Trump, Powell met Monday at White House to discuss economy

By Howard Schneider

WASHINGTON (Reuters) – U.S. President Donald Trump and Federal Reserve Chair Jerome Powell met at the White House on Monday morning, their second meeting since Powell started the job in February 2017 and soon after became the target of frequent criticism from the president who had appointed him.

The Fed announced the meeting in a morning press release, noting they met “to discuss the economy, growth, employment and inflation.”

“Everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.,” Trump tweeted soon after, calling the session “good & cordial.”

The Fed’s wording closely followed its description of Powell’s first meeting with Trump, this past February, over a dinner that also included Vice Chair Richard Clarida.

Trump’s tweet marked a change in tone. The president in recent months derided Powell and colleagues as “pathetic” and “boneheads” for not cutting interest rates, and in August labeled Powell personally as an enemy of the United States on a par with China leader Xi Jinping.

The Fed in its statement was careful to note what wasn’t discussed: Powell’s expectations for future monetary policy. Trump has for more than a year charged the Fed with undermining his economic policies by, in his view, keeping interest rates too high, and depriving the United States of what Trump feels are the benefits of the negative rates of interest set by the European and Japanese central banks.

The U.S. central bank has cut rates three times this year – in part to offset what it views as damage done by the Trump administration’s trade war with China. But after their last meeting, in October, policymakers signaled they would lower rates no further unless the economy takes a serious turn for the worse.

Less than 24 hours after that decision, Trump laid into Powell again, saying people are “VERY disappointed” in him and the Fed. And only last week, Trump lobbed another dig in a tweet that noted inflation was low: “(do you hear that Powell?)”

CONSISTENT

Powell “did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy,” the Fed said in its statement.

Powell appeared before congressional committees twice last week, and the Fed said his comments to Trump were “consistent” with his statements to lawmakers.

“Chair Powell said that he and his colleagues on the Federal Open Market Committee will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.”

The meeting included Treasury Secretary Steven Mnuchin.

Powell met with Trump in February, and in each of the three following months the two had a brief phone conversation. That compares with the three times his predecessor, Janet Yellen, met President Barack Obama at the White House; Yellen also met with Trump during her final year as Fed chair.

Powell’s has made much more extensive and deliberate efforts to court members of the House and Senate, even as Trump expressed regret for appointing Powell and reportedly explored whether he could remove him.

Fed chairs are appointed to four-year terms by the president, but once confirmed by the Senate are intended to be insulated from White House political pressure over how to manage monetary policy. They can only be removed “for cause,” not over a disagreement over policy.

Meetings between Fed chairs and presidents are not unprecedented but they are infrequent, as opposed to the nearly weekly sessions that central bankers have with the head of the Treasury.

(Reporting by Howard Schneider and Ann Saphir; Editing by Andrea Ricci)

Venezuela exodus set to top 5 million as long-term needs grow, officials say

Venezuela exodus set to top 5 million as long-term needs grow, officials say
By Stephanie Nebehay

GENEVA (Reuters) – The exodus of Venezuelans is on track to reach 5 million people, as pressure grows on neighboring countries to provide them with long-term support, United Nations and European Union officials said on Wednesday.

Some 4.5 million refugees and migrants have fled Venezuela since 2015, according to official figures, but more are using illegal crossing points because they lack identity papers, said Eduardo Stein, joint special representative of the U.N. refugee and migration agencies.

The crisis has worsened since the United States imposed sanctions, including on the pivotal oil industry, in an effort to oust leftist President Nicolas Maduro in favor of opposition leader Juan Guaido. Dozens of nations recognize Guaido as interim president, saying Maduro rigged a 2018 election.

Roughly 5,000 people leave Venezuela daily, although the number fluctuates as more states require visas, Stein said.

“The experience of other crises in the world shows us that those who would want to go back to Venezuela if the crisis in political terms were to be solved today, it will take a good two years or maybe even more,” Stein told a news conference.

