- Title: UK to try and develop competitive economy to EU say market experts
- Date: 17th January 2017
- Summary: FRANKFURT, GERMANY (JANUARY 17, 2017) (REUTERS) VARIOUS FRANKFURT STOCK EXCHANGE VARIOUS OF DAX INDEX BOARD TRADERS AT DESK VARIOUS OF DAX INDEX BOARD TRADER AT DESK TV SET SHOWING BRITISH PRIME MINISTER THERESA MAY HOLDING A SPEECH (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "Mrs. May, the prime minister, made a very clear announcement. We know now that the Brexit will be a hard Brexit. We know now what to expect. It will be very tough negotiations from March over the next two years. The cat is finally out of the bag. Finally, she said something so we all know now what this is all about." DAX INDEX BOARD (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "We are facing the problem now - also here in Germany, an export nation - that the Brits will try to compete with very low tax rates. They want to survive somehow. So what options do they have if access to the EU's internal market is blocked? They'll say 'we will lower corporate tax massively and labour costs'. That would lead to an ongoing competition with Germany. And we must not forget that she has an ally now, Donald Trump, who wants to reach a very exclusive trade deal with her. That could give the Brits several advantages." TRADERS LOOKING AT SCREEN SIGN "BOERSE FRANKFURT" (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "The EU's internal market is no longer part of the British economic politics. They are out. They need to find some sort of arrangement with that market in order to survive in the long term. But the Brits want their empire back - in the sense of a trading nation that can do business with the world. It's like an extra player in Europe next to the EU. And with the U.S. under a president Donald Trump they have a very important ally." TRADER LOOKING AT SCREEN INTERIOR OF TRADING FLOOR MUNICH, GERMANY (JANUARY 17, 2017) (REUTERS) PRESIDENT OF IFO INSTITUTE, CLEMENS FUEST, ENTERING ROOM NEWSPAPERS NEWSPAPER HEADLINE SAYING (German) "POUND DROPS BEFORE MAY SPEECH" (SOUNDBITE) (English) PRESIDENT OF IFO INSTITUTE, CLEMENS FUEST, SAYING: "I think it is true that the UK will have to reinvent its economic model. I think they will do three things: First, they will have to lower value of their currency, so devaluation. This will make the economy more competitive. They will reduce taxes and try to attract investments and jobs by having attractive tax rates. And they will also be more flexible. They will be able to subsidise certain sectors, have targeted support for certain industries. Something that cannot be done within the EU because we have strict state aid rules. So the UK would not be subject to state rate rules anymore and would be able to subsidise certain industries very flexibly." SIGN "CENTRE FOR ECONOMIC STUDIES (CES)", UNIVERSITY OF MUNICH PEOPLE ENTERING BUILDING
- Embargoed: 31st January 2017 14:30
- Keywords: Theresa May speech Brexit EU Germany reax Halver markets Fuest Ifo
- Location: FRANKFURT, MUNICH, GERMANY
- City: FRANKFURT, MUNICH, GERMANY
- Country: Germany
- Topics: Economic Events
- Reuters ID: LVA0015ZGYM2V
- Aspect Ratio: 16:9
- Story Text: Market experts in Germany expect the UK to try and develop a competitive economy to the EU's internal market, said a market analyst in Frankfurt on Tuesday, who said he was glad she had now made the hard Brexit clear so they could know what to expect.
"Mrs. May, the prime minister, made a very clear announcement. We know now that the Brexit will be a hard Brexit. We know now what to expect. It will be very tough negotiations from March over the next two years. The cat is finally out of the bag. Finally, she said something so we all know now what this is all about," said Robert Halver, Head of Capital Markets Analysis at Baader Bank.
"We are facing the problem now - also here in Germany, an export nation - that the Brits will try to compete with very low tax rates. They want to survive somehow. So what options do they have if access to the EU's internal market is blocked? They'll say 'we will lower corporate tax massively and labour costs'. That would lead to an ongoing competition with Germany. And we must not forget that she has an ally now, Donald Trump, who wants to reach a very exclusive trade deal with her. That could give the Brits several advantages."
Clemens Fuest, president of the IFO Institute in Munich, an economic think tank predicted a similar scenario.
"I think it is true that the UK will have to reinvent its economic model. I think they will do three things: First, they will have to lower value of their currency, so devaluation. This will make the economy more competitive. They will reduce taxes and try to attract investments and jobs by having attractive tax rates. And they will also be more flexible. They will be able to subsidise certain sectors, have targeted support for certain industries. Something that cannot be done within the EU because we have strict state aid rules. So the UK would not be subject to state rate rules anymore and would be able to subsidise certain industries very flexibly."
Britain will quit the European Union's single market when it exits the bloc, Prime Minister Theresa May said on Tuesday, in a decisive speech that quashed speculation she would seek a compromise deal to stay inside the world's biggest trading bloc.
Setting out a vision that could chart Britain's future for generations, May answered criticism that she has been coy about her plans with a direct pitch for a clean break, widely known in Britain as a "hard Brexit".
May promised to seek the greatest possible access to European markets. But she also said Britain would aim to establish its own free trade deals with countries far beyond Europe, and to impose limits on immigration from the continent.
For the first time, she acknowledged that those measures would require withdrawing from the market of 500 million people. - Copyright Holder: REUTERS
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