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Boris Johnson is the leading candidate to succeed Theresa
May as Britain’s next prime minister and has threatened to withhold $50 billion
Brexit payment until the European Union gives Britain better exit terms. This
is following the resignation of May as the British PM as well as stepping down
as the leader of the governing Conservatives.
The EU has also stated severally that it will not reopen discussion
with UK on the Brexit transition deal reached with May last year.
Unfortunately, British lawmakers have rejected the deal three times, which led
to the resignation of the prime minister.
Johnson is a former foreign secretary that served in May’s cabinet
and is popular with ordinary Conservative Party members. These members will
decide between the two candidates who come top in a series of votes by
Conservative lawmakers over the coming weeks.
“I always thought it was extraordinary that we should agree
to write that entire cheque before having a final deal. In getting a good deal,
money is a great solvent and a great lubricant,” Johnson told the Sunday Times.
Britain is scheduled to leave the EU at the end of October.
However, if no deal is approved and the government fails to ask the EU for
another delay, there is the risk of a major economic disruption occurring from
a disorderly departure.
The 39 billion pounds is the outstanding British liabilities
to the EU, which would be paid over a number of years as contained in the
withdrawal agreement negotiated by May. Johnson has also stated that border
arrangements with Ireland should be settled only as part of a long-term
agreement as against a “backstop” that would avoid checks on Northern Ireland’s
border.
In another light, one of Johnson’s rivals, environment
minister Michael Gove, has said that he would scrap the value-added tax (VAT)
levied on most goods and services, replacing it with a lower U.S.-style sales
tax.
SajidJavid is another leadership contender and he has
expressed his willingness to pay Ireland hundreds of millions of pounds towards
the cost of new border arrangements to facilitate a Brexit deal.
More economic news and other related information as well as
the services offered by Pacific Capital Advisors can be found on their website.
Contact Information
Pacific Capital Advisors
680 6th Avenue
New York City, New York
10019
United States
Phone: +1 (914) 867-3862
According to Fitch Ratings analyst, James MacCormack, there is a likelihood of the US Dollar surrendering its exorbitant privileges and ultimately losing its special global standing due to a number of factors. Some of the factors that have been identified by James are related to U.S. policy decisions. The statement from James seemingly received some sort of backing from the Russian President, Vladimir Putin, during the St. Petersburg International Economic Forum. Putin told participants at the event that US actions undermine the advantages created by the Bretton Woods system, thus “trust in the US dollar is falling.”
The major reasons for the dollar’s dominance in the global space
are inertia and the lack of viable alternatives. However, analysts have stated
that policymakers in the United States should not be too comfortable with these
reasons particularly in the longer term. The economic sanctions and
protectionist trade initiatives in the U.S. foreign policy are some of
contributions to a diminished role for the dollar. Such protectionist policies
will ultimately divert trade away from the U.S. and might even induce new trade
partners to settle in other currencies other than the USD.
Competition from
abroad
U.S. policies in recent times have pushed countries like
Iran and Russia away from the dollar. China and the euro zone have also been
actively touting their currencies as reserve and transaction substitutes.
Several European officials have hyped the role of the euro,
with European Commission President Jean-Claude Juncker in his 2018 annual
program address that it is “absurd” that 80% of European energy imports are
settled in dollars. This is a clear indication that countries across the globe
are continuously looking for substitutes for the dollar, especially as it is
becoming increasingly difficult to bridge policy differences.
Finding safe haven
elsewhere
Disentangling the causes and consequences that tie the
dollar as the world’s reserve currency to U.S. Treasury securities is
difficult. However, the effect of foreign investors – central bank reserve
managers in particular – seeking risk-free dollar assets other than Treasurys
should be considered.
More economic news and other related information as well as
the services offered by Pacific Capital Advisors can be found on their website.
Contact Information:
Pacific Capital Advisors
680 6th Avenue, New York City,
New York
10019
United States
Phone: +1 (914) 867-3862
Find More: http://www.prnob.com/release/show/us-dollar-risks-losing/44487