A U.N. regional humanitarian response plan of $739 million for this year is expected to nearly double for 2020, he added.

The initially welcoming attitude to Venezuelans around South America has soured amid accusations they bring crime, crowd the job market, and strain social services.

The United Nations and European Union are hosting a meeting on Oct. 28-29 in Brussels to raise awareness of needs. Donors and officials from the World Bank and Inter-American Development Bank are due to attend, but no Venezuelan representatives.

“This is the most severe and fastest-growing refugee migrant crisis in Latin American history, at least recent history,” said Walter Stevens, EU ambassador to the U.N. in Geneva. “There are estimates also that it could further increase if the situation does not change, quickly reaching 5 million.”

Colombia is the top destination for Venezuelan migrants fleeing the long-running crisis, which has caused widespread shortages of food and medicine. Some 1.4 million Venezuelans live in Colombia.

The flow is overwhelming the financial and administrative capacities of host countries to provide education and health services, Stein said.

“Nine receiving countries have agreed to accept expired (Venezuelan) passports as valid documents. And so with an expired passport you can get a temporary permit sometimes for two years,” he stated.

(Reporting by Stephanie Nebehay, editing by Larry King)

Brexit on a knife edge as PM Johnson stakes all on ‘Super Saturday’ vote

Brexit on a knife edge as PM Johnson stakes all on ‘Super Saturday’ vote
By Guy Faulconbridge and Kate Holton

LONDON (Reuters) – Britain’s exit from the European Union hung on a knife-edge on Friday as Prime Minister Boris Johnson scrambled to persuade doubters to rally behind his last-minute European Union divorce deal in an extraordinary vote in parliament.

In one of the most striking flourishes of the three-year Brexit drama, Johnson confounded his opponents on Thursday by clinching a new deal with the EU, even though the bloc had promised it would never reopen a treaty it agreed last year.

Yet Johnson, the face of the Brexit campaign in the 2016 referendum, must now ratify the deal in the British parliament where he has no majority and opponents are plotting maximum political damage ahead of an imminent election.

The numbers are too close to call: Johnson must garner 318 votes in the 650-seat parliament to get a deal approved. Yet his Northern Irish allies are opposed to a deal and the three main opposition parties have pledged to vote it down.

“We’ve got a great new deal that takes back control — now parliament should get Brexit done on Saturday,” Johnson said ahead of the first Saturday sitting of parliament since the 1982 Argentine invasion of the Falkland Islands.

If he wins the vote, Johnson will go down in history as the leader who delivered Brexit – for good or bad. If he fails, Johnson will face the humiliation of Brexit unraveling after repeatedly promising that he would get it done.

Goldman Sachs said it thought the deal would pass and raised its estimate of Brexit with a deal on Oct. 31 to 65% from 60%. It cut its odds on a no-deal departure to 10% from 15% and kept unchanged its 25% probability of no Brexit.

The pound held at five-month highs of $1.2874 against the dollar, down from Thursday’s peak of $1.2988.

Johnson won the top job by staking his career on getting Brexit done by the latest deadline of Oct. 31 after his predecessor, Theresa May, was forced to delay the departure date. Parliament rejected her deal three times, by margins of between 58 and 230 votes.

Downing Street is casting the Saturday vote as a last chance to get Brexit done with lawmakers facing the option of either approving the deal or propelling the United Kingdom to a disorderly no-deal exit that could divide the West, hurt global growth and trigger violence in Northern Ireland.

‘PRETTY CLOSE’

To win the vote, Johnson must persuade enough Brexit-supporting rebels in both his own Conservative Party and the opposition Labour Party to back his deal.

Concerned about the potential impact of a no-deal departure, Johnson’s opponents have already passed a law demanding he delay Brexit unless he gets a withdrawal deal approved by Saturday.

