Closed Brexit: Boris Johnson renews vow that UK will exit EU on October 31 — as it happened


Live coverage from the FT on pivotal Brexit week.

Johnson to unveil Queen’s Speech amid Brexit countdown

Good morning and welcome to the FT’s live coverage of the latest Brexit developments and the Queen’s Speech, as Westminster enters a crucial 14 days ahead of the October 31 scheduled exit date from the EU.

The Johnson government will unveil its legislative agenda as the countdown clock to Brexit ticks, with fresh fears surfacing in markets today over the chances of agreeing an exit deal in time.

Sterling under pressure as Brexit doubts resurface

Sterling fell on Monday morning as fresh fears over Boris Johnson’s chances of sealing a Brexit deal weighed on the currency following last week’s breathless rally.

The pound was recently 0.6 per cent lower at $1.2570, more than a cent below its peak on Friday but still 3 per cent above its levels on Thursday morning.

The currency enjoyed its best two-day period since the financial crisis on Thursday and Friday, as a sudden burst of hope that a Brexit deal was still possible swept through markets.

But that optimism has been tempered by a weekend which produced no meaningful breakthrough and a host of fresh questions. The FT reported last night that Brussels was left baffled by the British proposals after two days of intensive negotiations.
There was “no breakthrough yet”, said one EU diplomat, while noting it was positive that talks would continue in Brussels today.

UK government bonds rally as hopes for Brexit deal ease

British sovereign bonds are rallying strongly after the EU warned over the weekend that Boris Johnson faces an uphill battle in striking a Brexit deal.

The 10-year Gilt yield slumped 8.6 basis points to 0.622 per cent, signalling a rise in the price of the bond.

Monday’s action represents a reversal of last week, when signs of a breakthrough sparked a sell-off in Gilts.

Brexit developments are crucial for Gilt traders because the outcome is expected to have a significant effect on the economy, and in turn, what path the Bank of England will take on interest rates.

“The optimism as regards the Brexit talks seem to be fading somewhat which is likely to put some bids back into the Gilt market this morning,” said Peter Schaffrik, a strategist at RBC in London.

He adds:

Given how tight the timings are it appears a tall order for a deal to be agreed in time for sign-off at this week’s EU Council meeting. EU leaders meet in Brussels on Thursday and Friday of this week (October 17th and 18th). Typically, Brexit issues have been dealt with on the Thursday evening. No agenda for this week’s meeting has been published as of yet.

However, even if a deal is not agreed by the time of the EU Council, that is not the end of the matter. The real ‘hard’ deadline for the EU and UK to strike a deal is October 31st , the date of the UK’s scheduled departure. Even if it is not possible to agree a deal this week, talks can still run beyond the Council meeting, closer to October 31st. Sign-off on a deal, if there is one, may only come close to Brexit day. For example, in April, the decision to grant the UK an extension came just two days before its (then) scheduled exit date.

An unusually charged Queen’s Speech

This Queen’s Speech is one of the most unusual in British parliamentary history.

Boris Johnson’s government tried to prorogue parliament for five weeks at a key juncture in the Brexit process to introduce the speech, but was undone by a historic ruling by the Supreme Court in September.

The Johnson administration has long said it needs to reset the legislative agenda and introduce its priorities for government including investing in infrastructure and the health service and tackling crime.

But given Mr Johnson does not have a majority in the House of Commons it is not clear whether the speech will actually pass when MPs have the chance to vote on it in the coming days. What’s more if there is a general election in the next few months, as many expect, all the plans laid out in the Queen’s Speech will be scrubbed.

Today’s line-up for the Queen’s Speech

The Queen’s Speech is a piece of political theatre laced with pomp and ceremony. The Queen in the imperial state crown in the House of Lords reads a speech from her government in front of both houses that outlines its plans for the parliamentary year.

Below is a guide to today’s events from the House of Commons’ Table Office.

11:25: The House of Commons is due to meet for the Queen’s Speech.
MPs may follow the Speaker and party leaders to hear the speech delivered in the House of Lords.

The Commons will be suspended until 2.30pm.

