Interest Rates Are Still at Record Lows in Europe

In late April, the European Central Bank (ECB) resolved to keep interest rates at historically low levels and also announced that it plans to continue its aggressive debt reduction and purchasing program to further boost the economy of the member nations that make up this powerful trading bloc.

According to a news report published by BBC News, ECB President Mario Draghi said that the economic recovery was more solid than ever, but he pointed out that inflation still needs to prove whether it can sustain the current pace and establish long-term resistance.

Draghi has pointed out that promoting growth and job creation are important goals for the ECB, but he is worried that the continent is bordering on deflation. The continued reduction of consumer prices discourages business activity and thus ends up impacting the economy by setting off a deflationary course.

The ECB is really hoping for inflation to spread in the region, and for that it plans to continue applying a radically expansionary monetary policy, which has already been taking place for more than a year.

During a news conference in Frankfurt, Draghi explained that the data available since March confirmed that the cyclical recovery of the economy has been gradual and solid.

The interbank interest rate that banks can access and borrow for 24 hours, will stay at 0.25 percent for the time being while the daily deposit rate, which fell into negative territory for the first time in June 2014, is now at 0.4 percent.

Economists do not expect new announcements with regard to European interest rates before the second round of the presidential elections in France, which are scheduled for May 7.

Inflation contracted in March to 1.5 percent after having reached two percent in February, the hopeful target rate currently sought by the ECB members.

As Brexit Gets Triggered, Companies Look to Leave the UK

The British Prime Minister, Theresa May, officially has triggered the British negotiations with the European Union related to the UK’s exit from the common market. The negotiations will take two years, and could be potentially extended. The British will need to change multiple laws, which are currently entrenched in the system after 40 years as part of the EU.

 

The European leaders aren’t going to make this divorce easy. The British would like to exit smoothly while keeping access to the common market. But, Angela Merkel, the German Chancellor, stated that before any trade talks take place, an agreement must be made about ways to severe the highly linked relationship.

 

This means, CNN Money claims, the Brits will not know for quite a while what kind of a trade deal they’ll get. If there’s no trade deal, WTO tariffs will apply. This uncertainty isn’t good for business. And some companies aren’t willing to wait.

 

Some operations and jobs are already being relocated to continental Europe. For financial institutions, for example, it is crucial to keep the so-called “EU passport,” allowing them to offer their services across the EU member nations.

 

“For planning purposes, we must assume a hard Brexit in which the U.K. loses its ability to passport into the EU,” claimed James Cowles, Citigroup’s CEO for Europe.

 

Another financial giant, JP Morgan, is looking to move some operations to either Dublin or Frankfurt. Meanwhile, UBS and HSBC stated that they could move some of their employees outside of the UK. At the same time, AIG is setting up a unit in Luxembourg.

 

Other industries are affected as well. When it comes to automakers, their executives need to reconsider keeping their manufacturing operations in Britain. For airlines, there’s uncertainty as well. If no replacement deal is reached for Open Skies agreement, flights between the UK and EU could get halted.

 

As Brexit talks begin, Britain is facing a block of 27 nations. It looks like the Brits don’t have an advantage here.

Britain Is Open For Business According To Prime Minister Theresa May

Theresa May has her hands full, according to many economists. But May is not fazed by the doubters that say the United Kingdom is going to stumble economically, due to the Brexit decision. UK’s prime minister reassured political and business leaders that Britain will be open for business after the departure from the EU is completed. May’s speech at the Davos Economic Summit was prompted by the European Union reports that post-Brexit trade deals with the UK would be difficult.

 

 

Before the Davos Summit, May outlined Britain’s plans to exit the EU. May confirmed the fact that her country was destined to leave the EU, and that any new deal with the European Union would require a parliamentary vote. The prime minister also said Britain would walk away from talks if the EU did not sanction the Brexit agreement. Britain is prepared to incorporate a new trade and tax plan after it quits the EU, according to a spokesman for Prime Minister May.

 

 

The big question after the exit from the EU is finalized is, how will Britain do in the global market when the EU is not there to call the shots? And the answer, according to May, is the UK is capable of making its own trade deals and always has been. The Brits have been talking to countries like Brazil and Argentina ever since the Brexit vote, and some members of the EU want to keep their own economic ties with Britain.

 

 

But now that Trump is president, there is speculation that trade between the U.S. and the UK could be a challenge. Trump is pushing for better trade deals with all trading partners, so it is unclear what a U.S./UK partnership will look like going forward. But May is not worried about trading with the United States. She said Britain can survive and flourish even though Trump is in the White House.

Scottish National Party Pushing For Independence From The UK

The Brexit vote was one of the top news stories in Europe, and around the world, in 2016. The UK desire to leave the European Union finally became a reality. But not everyone in the UK is happy about leaving the EU. Scotland has been called the stepchild of the United Kingdom for years, and the Scottish National Party wants to do something about that title now that many of the Scots want to stay in the EU.