The government has said both that it will comply with this law and that Britain will leave the EU on Oct. 31 whatever happens. Johnson has not explained how he plans to take these two apparently contradictory steps.

The message from Johnson’s advisers is: “New deal or no deal but no delay.”

The prime minister was due to hold a cabinet meeting at 1500 GMT on Friday.

As lawmakers mull one of the United Kingdom’s most significant geopolitical moves since World War Two, hundreds of thousands of demonstrators are due to march towards parliament demanding another referendum on EU membership.

Parliament will sit from 0830 GMT on Saturday. Johnson will make a statement to lawmakers, after which there will be a debate and then a vote. The debate was originally scheduled to last 90 minutes, but is no longer time-limited.

NORTHERN IRISH OPPOSITION

The Northern Irish Democratic Unionist Party (DUP) said it would oppose the deal and lobby a faction of around 28 hardline Brexit supporters in the Conservative Party to do the same.

“We will be encouraging (other lawmakers to vote against) because we believe it does have an impact on the unity of the United Kingdom, will spark further nationalist sentiment in Scotland and will be detrimental to the economy of Northern Ireland,” the DUP’s Sammy Wilson said.

“Voting this down tomorrow is not the end of the game, in fact it probably opens up possibilities for the government which are not available at present after a general election.”

Without the DUP’s 10 votes, Johnson will need Brexit-supporting Labour Party rebels to support his deal.

Saturday’s vote will be “pretty close” but likely just fall short of approval, said John McDonnell, the second most powerful person in the Labour Party.

“I don’t believe it will pass, I think it will be defeated but… the numbers are going to be pretty close,” McDonnell told Sky News.

If the vote is a tie, then the speaker of parliament, John Bercow, would hold the deciding vote. According to vague convention, the speaker would seek to keep the issue open for further discussion.

(Additional reporting by Elizabeth Piper and William James; Writing by Guy Faulconbridge; Editing by Frances Kerry)

EU warns of 5G cybersecurity risks, stops short of singling out China

By Foo Yun Chee

BRUSSELS (Reuters) – The European Union warned on Wednesday of the risk of increased cyber attacks by state-backed entities but refrained from singling out China and its telecoms equipment market leader Huawei Technologies as threats.

The comments came in a report prepared by EU member states on cybersecurity risks to next-generation 5G mobile networks seen as crucial to the bloc’s competitiveness in an increasingly networked world.

The authors chose to ignore calls by the United States to ban Huawei’s equipment, drawing a welcome from the Shenzen-based company after it faced U.S. accusations that its gear could be used by China for spying.

“Among the various potential actors, non-EU states or state-backed are considered as the most serious ones and the most likely to target 5G networks,” the European Commission and Finland, which currently holds the rotating EU presidency, said in a joint statement.

“In this context of increased exposure to attacks facilitated by suppliers, the risk profile of individual suppliers will become particularly important, including the likelihood of the supplier being subject to interference from a non-EU country,” they said.

Huawei, which competes with Finland’s Nokia and Sweden’s Ericsson, said it stood ready to work with its European partners on 5G network security. It has always denied its equipment can be used for spying.

“This exercise is an important step toward developing a common approach to cybersecurity and delivering safe networks for the 5G era,” a Huawei spokesman said.

“We are pleased to note that the EU delivered on its commitment to take an evidence-based approach, thoroughly analyzing risks rather than targeting specific countries or actors.”

Tom Ridge, a former U.S. secretary of homeland security, took a different view of the report. He said Huawei’s close ties to the Chinese government meant it would have to comply with legislation requiring it to assist with intelligence gathering.

“If countries needed more reason to implement stricter security measures to protect 5G networks, this comprehensive risk assessment is it,” said Ridge, a member of the advisory board of Global Cyber Policy Watch.

Fifth-generation networks will hook up billions of devices, sensors and cameras in ‘smart’ cities, homes and offices. With that ubiquity, security becomes an even more pressing need than in existing networks.