2:30pm: The Speaker makes a brief statement about the duties and responsibilities of MPs, a practice at the start of each session that was agreed by the House in 2004.

The Outlawries Bill will receive its first reading, a formal proceeding whereby the “House asserts its right to deliberate on matters of its own choosing before those proposed by the government in the Queen’s Speech”. No bill is produced nor is there any debate.

When the debate on the Queen’s Speech is opened, two government backbench MPs propose and second a motion for an address (thanking the Queen for the Speech), after which the Leader of the Opposition and the Prime Minister will speak.

Debate in the Commons could continue until 10pm.

The Speaker announces at the start of the debate which subjects are to be debated on each subsequent day. The half-hour end-of-day adjournment debate will be initiated by Dan Jarvis on the subject of 75th anniversary of the Battle of Arnhem.

The debate on the Queen’s Speech will be resumed on Tuesday and normally lasts for six sitting days. MPs will vote on the motion on the final day.

UK stocks fall

Domestic stocks are giving back some of Friday’s large gains in morning trading.

• The FTSE 100 fell 0.5 per cent, despite the falling pound which typically acts as a boost to the blue-ribbon index.

• The FTSE 250, considered to be the best gauge for the domestic economy, fell 1 per cent.

• It rose 4 per cent amid Friday’s burst of Brexit enthusiasm.

• Banks including Lloyds and RBS fell around 3 per cent, following the double digit gains from the end of last week. British lenders are considered particularly exposed to the dangers of a no-deal Brexit.

Back to reality…
As UK stocks and sterling give back some of Thursday and Friday’s impressive gains, the key phrase floating around the City of London this morning is “reality check.”

The weekend’s headlines showed just how tough it will be to agree a Brexit deal within the remaining days before October 31, let alone pass that deal through the deadlocked British parliament.

Strategists at Société Générale and ING both flag the “reality check for sterling,” which rose as much as 2 per cent against the US dollar to briefly break above $1.27 during Friday afternoon’s frenzy of optimism.

Here is some more from an interesting note from ING:

With the EU summit starting this Thursday, we still see a high bar for the talks to progress successfully (albeit admittedly the probability of a deal has risen). Large GBP gains have in part been caused by meaningful short speculative positioning, exaggerating the effect of the news flow. With the market possibly getting ahead of itself, the pound is now vulnerable to a sell-off should the talks break down again.

The “triumph of hope vs. reality” is how the rates strategists at Rabobank termed market optimism on both Brexit and US-China trade at the end of last week.

“Unsurprisingly, the optimism of a breakthrough re. the Irish question that helped underpin the risk-on move on Friday has evaporated over the weekend.”

Some stories to whet your appetite as you prepare for today’s events

What to expect from Boris Johnson’s first Queen’s Speech

Boris Johnson’s opponents dismiss his debut Queen’s Speech as a “stunt”, which could be voted down for the first time in 95 years, writes Sebastian Payne. Many in Westminster view it as pointless and the 22 pieces of legislation set out in the speech have little hope of making it into law. Mr Johnson lost his working majority last month when 21 moderate MPs were kicked out of the Tory party for supporting parliamentary efforts to stop a no-deal Brexit.

Meanwhile in Brussels, officials are baffled:

Brussels baffled by UK’s ‘complex’ proposals to fix Brexit deadlock

Michel Barnier, EU chief Brexit negotiator, told diplomats on Sunday evening that British plans to keep Northern Ireland in the UK’s customs territory while avoiding a hard border on the island of Ireland were fiendishly complex and not yet properly worked out. 

Chris Giles reports on how hard it will be:

How Boris Johnson’s hard Brexit would hit the UK economy

The Brexit deal that Boris Johnson is seeking to strike with Brussels this week would push the UK towards a hard Brexit and lead it missing out on up to 7 per cent of growth, according to estimates from UK in a Changing Europe.

State Opening of Parliament due at 11.25am

And now the crown

The Queen traditionally wears the imperial state crown for the annual state opening of parliament.

According to the Royal Collection Trust, the term imperial state crown dates back to the 15th century when “English monarchs chose a crown design closed by arches, to demonstrate that England was not subject to any other earthly power”.

