Alison Ryan, London Office, Bord Bia – Irish Food Board
Key events this week:
Theresa May has announced her resignation as Conservative leader. May outlined in a statement in Downing Street that she will resign as Tory leader on Friday June 7, triggering a leadership contest the following week. May will continue in a care taker role until a new Conservative leader is elected. The leadership contest is expected to be wrapped up before the end of July. The decision was made following a meeting between May and Graham Brady, chairman of the backbench Tory 1992 committee, on Friday morning.
Boris Johnson is the front-runner to be Britain’s next prime minister. There are about a dozen senior Tory figures considering running in the contest, include Andrea Leadsom, Dominic Raab, Michael Gove and Sajid javid.
The overwhelming negative response from both Conservative and Labour MPs to May’s Brexit proposal set the ball in motion for her resignation this week. Announced on Tuesday, May’s 10-point plan included the possibility of a second EU referendum, which Downing Street hoped would push Labour MPs to support the deal. May had intended to put the deal to a vote in the house on the first week of June. Jeremy Corbyn rejected the deal, stated that the government was “too weak” to deliver it, while Tory Eurosceptics were furious that the deal would, in effect, make Britain a rule-taker from Brussels on workers’ rights, the environment, goods and foodstuffs.
Andrea Leadsom, the leader of the Commons, resigned on Wednesday night. She is the 36th minister to quit May’s government inside three years. Critics see this resignation as the final blow to May’s premiership. Leadsom resignation letter outlined that that she could not support a second referendum, which she described as “dangerously divisive”. Under May’s new proposed deal, Leadsom said she no longer believed “that we will be a truly sovereign United Kingdom”. Leadsom is expected to run in the impending leadership race.
The pound suffered its longest losing streak against the euro since the creation of the single currency two decades ago. With speculation over the end of May’s premiership, the pound fell as low as €1.313 against the euro, its weakest level for three months. The pound slid to $1.2625 against the dollar, which was its lowest level since early January. sterling has fallen four cents against the dollar since the start of the month, setting it up for its worst performance against the dollar since May floated the idea of head Brexit at the Conservative party conference in October 2016.
Inflation has edged up 2.1%, above the Bank of England’s 2% target, increasing pressure on its monetary policy committee to raise interest rates. It’s the first time that it has broken through the 2% barrier since November, but it is below the 2.2% forecasted by economists.
The European Parliament elections took place on Thursday May 23 in the UK. Results of the election will not be released until Sunday, when voting has finished in all EU member states. According to the final polls ahead of the election, the Brexit Party is expected to win about 30% of vote, Labour around 18% and Liberate Democrats 15%. The Conservatives are forecast to win less than 10%, which would be the lowest share the party controlled a national election since it formed in 1834.
Implications for Irish food & drink companies:
The pound fell this week to its lowest level of the year, fuelled by the uncertainty surrounding Theresa May’s premiership and the rise of Nigel Farage’s Brexit party, which advocates a hard exit from the EU. This indicates that the financial markets are reacting negatively to the turmoil in UK politics. Furthermore, Theresa May’s resignation means that there will be a new Conservative leader. Who that will be, and what direction they will take Brexit in, is unknown. The prolonged uncertainty will create challenges in the UK market. Therefore, it is crucial that Irish companies continue to prepare for all Brexit possibilities, including a no-deal Brexit, the threat of which has re-emerged. Bord Bia’s support programmes can be found here.
- The results of the European elections will be announced on Sunday.
- The House of Commons will be on recess from May 23 until June 3.
- European leaders will hold a symbolic meeting in June to review the UK’s progress.
- Newly elected MEPs will be taking their seats on July 1.
- October 31 is the current Brexit deadline.