalled.

(Writing by Guy Faulconbridge; Additional reporting by Paul Sandle, Alistair Smout and Michael Holden in London, Amanda Ferguson in Belfast, Conor Humphries in Dublin and Alissa de Carbonnel and Philip Blenkinsop in Brussels; Editing by Peter Graff, Giles Elgood and Frances Kerry)