Brexit: Theresa May defends 31 October delay to MPs
Theresa May has told MPs it remains her “priority” to deliver Brexit, defending the decision to delay the UK’s exit from the EU.
The new deadline of 31 October means the UK is likely to have to hold European Parliament elections in May.
The prime minister said that if the deal agreed with the EU was passed, the UK could leave the EU “as soon as possible”.
Labour leader Jeremy Corbyn called the latest delay a “diplomatic failure”.
The prime minister promised to pursue an “orderly” Brexit, adding that the “whole country” was “frustrated”.
Brexit was originally set to happen on 29 March. But after MPs repeatedly rejected Mrs May’s withdrawal agreement with the EU, the deadline was put back to 12 April.
The new 31 October deadline averts the prospect of the UK having to leave the EU without a deal this Friday.
The government said on Thursday it would “continue to make all necessary preparations” for a no-deal Brexit, after it was reported that departments had stood down their planning.
A government source said “plans will evolve and adapt” but would not stop, while the chance of leaving the EU without an agreement remained.
The source added that a leaked message referring to the “winding down” of no deal preparation related only to Operation Yellowhammer, the contingency planning operation based on worst-case scenarios – and not no-deal planning in general.
Under EU rules, the UK will have to hold European Parliament elections in May, or face leaving on 1 June without a deal.
In a statement to the House of Commons, Mrs May said she “profoundly” regretted her deal not being agreed to by MPs.
She said: “The whole country is intensely frustrated that this process of leaving the European Union has not been completed.”
On the latest delay, she said: “The choices we face are stark and the timetable is clear. I believe we must now press on at pace with our efforts to reach a consensus on a deal that is in the national interest.”
And she told MPs that the UK would hold full EU membership rights during the extension, saying the country “would continue to be bound by all our ongoing obligations as a member state, including the duty of sincere co-operation”.
Talks with Labour
The government is continuing to hold talks with Labour aimed at achieving a consensus on how to break the deadlock in Parliament.
Mrs May and Mr Corbyn had a “short meeting” on Thursday, Labour said.
In Parliament, Mrs May said: “Reaching an agreement will not be easy, because to be successful it will require both sides to make compromises.
“But however challenging it may be politically, I profoundly believe that in this unique situation where the House is deadlocked, it is incumbent on both front benches to seek to work together to deliver what the British people voted for.”
In response, Mr Corbyn said: “The second extension in the space of a fortnight represents not only a diplomatic failure but is another milestone in the government’s mishandling of the entire Brexit process.”
He added: “The prime minister has stuck rigidly to a flawed plan and now the clock has run down, leaving Britain in limbo and adding to the deep uncertainty of business, workers and people all across this country.”
Mr Corbyn said cross-party talks were “serious, detailed and ongoing”, but warned that the government would “have to compromise”.
If no agreement was possible, he said: “We believe all options should remain on the table, including the option of a public vote.”
What happens next?
Shortly – Talks continue between the Conservatives and Labour on how to end the Brexit impasse
23 April – MPs return from Parliament’s Easter recess
2 May – Local elections take place in England and Northern Ireland
23 May – European Parliament elections are scheduled to happen in the UK, if MPs do not back Theresa May’s agreement with the EU in time to avert them
31 October – The UK leaves the EU, unless MPs back the withdrawal agreement in advance of this deadline
What’s Missing From the U.S.-China Trade Deal?
With talks to end the U.S.-China trade war reportedly nearing a conclusion, it remains unclear whether any deal will fundamentally alter Chinese commercial behavior. The only way to do so is to introduce full, unhindered foreign competition into the Chinese market.
American negotiators seem to be trying to open up China by eking out incremental pledges on market access and reduced state subsidies. This isn’t likely to accomplish much. Leaders in Beijing have already promised to lift equity caps in most sectors for foreign companies. While helpful, the changes leave Beijing with plenty of tools to boost favored industries at the expense of foreign rivals. The same would hold true even if China does scale back its most egregious state-directed subsidies.
Instead, the U.S. should be demanding that foreign firms be allowed to operate in China just as Chinese companies do in the U.S. Truly open competition would test the mettle of China’s industrial policies and subsidy programs. If history is any guide, market-driven competition will win out, making it too expensive for the state to continue to support uncompetitive firms. Chinese firms that are truly competitive will succeed without the need for such aid, both at home and abroad.
The key issue isn’t ownership structure, but the fact that foreign companies currently operate in China under a system of positive rather than negative limits. Simply put, they are told very specifically what they can do, rather than what they can’t. For example, Company A may be permitted under its operating license to provide “marketing services.” Whether this includes, say, digital marketing services is left unclear.