“5G security requires that networks are built leveraging the most advanced security features, selecting vendors that are trustworthy and transparent,” a Nokia spokesperson said, adding that the company was the only global vendor capable of providing all the building blocks for secure 5G networks.

EU members have differed on how to treat Huawei, with Britain, a close U.S. ally, leaning toward excluding it from critical parts of networks. Germany is meanwhile creating a level playing field in which all 5G vendors should prove they are trustworthy.

OVER-DEPENDENCE

The report warned against over-dependence on one telecoms equipment supplier.

“A major dependency on a single supplier increases the exposure to a potential supply interruption, resulting for instance from a commercial failure, and its consequences,” it said.

European network operators, including Germany’s Deutsche Telekom typically have multi-vendor strategies that they say reduce the security risks that might arise from relying too heavily on a single provider.

“The Commission’s 5G assessment recognizes security isn’t just a supplier issue,” said Alex Sinclair, chief technology officer of the GSMA, a global mobile-industry trade group.

“We all have a role to play – from manufacturers to operators to consumers – and we are taking responsibility for our part in the security chain seriously.”

The EU will now seek to come up with a so-called toolbox of measures by the end of the year to address cyber security risks at national and bloc-wide level.

The European Agency for Cybersecurity is also finalizing a map of specific threats related to 5G networks.

(Additional reporting by Douglas Busvine in Berlin and Anne Kauranen in Helsinki; Editing by Kirsten Donovan and Elaine Hardcastle)

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)

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)

UK faces food, fuel and drug shortages, says contested leaked document

FILE PHOTO: A line of trucks is seen during a trial between disused Manston Airport and the Port of Dover of how road will cope in case of a "no-deal" Brexit, Kent Britain January 7, 2019. REUTERS/Toby Melville/File Photo

By Kate Holton and William James

LONDON (Reuters) – Britain will face shortages of fuel, food and medicine if it leaves the European Union without a transition deal, according to leaked official documents reported by the Sunday Times whose interpretation was immediately contested by ministers.

Setting out a vision of jammed ports, public protests and widespread disruption, the paper said the forecasts compiled by the Cabinet Office set out the most likely aftershocks of a no-deal Brexit rather than the worst-case scenarios.

But Michael Gove, the minister in charge of coordinating “no-deal” preparations, challenged that interpretation, saying the documents did set out a worst-case scenario and that planning had been accelerated in the last three weeks.

The Times said up to 85% of lorries using the main Channel crossings may not be ready for French customs, meaning disruption at ports would potentially last up to three months before the flow of traffic improved.

The government also believes a hard border between the British province of Northern Ireland and the Republic of Ireland, an EU member, will be likely as plans to avoid widespread checks will prove unsustainable, the Times said.

“Compiled this month by the Cabinet Office under the codename Operation Yellowhammer, the dossier offers a rare glimpse into the covert planning being carried out by the government to avert a catastrophic collapse in the nation’s infrastructure,” the Times reported.

Prime Minister Boris Johnson’s office said it did not comment on leaked documents. But Gove said it was an old document that did not reflect current preparedness.

“It is the case, as everyone knows, that if we do have a no-deal exit there will inevitably be some disruption, some bumps in the road. That’s why we want a deal,” Gove told reporters.

“But it is also the case that the UK government is far more prepared now than it was in the past, and it’s also important for people to recognize that what’s being described in these documents… is emphatically a worst-case scenario,” Gove added.

A government source blamed the leak on an unnamed former minister who wanted to influence negotiations with the EU.

“This document is from when ministers were blocking what needed to be done to get ready to leave and the funds were not available,” said the source, who declined to be named. “It has been deliberately leaked by a former minister in an attempt to influence discussions with EU leaders.”

NO TURNING BACK

The United Kingdom is heading toward a constitutional crisis and a showdown with the EU as Johnson has repeatedly vowed to leave the bloc on Oct. 31 without a deal unless it agrees to renegotiate the Brexit divorce.