Brexit tones seep through even then.

The imperial state crown, which reportedly weighs 1.6kg, was made for the coronation of her father King George VI in 1937 and is based on one designed for Queen Victoria in 1838 by the crown jewellers of the time, Rundell, Bridge & Rundell, the trust says.

The Queen wore a hat in the state opening of parliament in 2017 and her crown was carried along beside her when snap elections were held.

Traders braced for swings in sterling

The pound is down 0.7 per cent today, giving up some of last week’s sharp gains as traders reassess the likelihood of a last-minute Brexit deal.

Shifts in the options market, where bets are made on exchange rates, show expectations for sterling volatility over the next month have risen sharply over the past few trading days. They are at their highest level since April when former prime minister Theresa May negotiated a six-month extension to the original departure date.

The scene in the House of Lords ahead of the Queen’s Speech

As is tradition, the Queen will give her speech outlining the government’s legislative agenda from the chamber of the House of Lords.

MPs will file over from the Commons to listen before debating the speech later in the day. Boris Johnson and Jeremy Corbyn will both speak in that debate early afternoon London time.

Ireland: Brexit deal can be done

The usual British pomp and ceremony is well underway in central London now, but the real action is taking place in Brussels this week as the EU and UK continue talks over the last-minute Brexit deal.

Ireland’s foreign minister Simon Coveney gave an update on Dublin’s thinking earlier as he met his EU counterparts in Luxembourg, in comments reported by Reuters:

A deal is possible and it is possible this month, maybe even this week but we are not there yet … there’s still a lot of work to do, so I hope we can make more progress today.

On her way

Six horses pull the Queen and Prince Charles in her gilded coach on a well rehearsed journey from Buckingham Palace towards the Palace of Westminster along Pall Mall on a wet October day in London.

Programmed for Brexit

Programmes for the state opening of parliament and the Queen’s Speech on the red seats of the House of Lords:

Emoticon Queen’s Speech imminent

The Queen has arrived at Parliament.

We are expecting the speech to concentrate on Boris Johnson’s plans for health and crime, although on Brexit it is also likely to include the prospect of the Withdrawal Agreement Bill, the critical piece of legislation required to put any new Brexit deal into law.

First Queen’s Speech for the first female Black Rod

This is the first Queen’s Speech for Sarah Clarke, the first female Black Rod.

Ms Clarke’s ceremonial role will be to knock on the door with her rod, topped with a golden lion, to invite MPs to listen to the Queen’s Speech in the House of Lords.

Her position is one of the most exotic in British parliamentary tradition.

Labour: Queen’s Speech a farce

The major opposition parties have already criticised today’s Queen’s Speech.

Diane Abbott MP, Labour’s shadow home secretary, said the speech is “farcical.”

It is just an uncosted wish list which the government has no intention and no means to deliver, and nothing more than a pre-election party political broadcast.

The Liberal Democrats called it a “gimmick.”

Today’s Queens Speech is nothing more than a Tory party manifesto that will damage our country. It is an election gimmick driven by Boris Johnson.

Emoticon Queen’s Speech begins

The Queen’s Speech begins with Brexit:

“My government’s priority has always been to secure the UK’s departure from the European Union on the 31st of October.”

Brexit key points

Here are the key early lines relating to Brexit:

• The government intends to work towards a new partnership based on free trade and cooperation.

• New regimes are planned for fishing, agriculture and trade to “seize the opportunities that arise from leaving the EU.”

• An immigration bill ending the free movement of people will lay the foundation for a new immigration system. Resident EU citizens will have the right to remain as previously laid out.

• Stability and new opportunities for the financial service and legal sectors.

Queen’s Speech includes 22 pieces of legislation

The Queen in her 65th Speech addresses both houses in the House of Lords as she sets out the legislative agenda for the next parliamentary session. The speech reflects the government’s priority is exiting the EU and confirms that the prime minister will seek to draw up a Withdrawal Agreement Bill.

