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Brexit news: Bank of England predicts post-transition hit to UK economy as deadline looms in EU trade talks

Follow events as they happened in Westminster and beyond

Peter Stubley,Zoe Tidman
Thursday 05 November 2020 21:19 GMT
Justice Secretary Robert Buckland says he's confident a hard border can be avoided in Ireland

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Louise Thomas

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The Bank of England has said it would pump £150bn into the UK economy and warned that even with a trade deal the lack of preparedness for Brexit would cut 1 per cent from GDP in the first quarter of 2021.

Its Monetary Policy Committee (MPC) based its assessment on the UK striking a Canada-style free trade deal, the prime minister's preferred outcome in the talks with the EU.

With the clock running down before the UK leaves the single market and customs union at the end of the year, significant gaps remained between the two sides in post-Brexit trade negotiations.

The EU’s chief negotiator Michel Barnier said there were still "very serious divergences" after two weeks of intensive Brexit discussions broke up without agreement on Wednesday evening. His UK counterpart David Frost said that they were still working to “find solutions that fully respect UK sovereignty.”

Talks were set to resume on Sunday but major sticking points remained on the “level playing field” regulations, fisheries and a dispute-settling mechanism.

Away from Brexit, Boris Johnson also came under fire from former cabinet minister Rory Stewart, who branded the prime minister an “amoral character” and “the most accomplished liar in public life”.


Sunak on change in policy

Announcing a new extension to the furlough scheme, Rishi Sunak says:

“Political opponents have chosen to attack the government for trying to keep the economy functioning, and to make sure the support we provide encourages people to keep working.”

They will no no doubt criticise the government on the basis we have had to change approach.

“To anyone in the real world, that is just the thing you have to do when the circumstances change.”

Boris Johnson had said furlough would be extended until December amid England’s new lockdown.

Zoe Tidman5 November 2020 12:34

Government votes down Dubs amendment again

Last night also saw the the government vote down for a second time a proposal to preserve family reunion rights for child refugees after the UK’s transition out of the EU’s immigration rules on 31 December.

The measure, put forward by Labour peer Lord Dubs has twice been approved by the House of Lords but twice rejected by the Commons - this time by a margin of 333 votes to 264.

Government votes down bid to help child refugees be reunited with family

‘Disappointed’ Lord Dubs says further attempt may be made to offer help to underage migrants

Peter Stubley5 November 2020 12:30

BREAKING: Furlough scheme extended to end of March at 80% pay, Rishi Sunak announces

Furlough scheme extended to end of March at 80% pay, Rishi Sunak announces

The latest breaking news, comment and features from The Independent.

Zoe Tidman5 November 2020 12:23

Rishi Sunak

Rishi Sunak is now making a statement to the Commons, amid speculation the furlough scheme is set to be extended past the current lockdown.

Zoe Tidman5 November 2020 12:18

No-deal Brexit plans for road haulage industry are ‘bonkers’

Plans for movement of HGVs across borders after a no-deal Brexit are "bonkers" and "a shambles", according to a director of the Road Haulage Association (RHA).

Rod McKenzie, the RHA's policy director, told a Scottish parliamentary committee this morning that the industry is not prepared for the disruption caused in the event of a no-deal Brexit on 1 January.

Joan McAlpine, convener of Holyrood's Europe Committee, asked him if the haulage industry is prepared for a no-deal Brexit.

He said: "Absolutely not, this is a shambles. It's been a shambles from beginning to end. The information we have is incomplete, inadequate and quite often totally incomprehensible.

"We feel we have been badly let down by the UK government from beginning to end."

Peter Stubley5 November 2020 12:13

PM is ‘the most accomplished liar in public life’

Former cabinet minister Rory Stewart has launched a blistering attack on Boris Johnson, branding the prime minister an “amoral character” and “the most accomplished liar in public life”.

Stewart, who lost the Tory leadership contest last year to Johnson and was later expelled by him from the Conservative parliamentary party, said the prime minister showed a “startling” lack of the virtues traditionally valued in politicians.

Boris Johnson branded ‘most accomplished liar in public life’ by former cabinet colleague

Blistering assault on prime minister’s character by former leadership rival Rory Stewart

Peter Stubley5 November 2020 11:57

EU predicts higher growth than UK

The European Commission has released its own economic projections for the next two years - with 4.1 per cent growth next year after this year’s Covid-influenced plunge of 7.4 per cent.

They also forecast that the UK’s GDP will fall more than 10 per cent this year, followed by growth of 3.3 per cent in 2021 and 2.1 in 2022.

Peter Stubley5 November 2020 11:43

What are the sticking points in the Brexit trade deal?

Talks between the UK and EU negotiators are expected to resume in London on Sunday in an attempt to reach agreement before the mid-November deadline.

Here are the key sticking points, courtesy of Reuters news agency:


The EU wants to lock the UK as closely as possible into its own regulations on minimum labour, environment and social production standards, as well as corporate subsidies or state aid, so that firms from one side cannot sell substandard goods on the other one's market.

Boris Johnson’s government rejects that because the ability to shape its own laws independently was one of Brexit's chief promises.

Specifically, the two sides are at odds over the 'nn-regression clause', a provision that would not allow either to backpedal on a certain minimum level of standards once they reached them independently.

The EU says such a clause is needed to safeguard its market of 450 million consumers from any cheap, poor-quality goods coming from the UK should it chose to use its regulatory freedom to gain a competitive edge. The British government says it will maintain the highest standards but argues it should be offered similar terms to those the EU offered Canada in their trade deal.


Fishing rights - a totemic issue for both Brexit Britain and France - is proving a stubborn issue.

London insists on annual catch negotiations under the principle of "zonal attachment" but the EU demands a longer-term perspective for its fishing industry and more specific numerical targets for some 100 species under discussions.

Britain also wants a separate agreement on fisheries, while the EU insists it must be part of any wider free trade deal.

Tentative ideas for a compromise, including a transition period from 2021, have yet to bear fruit as the sides disagree over the length of any such arrangement and what exactly would come at the end of it.


The EU seeks a robust dispute setting mechanism that would include an oversight body in the UK, independent of the government.

It also wants to be able to restrict bilateral trade flows if London violates crucial parts of their agreement.

Boris Johnson's government says that would be excessive and opts for more relaxed procedures to settle any future trade disagreements, which it says is standard practice in international free trade deals. It has rejected the jurisdiction of the European Court of Justice.

Peter Stubley5 November 2020 11:29

‘Build back better’ - who said it first?

Joe Biden and Boris Johnson could soon be forced to form an uneasy alliance — should the Democrat prevail over Donald Trump’s legal challenges in the US presidential election.

The former vice president may not be a fan of the British prime minster, but they do have one thing in common. They are extremely fond of the “build back better” slogan when talking about their economic plans.

Build back better: Who said it first — Biden or Johnson?

Conservative and Democrat have exactly the same slogan for their economic-recovery plan 

Peter Stubley5 November 2020 11:16

The government has pushed back against the suggestion that the UK has paused Brexit talks to await the result of the US election.

 EU officials claim Britain slowed down negotiations this week and are speculating that the UK is considering the timing of any possible concessions on the key issues such as fishing and the level playing field, according to the BBC’s Europe editor Katya Adler.

Peter Stubley5 November 2020 11:03

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