Yet after more than three years of Brexit dominating EU affairs, the bloc has repeatedly refused to reopen the Withdrawal Agreement.

Brexit minister Stephen Barclay said on Twitter he had signed a piece of legislation which set in stone the repeal of the 1972 European Communities act – the laws which made Britain a member of the organization now known as the EU.

Though his move was largely procedural, in line with previously approved laws, Barclay said in a statement: “This is a clear signal to the people of this country that there is no turning back (from Brexit).”

A group of more than 100 lawmakers wrote to Johnson calling for an emergency recall of parliament to discuss the situation.

“We face a national emergency, and parliament must now be recalled in August and sit permanently until October 31 so that the voices of the people can be heard, and that there can be proper scrutiny of your government,” the letter said.

Johnson will this week tell French President Emmanuel Macron and German Chancellor Angela Merkel that the Westminster parliament cannot stop Brexit and a new deal must be agreed if Britain is to avoid leaving the EU without one.

Merkel said during a panel discussion at the Chancellery: “We are prepared for any outcome, we can say that, even if we do not get an agreement. But at all events, I will make an effort to find solutions – up until the last day of negotiations.”

Johnson is coming under pressure from politicians across the political spectrum to prevent a disorderly departure, with opposition leader Jeremy Corbyn vowing to bring down Johnson’s government to delay Brexit.

It is, however, unclear if lawmakers have the unity or power to use the British parliament to prevent a no-deal departure, likely to be the UK’s most significant foreign policy move since World War Two.

(Editing by Gareth Jones and David Holmes)

From archaeologists to vets, UK widens list of desired immigrants

LONDON (Reuters) – Britain needs a wider range of immigrants to tackle shortages of workers ranging from archaeologists and architects to vets and web developers, government advisors said on Wednesday, just days after figures showed immigration had fallen to a five-year low.

Britain is reviewing its immigration system as it prepares to leave the European Union, which allows almost unrestricted free movement of workers between its 28 member states.

More than 3 million foreigners have moved permanently to Britain since 2009, despite the government’s aim to reduce net migration to 100,000 a year, and this was a top worry for voters at the time of 2016’s referendum to leave the EU.

However, in its first full review of job shortages in five years, the government’s Migration Advisory Committee (MAC) said shortages of workers in Britain’s economy had increased since 2013, as unemployment had fallen to its lowest since 1975.

The body, made up mostly of academic labor market economists, recommended that jobs similar to those done by 9% of workers in Britain should be put on an immigration shortage list, up from less than 1% in 2013.

“The expansion comes mainly from the wider set of health and IT sector jobs included,” the report said.

The MAC’s recommendations are not binding, but the government has generally followed previous suggestions.

Inclusion on the ‘shortage occupation list’ would mean employers no longer needed to prove they were unable to hire a British worker to do the job, and shortage workers would have priority over some other immigrants if quotas applied.

Businesses welcomed the recommendation from the body, which has already urged the government to lift a cap on high-skilled immigrants, but had upset some firms by opposing a new category of post-Brexit visa for low-skilled EU workers.

“Our research shows that three-quarters of firms are currently unable to find the talent they need, and vacancies are being left unfilled,” the British Chambers of Commerce said.

However Migration Watch UK, a body that wants less immigration, called the new job shortage list “astonishing”.

“The MAC seems to have turned 180 degrees from its previous emphasis on encouraging employers to recruit domestically through improved wages, better conditions and boosted training,” Migration Watch’s vice-chairman, Alp Mehmet, said.

Stricter border controls were Britons’ top concern at the time of the 2016 referendum, but this has now fallen to third place, behind funding public healthcare and education, according to recent polling by market research company Kantar.

Nonetheless, some 42% of Britons still want to restrict EU citizens’ future rights to live in Britain after Brexit, while only 33% wanted to preserve them.