Here’s our story of the legislative agenda

The Queen’s Speech included 22 pieces of legislation that sets out the contents of a potential Conservative party manifesto. Remember, the prime minister has no Commons majority so he cannot expect to put any of his proposals into law in this parliament.

Measures announced on Monday include a “fair” immigration bill that introduces a points-based system that seeks to control and limit migration. Other issues include a domestic abuse bill and plans to protect the police as well as new extradition powers.

Chancellor Sajid Javid on Monday announced plans for a pre-election Budget on November 6.

The opposition Labour party denounced the Speech as a “cynical stunt”.

Pensions changes

The speech promises simpler oversight of pensions savings, and a new law to tackle irresponsible management of private pension schemes. More details on that when we have them.

‘New economic plan’

Domestic lines include strengthening and supporting the NHS, reforming adult social care and investing in economic growth via a “new economic plan.”

The speech also promised changes to the criminal justice system, a plan to lessen the impact of divorce on children, changes to internet safety and a national infrastructure strategy including fresh investment in broadband and an “ambitious” national space strategy.

Queen concludes her speech

The Queen has finished laying out the Johnson government’s ambitions for office, and is returning to Buckingham Palace.

Here is our political reporter Laura Hughes’s report on the day’s developments.

UBS expects a Brexit extension

Back to the business of Brexit, and these new lines from UBS Wealth Management, which oversees $2.5tn for rich clients:

“In our view, it is still too early to conclude that success is likely. With time tight and much ground to cover we still, on balance, believe that the UK will be asking for a further extension to Article 50. This is likely to be followed by a general election which will decide the final Brexit outcome”

Johnson vows to ‘re-energise and unite’ the country as ‘we get Brexit done’

You cannot accuse Boris Johnson of setting unambitious targets. In his introduction to the Queen’s Speech the prime minister says his government’s mission is “nothing less than making our country the greatest place on earth”.

The first step to greatness, he says, is the “defining opportunity of Brexit”:

So we are going to get the gears on our national gearbox working again. Leaving the EU is a defining opportunity for us to set a new course and a new direction for our country – to do the things we have not been allowed to for decades, to tear away that bureaucratic red tape, to set our own rules, and to release the talent, creativity, innovation and chutzpah that exists in every corner of our United Kingdom.

Removing that “red tape” and setting a new course is a nod to the regulatory divergence from the EU that the Johnson government is prioritising. This relatively hard interpretation of Brexit would result in the nation missing out on up to 7 per cent of growth, according to estimates from UK in a Changing Europe.

You can read the prime minister’s full commentary, along with background reading from the government on its legislative plans here.

The DUP is boxing itself in a corner on Brexit

From the FT’s political editor George Parker:

Just a thought on how the DUP is boxing itself into a corner on Brexit. Under Theresa May’s backstop deal, there would have been a thin regulatory border between GB and NI until a final trading relationship was sorted. No customs border between NI/GB. 

Under Boris Johnson’s plan, there would be a thick customs and regulatory border in the Irish Sea between GB and NI, possibly long-term. Plus the risk that this closer relationship with the EU is tested in a referendum, exposing how the DUP is out of touch with popular opinion. 

‘Chill winds of Brexit’ swirl round Scottish economy, says finance minister

The “chill headwinds of Brexit” are already upon the Scottish economy, Derek Mackay, Scotland’s finance secretary said on Monday, writes Mure Dickie in Aberdeen.

Mr Mackay told the Scottish National party conference in Aberdeen that stockpiling by companies ahead of the UK government’s October 31 Brexit date meant Scotland might avoid a recession in the short term. But he blamed looming departure from the EU for rising unemployment and stalling business investment.

We should be in no doubt that the chill headwinds of Brexit, any form of Brexit, are upon us

Mr Mackay seized upon an opinion poll published at the weekend that found more Scottish voters believe that Scotland would be better off economically as an independent country within the EU rather than staying in the UK after Brexit.

We are winning the argument on Scotland’s economic future

Mr Mackay did not mention Scotland’s large notional fiscal deficit and the possibility of a “hard” border between an independent Scotland and post-Brexit UK, factors that could raise major difficulties for maintaining economic growth and current levels of government spending.

