BusinessDay 07 Jan 2019

FT
BUSINESS DAY
FINANCIAL TIMES
Monday 07 January 2019 www.businessday.ng https://www.facebook.com/businessdayng @Businessdayng
57
World Business Newspaper
May warns of ‘uncharted territory’ if MPs reject her deal
Prime minister refuses to rule out taking Brexit decision to Parliament multiple times
Laura Hughes
Theresa May has said
the UK would be in
“uncharted territory”
if MPs reject her Brexit
deal next week, as she
refused to rule out bringing the
deal back to Parliament multiple
times.
A vote on the deal is now
earmarked for the week starting
January 14, after the prime minister
postponed it in December
because she risked almost guaranteed
defeat.
Speaking on Sunday, she was
adamant that the Commons vote
on her Brexit deal would “definitely”
go ahead next week.
Questioned on whether she
would continue to put the deal
back to MPs if it is rejected, Mrs
May told the BBC’s Andrew Marr
Show: “If the deal is not voted
on at this vote that’s coming up,
then actually we’re going to be in
uncharted territory.”
“I don’t think anybody can
say exactly what will happen in
terms of the reaction we will see
in Parliament.”
Mrs May said she would seek
to avert defeat in the vote by
securing new reassurances for
Northern Ireland, a greater role
for UK parliamentarians in forging
the future relationship with
the EU and further pledges from
Brussels.
Mrs May is seeking legally
binding assurances that a socalled
backstop plan — intended
to avoid a hard Irish border, based
on proposals for a temporary
UK-EU customs union — will be
time-limited.
She acknowledged on Sunday
that “we are still working on”
securing these assurances from
the EU.
Downing Street will seek to
win over critics who have vowed
to rebel against Mrs May’s deal
this week, by highlighting the
dangers posed by a no-deal Brexit
or a second referendum.
Asked to rule out a second
referendum, Mrs appeared to
soften her stance, saying it was
her personal view that a second
Top congressional Democrats Steny Hoyer, Chuck Schumer and Nancy Pelosi met Donald Trump at the White House on Wednesday
to discuss the president’s demand for border wall funding © EPA
vote would divide the country.
“In my view there should not be
a second referendum”, she told
the BBC.
In a message to Labour MPs
and Conservative Eurosceptics
who have vowed to vote down
her deal, Mrs May said: “We have
got people who are promoting
a second referendum in order
to stop Brexit, and we have got
people who want to see their
perfect Brexit.”
“I would say don’t let the
search for the perfect become
the enemy of the good because
the danger there is that we end
up with no Brexit at all.”
World unprepared for slowdown,
says IMF’s Lipton
Fund official warns on trade tensions, policy flaws and weakness in China
Colby Smith and Brendan Greeley
The leaders of the world’s largest
countries are dangerously unprepared
for the consequences
of a serious global slowdown, a
senior executive at the International
Monetary Fund has warned.
In particular, governments will
find it hard to use fiscal or monetary
measures to offset the next recession,
while the system of cross-border support
mechanisms — such as central
bank swap lines — has been undermined,
warns David Lipton, the first
deputy managing director of the IMF.
“The next recession is somewhere
over the horizon, and we are less
prepared to deal with that than we
should be . . . [and] less prepared than
in the last [crisis in 2008],” Mr Lipton
told the Financial Times on the
sidelines of the American Economic
Association annual meeting in Atlanta.
“Given this, countries should
be paying attention to keeping their
economy on a level trajectory, building
buffers and not fighting with
each other.”
In its most recent forecasts, in
October, the IMF projected 3.7 per
cent growth in the global economy
this year. However, with the IMF set
to release updated forecasts later this
month, Mr Lipton admitted that the
growth outlook is being undermined
by trade tensions, policy flaws and
weakness in Asia.
“China is clearly slowing down
— we think China’s growth has to
slow, but keeping it from slowing
in a dangerous way is an important
objective,” he said, noting that a
downshift would be “material very
broadly, not just in Asia.”
Concern about the faltering
growth outlook, coupled with rising
interest rates, has prompted sharp
falls in equity markets in recent
weeks. Jay Powell, chairman of the
Federal Reserve, tried to offset this
on Friday at the Atlanta conference
by saying that “US data seem to be
on track to sustain good momentum
into the new year”. He pledged
that the Fed would take a “patient”
approach to monetary policy tightening.
Separately Larry Kudlow, White
House economic adviser, told the
conference — which brings together
around 13,000 economists — that
“there’s no recession in sight.” He
urged economists to ignore the
swings on Wall Street.