(Reporting by David Milliken; editing by Stephen Addison)

Tearful Theresa May resigns, paving way for Brexit confrontation with EU

British Prime Minister Theresa May reacts as she delivers a statement in London, Britain, May 24, 2019. REUTERS/Toby Melville

By Elizabeth Piper, William James and Kylie MacLellan

LONDON (Reuters) – Fighting back tears, Theresa May said on Friday she would quit, setting up a contest that will install a new British prime minister who could pursue a cleaner break with the European Union.

May’s departure deepens the Brexit crisis as a new leader, who should be in place by the end of July, is likely to want a more decisive split, raising the chances of a confrontation with the EU and potentially a snap parliamentary election.

Her voice cracking with emotion, May, who endured crises and humiliation in her failed effort to find a compromise Brexit deal that parliament could ratify, said she would resign on Friday, June 7 with a leadership contest beginning the following week.

“I will shortly leave the job that has been the honor of my life to hold,” May said outside her Downing Street official residence with her husband, Philip, looking on. “The second female prime minister, but certainly not the last.

“I do so with no ill will but with enormous and enduring gratitude to have had the opportunity to serve the country I love,” said the usually reserved May as she fought back tears.

May, once a reluctant supporter of EU membership who won the top job in the turmoil that followed the 2016 Brexit referendum, steps down with her central pledge – to lead the United Kingdom out of the bloc and heal its divisions – unfulfilled.

“It is, and will always remain, a matter of deep regret to me that I have not been able to deliver Brexit,” May said, adding that her successor would have to find a consensus to honor the 2016 referendum result.

Jeremy Corbyn, leader of the main opposition Labour Party, said the new prime minister must hold an election to “let the people decide our country’s future”.

PM BORIS JOHNSON?

May bequeaths a deeply divided country and a political elite that is deadlocked over how, when or whether to leave the EU. The latest deadline for Britain’s departure is Oct. 31.

Most of the leading contenders to succeed May want a tougher divorce deal, although the EU has said it will not renegotiate the Withdrawal Agreement it sealed with Britain in November.

Spain said it now seemed almost impossible to avoid a so-called hard Brexit, or clean break from the EU, and the bloc signaled there would be no change on the agreement despite European Commission President Jean-Claude Juncker learning of May’s resignation “without personal joy”.

Irish Foreign Minister Simon Coveney underlined the bloc’s stance that there would be no better Brexit deal.

“This idea that a new prime minister will be a tougher negotiator and will put it up to the EU and get a much better deal for Britain? That’s not how the EU works,” Coveney told Ireland’s Newstalk radio station.

Sterling swung back and forth on May’s resignation, trading slightly higher on the day, and British government bond yields edged off near-two-year lows struck first thing on Friday. Boris Johnson, the face of the official Brexit campaign in 2016, is the favorite to succeed May and he thanked her for her “stoical service”. Betting markets put a 40% implied probability on Johnson winning the top job.

Others tipped are Dominic Raab, a Brexit supporter and former Brexit secretary, with a 14% implied probability on his chances. Environment Secretary Michael Gove, former House of Commons leader Andrea Leadsom and Foreign Secretary Jeremy Hunt each have a 7% probability, according to betting markets.

Defence Secretary Penny Mordaunt and International Development Secretary Rory Stewart each have a 4% chance of the top job while Home Secretary Sajid Javid has a 3% chance.

For many Conservative lawmakers, speed is of the essence to install a new leader to try to break the Brexit impasse.

The governing party said it would move quickly to try to end the leadership contest before parliament breaks for a summer holiday, a so-called recess which usually falls in late July.

“The fight for the heart and soul of the Conservative Party officially starts now,” said Andrew Bridgen, a pro-Brexit lawmaker. “We need a new PM as soon as possible and who that is will decide the future of our democracy, our country and the Conservative Party.”