City welcomes Queen’s Speech

Business lobby group TheCityUK has broadly welcomed the Queen’s Speech, which it said included “a welcome focus on our industry’s future competitiveness”.

The government has promised a Financial Services Bill, which it says would “support the UK’s position as an international financial services centre”, including simplifying the process that allows overseas investment funds to be sold in the UK.

Chris Cummings, chief executive of the Investment Association, said “this is an extremely positive step, which will benefit UK savers by providing them with more choice to help them achieve their financial goals.”

But of course the City’s biggest worry is still Brexit. TheCityUK’s chief executive Miles Celic said:

It is now vital that the UK and the EU move forward together to secure a Brexit withdrawal agreement which will minimise economic disruption and allow us to move on to the shared priorities of the future economic relationship.

The Federation of Small Businesses had this blunt response to the speech:

Today’s Queen’s Speech serves as a stark reminder of the many domestic challenges that have been neglected over the past three years as Brexit has absorbed government bandwidth.

The director-general of the Country Land and Business Association spoke of a “wasted year” as the Agriculture Bill restarts its process through the legislative process. The Queen’s Speech noted plans to “implement new regimes” for fisheries, agriculture and trade once the UK leaves the EU.

Sarah Hendry, director-general of the CLA, said:

The government’s direction of travel is robust and ambitious, and will be welcomed by rural businesses. Nevertheless, farmers will be dismayed that the Agriculture Bill has to start all over again having been stuck in the legislative process for the past year. It has been a wasted year.

She added:

Government must fast track the bill to make up for lost time, and finally give rural business owners some clarity.

Sterling slides

Sterling was recently trading 0.8 per cent lower at $1.2550, having fallen as much as 1 per cent earlier in the session.

Traders are repricing the likelihood of a Brexit deal amid signs last week’s sharp rally may have been premature. Talks are continuing in Brussels, but the clock is ticking.

One European official told the FT yesterday that the talks on Monday would be “one last chance” for the two sides to bridge their differences or risk failing to agree a deal by the time of the EU leaders’ summit on Thursday. 

Goldman Sachs has been optimistic on the chances of a deal for some time, here is the latest from its research team in a note issued earlier today:

Our view has long been that a Brexit deal was more likely than not before the end of October.

Until the substance of any potential changes to the existing Withdrawal Agreement is published, we leave our probabilities on terminal outcomes unchanged: 60% on a Brexit deal, 15% on a “no deal” Brexit, and 25% on no Brexit at all.

Voter ID proposals raise questions

One of the more contentious proposals in the Queen’s Speech could turn out to be over the proposal to tackle electoral fraud via new legislation.

The government said it would require voters to show an approved form of photographic ID in order to vote at a polling station in a UK parliamentary election in Great Britain and local election in England.

The government’s plans raise questions over the impact on parties’ traditional voter bases, according to an analysis by the FT’s John Burn-Murdoch and Chris Hanretty, professor of politics at Royal Holloway, University of London.

Existing forms of photo ID such as driving licences and passports would be one natural form of ID for voters to present at the polling station, but these documents are not distributed equally across people of different socio-economic backgrounds and political persuasions.

In the 2017 general election, 45 per cent of people with a driving licence voted Conservative, and 37 per cent voted Labour. Among those without a licence, the Conservative share fell to 27 per cent and Labour’s rose to 57 per cent, according to the analysis of the Understanding Society survey.

Data on differential rates of passport possession is harder to come by, but census data suggest that the net impact here may be more politically neutral.

Students, the unemployed and the long-term sick are all disproportionately unlikely to have a passport, and are all traditionally strong Labour groups, but the Tory-leaning retired demographic are also less likely to hold a passport.

“It’s not yet clear how this would affect parties’ vote shares in an election”, said professor Hanretty.

“We don’t know what proportion of supporters of different parties hold a passport, the other common form of voter ID. Nor do we know how many people would apply to their local authority for photo ID.

“But on the best available evidence, some supporters of the main opposition party are disproportionately likely to be affected by an extra barrier to voting”