Naturally, as technologies and markets evolve, so must these lists. But changing them — i.e. adding “digital” to the example above — requires an entirely new negotiation with Chinese officials. This caveat is how foreign competition is constrained in China. Letting Tesla Inc. wholly own its manufacturing operations won’t change much if the company’s business license doesn’t explicitly permit it to develop and operate its own battery systems or maps or self-driving software — core value components that, as of now, will likely have to be outsourced to Chinese firms.
Such restrictive licenses put the fate of any foreign firm into the hands of Chinese regulators. This is by design. Even within China’s much improved legal environment, laws remain vague and implementation guidelines are imprecise and often contradictory. Regulators, whose aims can be politicized, protectionist or worse, thus have great sway over essentially all commercial developments.
As technology advances, regulators’ clout has only increased. China’s new national security framework — which has effectively defined most commercial markets as “strategic” (and thus restricted for foreigners) — gives them control over multinationals’ data operations and enterprise IT choices. Foreign companies can’t freely use digitally driven operational models and innovative technologies from around the world to achieve competitive advantage. This handicap massively distorts China’s potential as a market. Ultimately, constraints on technology choice, IT system control and data operations could drive foreign companies out of many sectors entirely.
Meanwhile, even though mainland companies, too, operate under “positive” business licenses, regulators seem more willing to look the other way when they exceed their mandates. Domestic firms regularly expand into new businesses without any visible constraints. They also seem to be permitted much wider scope in data operations, technology platforms and the use of consumer information. They’re then able to leverage their scale advantages unimpeded in overseas markets.
Real change would involve three core elements. First, both foreign and local businesses would have to operate under business licenses that are negatively limited — where only certain activities are specifically barred and all other conceivable activities are de facto permitted. Licenses would have to include unconditional freedoms for enterprise IT choices and data operations. Foreign companies shouldn’t have to localize, outsource or cede control of commercially sensitive data and assets to Chinese vendors or agencies. China’s privacy and cybersecurity concerns can be addressed adequately through other means.
Second, to make sure such pledges are implemented, mechanisms should be established that oblige Western firms to consult regularly and confidentially with their trade officials. Unless they honestly disclose the inequities they face in the Chinese market, their respective governments will never know. Third, China should establish a paramount agency fully empowered to respond quickly, precisely and discreetly to complaints so that the buck can’t be passed around within the maze of Chinese regulatory agencies. Relying on “snap-back” tariffs as an enforcement mechanism would be disastrous, creating unmanageable uncertainty for foreign businesses operating in China.
It may be too late to work such changes into whatever trade deal the U.S. and China sign. But, this doesn’t change the fact that fair, competition-enhancing reforms would be as good for China as for the rest of the world. Competition would improve the productivity and unlock the innovative capacity of Chinese enterprises, which is critical to putting China’s economy on a sustainable path. Foreign firms would also contribute much more to Chinese growth and welfare. If China truly wants to become a fully developed nation by 2049, this is one concession it might want to make on its own.
Stock Market News
U.S. shares mixed at close of trade; Dow Jones Industrial Average down 0.05%
U.S. equities were mixed at the close on Thursday, as gains in the Industrials, Utilities and Telecoms sectors propelled shares higher while losses in the Healthcare, Basic Materials and Technology sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average fell 0.05%, while the S&P 500 index added 0.00%, and the NASDAQ Composite index fell 0.21%.
The biggest gainers of the session on the Dow Jones Industrial Average were Boeing Co (NYSE:BA), which rose 1.43% or 5.22 points to trade at 370.16 at the close. Walmart Inc (NYSE:WMT) added 1.20% or 1.20 points to end at 100.80 and Home Depot Inc (NYSE:HD) was up 1.03% or 2.05 points to 201.48 in late trade.
Biggest losers included UnitedHealth Group Incorporated (NYSE:UNH), which lost 4.31% or 10.61 points to trade at 235.42 in late trade. Walgreens Boots Alliance Inc (NASDAQ:WBA) declined 1.96% or 1.07 points to end at 53.44 and Dow Inc (NYSE:DOW) shed 1.47% or 0.82 points to 54.89.
The top performers on the S&P 500 were Fastenal Company (NASDAQ:FAST) which rose 5.05% to 68.48, Kroger Company (NYSE:KR) which was up 3.04% to settle at 25.74 and United Rentals Inc (NYSE:URI) which gained 2.94% to close at 124.75.