(Writing by Guy Faulconbridge; Additional reporting by Kate Holton; Editing by Janet Lawrence)

Britain warns of Iran-U.S. conflict, Pompeo meets Europeans

FILE PHOTO: The Iranian flag flutters in front the International Atomic Energy Agency (IAEA) headquarters in Vienna, Austria March 4, 2019. REUTERS/Leonhard Foeger/File Photo

By Robin Emmott

BRUSSELS (Reuters) – Iran and the United States could trigger a conflict by accident in an already unstable Gulf region, Britain’s foreign minister said on Monday, as U.S. Secretary of State Mike Pompeo held talks in Brussels with the main European powers on the crisis.

President Donald Trump is seeking to isolate Tehran by cutting off its oil exports after pulling out of a 2015 deal aimed at curbing Iran’s nuclear program. Trump has also beefed up the U.S. military presence in the Gulf to pressure Iran.

While the European Union shares some U.S. concerns about Iran, including over its involvement in the Syrian conflict, it still backs the 2015 nuclear deal, saying that it is in Europe’s own security interests.

“We are very worried about a conflict, about the risk of a conflict … of an escalation that is unintended,” Britain’s Jeremy Hunt told reporters in Brussels ahead of the talks with Pompeo.

Britain, Germany and France are signatories to the 2015 deal and their foreign ministers were holding separate meetings in Brussels on Monday with Pompeo, who canceled a planned stopover in Moscow in order to brief the European allies on Washington’s latest moves.

Trump, who wants to force Tehran to agree a broader arms control accord, has sent an aircraft carrier and B-52 bombers to the Gulf in a show of force against what U.S. officials have said is a threat to U.S. troops in the region.

Iran says the strategy amounts to “psychological warfare” and a senior Iranian Revolutionary Guards commander on Sunday said Iran would retaliate to any aggressive U.S. moves.

“TAKING DIFFERENT COURSES”

The U.S. State Department billed Monday’s talks in Brussels as a chance “to discuss recent threatening actions and statements” by Iran.

German Foreign Minister Heiko Maas said he had told Pompeo during their Monday meeting: “We do not want it to come to a military conflict (between the United States and Iran).”

Maas avoided any public criticism of Washington, saying both sides wanted to ensure peace in the Middle East. But he said it was clear that Europe and the United States were “going about it in different ways … taking different courses.”

Before his meeting with Pompeo, France’s Foreign Minister Jean-Yves Le Drian urged Europeans to remain united in support of the nuclear deal, which was signed by the United States, Britain, France, Germany, China and Russia, and which the European Union helped to negotiate.

For Europe, the tensions with the Trump administration mark a deepening split in transatlantic ties that were traditionally marked by close coordination on Middle East policy, despite sharp disagreements over the 2003 Iraq war.

Iranian President Hassan Rouhani warned last week that Tehran could resume enrichment at a higher grade if the European powers, China and Russia did not do more to circumvent punitive U.S. measures on banking and energy to boost trade.

Hunt, who held talks with Maas and Le Drian on the margins of a regular EU meeting in Brussels, expressed concern about the risks of a nuclear arms race in the Middle East if Iran were to acquire such weapons.

“We need to make sure that we don’t end up putting Iran back on the path to re-nuclearization,” Hunt said, calling for “a period of calm so that everyone understands what the other side is thinking”.

EU foreign policy chief Federica Mogherini said the EU would continue to support the nuclear pact because Iran continued to comply with inspections and uranium production limits.

The EU is trying to implement a new channel to allow Iran to sell its oil and circumvent newly-instated U.S. sanctions, but setting it up is proving complex.

Spain’s Foreign Minister Josep Borrell said Madrid was considering joining the special trade channel, known as INSTEX, which so far counts France, Germany and Britain as shareholders and could be operational by the end of June.

(Additional reporting by Francesco Guarascio and Philip Blenkinsop; Editing by Gareth Jones)