The last-gasp effort to resolve the impasse over Britain’s departure from the EU on March 29 is in trouble after the government’s legal advice said it did not provide for a clean break in future.
Britain’s Attorney General Geoffrey Cox said there was a “legal risk” that the controversial Irish backstop to prevent a hard border with Ireland could remain indefinitely when the UK leaves the EU, despite the new Brexit agreement on Monday night.
Mr Cox's opinion means the chances of Prime Minister Theresa May’s Brexit plan being voted through parliament have taken a significant hit.
Brexiteers, including those from her own party, are vehemently opposed to any deal that could result in the UK remaining tied to the EU for an indefinite period.
The pound fell sharply from recent highs amid fears of a no-deal Brexit. It plunged 1.43 per cent by 11.30am GMT against the euro and 1.35 per cent against the dollar.
It recovered to a drop of 1.02 per cent by and 0.79 per cent against the dollar by 4.10pm, but it remained a disatrous day.
MPs are set to vote on Mrs May’s Brexit proposal on Tuesday evening, having overwhelmingly rejected her original plan in January by a record margin.
While a few parliamentarians have intimated they will change their minds, it will probably not be enough for the government deal to pass.
Mr Cox said “the legal risk remains unchanged” that the UK would have “no internationally lawful means of exiting” the backstop arrangement, “save by agreement”.
But he conceded the risk of remaining involuntarily had been reduced.
Mr Cox told Parliament that the new deal would “strengthen and improve the withdrawal agreement” and said it was highly unlikely that an alternative to the backstop would not be agreed to.
A Eurosceptic arm of the Conservative party, known as the European Research Group, whose support the government desperately needs, said the deal was not good enough.
Northern Ireland's Democratic Unionist Party said it could not support the government's new plan, leading Mrs May to warn that Brexit could be lost if the deal was not approved.
She has refused to back any extension to the UK's departure date, telling Parliament she was "certain we have secured the very best changes available".
Opposition leader Jeremy Corbyn urged MPs not to vote for the deal, saying: "It is simply not good enough to vote for a blindfold Brexit."
Labour's shadow Brexit secretary, Sir Keir Starme, said the government's plan was now in tatters.
“The Attorney General has confirmed that there have been no significant changes to the withdrawal agreement, despite the legal documents that were agreed to last night," Mr Starme said.
Naeem Aslam, chief market analyst at TF Global Markets, said: “Sterling took a nosedive on the back of the Cox statement.
"It was his opinion that matters the most. Now that he has made it clear that the recent deal has no weight, the door is wide open for the sterling to move lower against the dollar.
“Another historic defeat is strongly on the cards for Mrs May and all options are on the table with respect to another election or no Brexit at all.”
Mrs May flew into Strasbourg late on Monday for a last-ditch effort to salvage a deal with the EU.
Her frantic trip sparked anxiety among some MPs, who feared they might not have enough time to scrutinise what she agreed to before being asked to vote.
"Is this incompetence or is this just contempt for Parliament?" opposition Labour MP Yvette Cooper asked on Monday.
The UK is set to leave the EU on March 29 after a referendum in 2016 in which a 51.9 per cent of voters opted to leave the world's largest trading bloc.
UK’s AI plan
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- £10bn AI growth zone in South Wales to create 5,000 jobs
- £100m of government support for startups building AI hardware products
- £250m to train new AI models
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Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Syria squad
Goalkeepers: Ibrahim Alma, Mahmoud Al Youssef, Ahmad Madania.
Defenders: Ahmad Al Salih, Moayad Ajan, Jehad Al Baour, Omar Midani, Amro Jenyat, Hussein Jwayed, Nadim Sabagh, Abdul Malek Anezan.
Midfielders: Mahmoud Al Mawas, Mohammed Osman, Osama Omari, Tamer Haj Mohamad, Ahmad Ashkar, Youssef Kalfa, Zaher Midani, Khaled Al Mobayed, Fahd Youssef.
Forwards: Omar Khribin, Omar Al Somah, Mardik Mardikian.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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