 

 

Scotland has been neglected, and dictated to, by the right-winged Westminster government for years. Now that there is an opening in terms of change, the Scottish National Party wants to make the best of that change by pushing for independence. Scotland is not an equal partner and never has been, according to a Scottish National Party international affairs spokesman. The party wants to protest the Article 50 proceedings. Scotland plans to put 50 substantive and serious amendments in front of the UK’s legislature.

 

 

But not everyone in Scotland feels a break from the United Kingdom is the right thing to do at this point in time. Scotland economy is dependent on oil, and oil prices have not rebounded enough to sustain economic growth.

 

 

British Prime Minister May wants to begin the Brexit departure by the end of march 2017, but there are hurdles to overcome. It could take years before a complete break from the EU is accomplished. During that time Scotland, as well as Ireland, could make the process even more complicated. Ireland’s financial situation is just as bad the Scottish economic situation.

 

 

The Brexit exit from the European Union could cause a breakdown in the long-standing relationship between England, Scotland, and Ireland. England doesn’t want the UK to fall apart, but that is a possibility, according to some London insiders.

 

UK Council Cuts: Austerity Economics or Just a Load of Rubbish?

Ever since the Brexit referendum in 2016, the UK news media has largely focused on topics such as Prime Minister Theresa May’s handling of negotiations with the EU and the threat of funding cuts to social care as part of future austerity measures. Months before Brexit, however, cuts were already being felt at the council level, and British families are already smelling the consequences.

 

The budget cuts at councils across England have resulted in drastic reductions to waste collection services, a most unpleasant situation that is being handled in less than decorous ways.

 

Back in November, a report broadcast by Good Morning Britain revealed that homeowners in Greater Manchester were forced to pay hundreds of pounds each year for private dustmen to empty their bins. The problem is that bin collection has been reduced to just once a month in many councils, which means that furry creatures are now emerging to feast on the food recycling items mixed in with the uncollected rubbish. It is worth mentioning that these homeowners are still paying full council tax despite the cuts.

 

It is worth mentioning that council leaders have tried to put a positive spin on the smelly state of affairs claiming that the cuts are not only economising but also motivating residents to recycle. This lip service was put to rest by a December report by The Telegraph, which revealed that British recycling has been on the decline since the cuts started. According to data compiled by the Department for Food, Environment and Health, UK recycling was down by 0.6 per cent last year, meaning that only 44.3 per cent of rubbish was recycled, down from 44.9 per cent.

 

To add insult to injury, fly-tipping has sharply risen in places such as Sunderland and Newcastle, where council cabinets have collected more than £400,000 worth of fines against residents caught littering and fly-tipping. According to the Chronicle Live in Newcastle, fly-tipping incidents totalled 900,000 across the UK from 2014 to 2015. If anything, the increase in fly-tipping is eating into the council budgets since they have to send out dustmen on special assignment to look for tippers and clean up their mess.

 

The situation is even worse at councils such as North Somerset and Basingstoke, which are squeezing residents with new charges for dumping plasterboard at £10 per sheet. Other councils are planning more charges for any rubbish outside of discarded packaging from the weekly shop.

 

It is safe to say that quite a few people are vexed over the aforementioned developments. A few months ago, an activist walked into the Washington Civic Centre in Sunderland and dumped a load of litter at the lobby in protest.

Porsche Developing New Electric Car

European car company Porsche is developing a new model of electric car; the German firm’s intent is to put a product on the market to compete with the popular Tesla electric vehicles. The new car is currently being referred to as the Mission E and is in the prototype stage. To see how it responds to extreme weather conditions, Porsche engineers are testing it at the Arctic Circle. Business Insider magazine has an excellent article, complete with pictures, on their website about the Mission E.

 

An entirely electric vehicle, the Mission E will have the superior handling and performance that consumers have come to expect from Porsche. Furthermore, it will be able to drive up to 310 miles on a single charge of its lithium battery, which is an improvement over the many electric cars currently on the market that can only travel around 200 miles or so before needing a recharge. In order to evenly distribute weight, the battery will run the whole length of the car. Visually, the Mission E is sleek and elegant and comes with suicide doors. The dashboard is full of the latest computerized displays; the driver uses cameras to keep track of what’s going on outside the vehicle instead of mirrors.

 

The development of this vehicle is great news, in my opinion. Porsche has long had the reputation for making some of the best automobiles in the world, and the Mission E promises to be part of this tradition. It’s wonderful to see a traditional firm on the very cutting edge of making vehicles that do minimal damage to the environment while running like a dream. I’m hoping that Porsche can bring this vehicle to market by their target year of 2020 at an affordable price.

 

 

Britain Heading for a Hard Brexit

The United Kingdom is heading for a hard Brexit from the European Union, it looks. The British Prime Minister, Theresa May, is interested in control of the borders at the expense of the access to a single European market. If the UK limits movement of people with the European Union, in response Britain will not continue to enjoy the full benefits of trade in goods and services with the remaining 27 member states.