However, some leading economists
pointed out that the new
gloomy investor “narrative” could
become self-reinforcing. “Suddenly,
the markets are reacting as if there’s
a crisis of interest rate increases,” argued
Robert Shiller, the Yale professor
and Nobel laureate. He pointed
out that, although the Fed had been
raising rates for several years, investors
were only reacting to this now.
“This doesn’t look rational,” he
says, drawing parallels with the
1920s in terms of the sudden shift
in psychology. “[Then] the earnings
were high, the economy was moving
well, but suddenly it crashed — and
again it was talk, I think. There was
a new narrative that developed in
1929, just as there is a new narrative
developing today.”
The debates in Atlanta revealed
widespread pessimism among economists
about the chance of any rapid
resolution to the current trade wars.
“It is always possible that President
Trump can wake up one day, reach
out to his friend President Xi and
decide to take yes for an answer”,
said Adam Posen, president of the
Peterson Institute for International
Economics.
Trump tries to sell border ‘barrier’ to Democrats
Government drops demand for concrete wall as shutdown heads into third week
Kadhim Shubber
Donald Trump said a steel
barrier would satisfy his
demand for a wall along
the US-Mexico border on Sunday,
as the partial shutdown of the government
look set to continue into
its third week.
The US president, and his acting
chief of staff, reiterated comments
that a concrete wall was
not strictly necessary as they attempted
to reframe Mr Trump’s
demands as a call for the sort of
border fencing constructed under
previous US presidents.
“We have to build the wall or
we have to build a barrier,” said Mr
Trump to reporters before he left
the White House for Camp David.
“The barrier or the wall can be of
steel instead of concrete if that
works better,” he added.
Mick Mulvaney, the White
House acting chief of staff, said
on NBC’s Meet the Press that Mr
Trump was willing to “take a concrete
wall off the table”.
“If he has to give up a concrete
wall, replace it with a steel fence in
order to do that so that Democrats
can say, “See? He’s not building a
wall any more,” that should help us
move in the right direction,” said
Mr Mulvaney in comments aired
on Sunday morning.
Talks between Democrats and
the White House to end the shutdown
ended on Saturday without
visible progress. The two sides are
set to continue negotiations on
Sunday afternoon, but Mr Trump
said he did not expect a breakthrough.
“I don’t expect to have anything
happen at that meeting . . . but I
think we’re going to have some
very serious talks come Monday,
Tuesday, Wednesday,” he told
reporters.
Hundreds of thousands of federal
employees have been on leave
or working without pay since December
22 after the White House
and Congress failed to agree a
funding bill to keep the entire government
open. Roughly a quarter
of federal agencies, including the
Department of Justice and Department
of Homeland Security, are
affected.
Mr Trump has demanded
$5.6bn in funding for a border wall
and has said he would continue
the partial shutdown for months,
or even years, if his demand was
not met. A border wall was Mr
Trump’s signature promise during
the 2016 presidential campaign.
He insisted Mexico would pay
for the wall, which the southern
neighbour has refused to do.
Some 650 miles of the almost
2,000-mile US-Mexico border is
already covered by various forms
of fencing, much of it built as a
result of the Secure Fencing Act of
2006, which was signed by George
W Bush.
Nancy Pelosi, the Democratic
leader in the House, has refused
to offer any money for a wall.
On Thursday, Democrats, who
recently regained control of the
lower chamber, passed a bill that
would fund the government but
not a wall.
Chuck Schumer, the top
Democrat in the Senate, has offered
funding for border security
measures but no money for Mr
Trump’s wall, which Democrats
regard as an ineffective waste of
money.
The idea has also been criticised
by Republicans. In 2015, Mr
Mulvaney dismissed Mr Trump’s
calls for a barrier on the US-Mexico
border as too simplistic, calling
the demand “absurd and almost
childish”. He said on Sunday that
circumstances on the ground had
changed and so had his view.
In December, the Republicancontrolled
Senate passed a shortterm
funding bill that would have
kept the government open. The bill
did not include money for a wall.
Mitch McConnell, the Republican
majority leader in the Senate,
has said he will not bring another
funding bill for a vote until the
White House and Democrats have
come to an agreement.
Mr Trump has said he may
announce a national emergency
to build the wall if Congress did
not grant money for the project, a
dramatic step that would probably
be challenged in the courts.
“Presidents have authority to
defend the nation,” said Mr Mulvaney
on CNN’s State of the Union
on Sunday. The acting chief of
staff said Mr Trump had asked his
cabinet secretaries “to try and find
money that we can legally use to
defend the southern border”.