The worst performers were Signet Jewelers Ltd (NYSE:SIG) which was down 5.95% to 23.85 in late trade, UnitedHealth Group Incorporated (NYSE:UNH) which lost 4.31% to settle at 235.42 and Keurig Dr Pepper Inc (NYSE:KDP) which was down 4.24% to 26.87 at the close.
The top performers on the NASDAQ Composite were Future Fintech Group Inc (NASDAQ:FTFT) which rose 162.17% to 2.0500, Phunware Inc (NASDAQ:PHUN) which was up 70.11% to settle at 8.88 and Vital Thera (NASDAQ:VTL) which gained 31.44% to close at 0.77.
The worst performers were China Jo-Jo Drugstores Inc (NASDAQ:CJJD) which was down 43.69% to 1.740 in late trade, Farmmi Inc (NASDAQ:FAMI) which lost 36.13% to settle at 2.2100 and Amyris Inc (NASDAQ:AMRS) which was down 22.93% to 2.890 at the close.
Uber unveils IPO with warning it may never make a profit
Uber Technologies Inc has 91 million users, but growth is slowing and it may never make a profit, the ride-hailing company said on Thursday in its IPO filing.
The document gave the first comprehensive financial picture of the decade-old company which was started after its founders struggled to get a cab on a snowy night and has changed the way much of the world travels.
The S-1 filing underscores Uber’s rapid growth in the last three years but also how a string of public scandals and increased competition from rivals have weighed on its plans to attract and retain riders.
The disclosure also highlighted how far Uber remains from turning a profit, with the company cautioning it expects operating expenses to “increase significantly in the foreseeable future” and it “may not achieve profitability.”
Uber lost $3.03 billion in 2018 from operations.
The filing with the U.S. Securities and Exchange Commission revealed Uber had 91 million average monthly active users on its platforms, including for ride-hailing and Uber Eats, at the end of 2018. This is up 33.8 percent from 2017, but growth slowed from 51 percent a year earlier.
Uber had not disclosed the latest user numbers before, and the figure indicates the scale of the business. Although its user base includes customers of other services and ride-sharing, the number is nearly five times the 18.6 million announced by rival Lyft Inc.
Uber in 2018 had $11.3 billion revenue, up around 42 percent over 2017, but below the 106 percent growth the prior year.
Uber set a placeholder amount of $1 billion but did not specify the size of the IPO. Reuters reported this week that Uber plans to sell around $10 billion worth of stock at a valuation of between $90 billion and $100 billion.
Investment bankers had previously told Uber it could be worth as much as $120 billion.
Uber would be the largest initial public offering since that of Chinese e-commerce company Alibaba Group Holding Ltd in 2014, which raised $25 billion.
Although Uber is no longer targeting a $120 billion valuation in the IPO, some stock bonuses to Chief Executive Dara Khosrowshahi and other company executives are only triggered when that valuation is reached.
Uber will follow Lyft in going public.
Crypto Extends Losses; IMF Chief Calls Crypto Disruptors
Major cryptocurrencies continued to trade in the red on Friday morning in Asia, extending losses following an unexpected rally the week before. Bitcoin finally lost its grip on the $5,000 level amid a bearish sentiment.
Bitcoin dropped 6.59% to $4,991.2 by 12:02 PM ET (04:02 AM GMT). The digital coin had been staying above the $5,000 level since it suddenly surged on April 1 and it even reached as high as $5,299.4 on Monday.
Ethereum lost 8.45% to $163.69, XRP dived 9.27% to $0.32176 and Litecoin plunged 13.83% to $77.878.
The crypto market cap slid further to $169 billion from $184 billion at the beginning of this week, down 8%.
The crypto market ended on a low note this week amid bearish outlook.
Cryptocurrencies were criticised as “disruptors” that are “clearly shaking the system” by Christine Legarde, the Managing Director of the International Monetary Fund.
Speaking to CNBC on Wednesday, she warned that digital tokens could act as a catalyst to shake up the banking and finance industries.
“I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … that is clearly shaking the system,” Legarde said.
She further noted that regulation should come in play to address such financial industry changes.
“We don’t want innovation that would shake the system so much that we would lose the stability that is needed,” Legarde told CNBC.
In Asia, South Korea’s leading crypto exchange Bithumb recorded a net loss of $180 million in 2018 due to a sharp decline in the crypto market. The net loss marked a huge setback from a net profit of $469 billion the year before.
Bithumb also suffered from a hack two weeks ago, losing about $13 million in the EOS cryptocurrency and about $6.2 million in XRP. The company is also reportedly downsizing to cut half of its staff in South Korea.
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