 

Philip Hammond, the finance chief within the cabinet, stated that as a result the UK may be forced to change its economic and social model, and strive to become another Singapore, BBC reports. However, there are critics who say it is not likely since Britain isn’t a small city-state.

 

Meanwhile, the Labour Party leader, Jeremy Corbyn, claimed that his country under May’s leadership “appears to be heading us in the direction of a sort of bargain-basement economy on the shores of Europe.”

 

The European leaders, including Chancellor Merkel, stated that they won’t allow the British to cherry pick, and get the best exit terms, while limiting the flow of goods and services between the EU members and the UK.

 

The British pound has suffered, although it has helped to stimulate British exports for now. Back to 2007, the pound was a high-flier at $2 per pound. Just prior to the Brexit vote, it was $1.50 per pound. Now, the British currency has declined another 20 percent to just above $1.20. It is not impossible for the pound to fall below the dollar if hard Brexit comes. It looks that it’ll get a lot more expensive for the Brits to leave their rainy island and travel where the sun shines.

 

Office Depot Sells Their European Operations

Earlier this month, Office Depot had completed it’s sale of their European locations to The Aurelius Group. The company is not interested in their international dealings anymore and want to focus on their North American presence. Office depot had over 6,000 employees in 14 different countries in Europe. The company was sold at an undisclosed price.

 

Office Depot previously attempted a merger with Staples last year but the deal did not work out. The company had successfully acquired OfficeMax in 2013. They will now be closing over 300 stores in the United States due to the low ROI.

 

The company has been averaging over $14 billion in sales per year since 2015. The company still has over 49,000 employees at 1,800 stores. The volume of sales and ROI has been much higher than during their early years. The stock price also has more than doubled in recent months. The stock went from $3 to nearly $8.

 

Roland Smith will be stepping down at the CEO and they are currently searching for a suitable successor. Smith is still acting as the CEO until the end of this quarter.

 

Office Depot was originally founded in 1986 with their first store in Ft Lauderdale. They soon merged with Office Club to become one of the largest office supply store in the country. In the 1990s, they began their international expansion to Canada and Europe.

 

AURELIUS Group is an asset management firm for Europe. They hold their primary offices in Munich, London, Stockholm, and Madrid. With over 2 billion Euros in yearly revenue, Office Depot of Europe is their largest asset in the continent. They will continue running the chain of stores with the original plans and branding of Office Depot. They also maintain over 100,000 business to business contracts with large clients in Europe.

 

UK Banks Are Fighting Brexit

Banks located in London are lobbying around the clock to convince the government to remain as open as possible to the rest of Europe. These banks are not interested in lobbying other European officials since the Brexit is imminent.

 

The banks are crunching numbers to decide if they should move their headquarters to other parts of Europe. There is a lot of uncertainty of the banking industry in the UK after they will lave the union.

 

Britain is currently rejecting even partial membership of the European Union. There are fears that having access to the market will also lead to unwanted immigration due to the EU’s policies.

 

France and Italy have also been considering leaving the European Union. Many bank lobbyist have plans to begin their protest in Paris in the near future. Le Pen of France is against the free movement of European immigrants as well as having a European central bank.

 

The Brexit will certainly be the most devastating to the EU since it is the financial center of the continent. At the same time, some European institutions see it as an opportunity to compete against the English dominated financial market. French President Francois Hollande is certainly one of the people against the British dominance over the Euro financial market.

 

Britain is heavily reliant on their financial and banking sector of the economy for their dominance. Britain acts as the top investment banker for the rest of Europe and they hold stakes in all countries. The connection of the UK to the EU certainly helps with the ease of expanding their financial hold.

 

Many European economists fear the instability if London’s banks are cut off from the dependents in continental Europe. There was well over 1.1 trillion pounds in loans to European countries in 2016 alone. Many of the financial lobbyists want a slower transition to give banks time to finish business.

 

UK Trade Set to Continue After Brexit

In 2016, the United Kingdom famously voted to exit the European Union. While the Brexit event garnered headlines around the world, the controversy is now over and officials in Britain and the European Unit are working to address important trade details that remain unresolved.

According to the BBC, the City of London Corporation’s policy chair, Mark Boleat, has assured observers that London will remain the leading financial center in the world. For nervous UK residents, the sentiment is undoubtedly comforting, but concerns remain.

It is important to businesses in both Britain and the European Union that trade continues in as free a manner as possible. While Britain might not continue to enjoy the frictionless trade that the European Union was designed to foster, it will still be a major trade partner for almost every European country.

Some observers have noted that European countries carry on a tremendous amount of trade with the United States and other non-EU countries, so there is no reason that they cannot continue to trade heavily with the UK. Obviously, certain policy issues will need to be resolved and new bilateral treaties might be necessary between the UK and its European partners.

Ultimately, however, economic participants should take some comfort in the fact that, where economic incentives exist, people have a way of making business work. When the furor surrounding Brexit fades away, many UK companies might find themselves engaging in business in much the say way that they did before the exit from the European Union.