FirstFT: UK and Brussels clash over £40bn Brexit divorce bill

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Brussels and London were yesterday locked in a dispute over the size of the UK’s Brexit bill, after the EU suggested that Britain would be obliged to pay £40.8bn as part of its post-withdrawal arrangements.

But the UK Treasury insisted that the divorce settlement remained within its central range of £35bn-£39bn.

The higher sum was reported in the EU’s annual accounts for 2020, released by the European Commission last month. An updated estimate will be published next week.

The obligations relate to commitments made when the UK was an EU member state and during the post-Brexit transition period. An agreement was one of the first important parts of talks after the 2016 referendum — and one of the most difficult to resolve.

Five more stories in the news

1. Global stocks drop Stock markets dropped yesterday on concerns about the economy and following days of sharp moves in government bonds that hinted at slower growth and inflation. Jim Caron, portfolio manager at Morgan Stanley, described the moment as a “peak in growth, a peak in inflation and a peak in policy stimulus”. Robert Armstrong asks in our Unhedged newsletter: what took so long for US Treasury yields to crash? Sign up here to receive Unhedged in your inbox every weekday.

2. Senators call for Didi IPO investigation Two senators called on the Securities and Exchange Commission to investigate whether Didi Chuxing misled investors ahead of its initial public offering by failing to be forthcoming about its contacts with Chinese regulators. Shares in Didi have slumped more than a quarter during its first week of trading in New York.

  • Didi crackdown reverberates: Keep, China’s most popular fitness app, pulled its planned US IPO last week after Chinese regulators announced an investigation into data security concerns at Didi.

2. Biden defends Afghanistan withdrawal Joe Biden said that the US military mission in Afghanistan will end on August 31, defending the withdrawal of American troops after more than 20 years of fighting. Many Afghan professionals are fleeing the threat of a resurgent Taliban. (FT, WSJ)

3. ECB changes inflation target The European Central Bank set a new 2 per cent inflation target and said it could tolerate temporary moves beyond that point, a shift that gives policymakers flexibility to keep interest rates at historic lows. The unanimous agreement was victory for President Christine Lagarde — but the real test will come in scaling back pandemic stimulus.

5. UK cracks down on crypto marketing The advertising watchdog told the FT it will clamp down on misleading marketing for crypto investments, particularly online and on social media platforms, as part of a wider effort to prevent harm to consumers who trade unregulated digital assets.

Coronavirus digest

  • UK ministers are poised to tell companies next week that employees can drop face masks, social distancing and other workplace Covid-19 measures.

  • Mary Daly, president of the Federal Reserve Bank of San Francisco, has warned in an interview with the FT that the Delta variant and low vaccination rates pose a threat to the global recovery.

  • BioNTech/Pfizer are preparing to start clinical trials of a vaccine targeting the Delta variant. Scientists are racing to answer: how well do jabs protect against the variant?

  • The World Health Organization director-general said the number of global deaths, which has passed 4m, “likely underestimates the overall toll”.

  • In our new First Person series, florists, fishmongers, writers, oil towns and car insurers reflect on how they have coped during the pandemic.

Sign up for our Coronavirus Business Update newsletter for more Covid-19 news.

The days ahead

G20 meeting Finance ministers kick off a two-day meeting in Venice today, with the main agenda item a proposed global minimum corporate tax after the deal agreed by 130 nations at the OECD last week. Ireland is worried about losing its “sacrosanct” low-tax regime. Separately, the UK has GDP and production figures for May.

  • Opinion: Gillian Tett lists five things the G20 must do to tackle climate change.

Euro 2020 final: England vs Italy England will face Italy in their first major football tournament final since 1966 on Sunday after beating Denmark 2-1. Scientists have warned that England’s exploits could be fuelling a surge in coronavirus cases.

  • Simon Kuper writes that, for 55 years, the question has been: why don’t we win any more? When people say England’s football team ought to win World Cups, they tend to be talking about the nature of England.

Join “Building new pathways to success for African football”, a conversation with sports leaders on the opportunities for developing African football talent on July 15.

Fans in London celebrate during the semi-final match between England and Denmark © Leon Neal/Getty
Fans in London celebrate during the semi-final match between England and Denmark © Leon Neal/Getty

Keep up with the important business, economic and political stories in the coming days with the FT’s revamped Week Ahead newsletter. Subscribe here. And don’t miss our FT News Briefing audio show — a short daily rundown of the top global stories.

What else we’re reading

Can Wizz unseat Ryanair? For years, Michael O’Leary has been the undisputed king of the European skies. But when the aviation industry emerges from the rubble of the pandemic, the Irish executive will have competition: low-cost Hungarian carrier Wizz Air.

Nextdoor’s neighbours are not kind to strangers The social network for neighbours faces the same problem of all such platforms. They link people to vast networks, unleashing a flow of information, providing entertainment and encouraging companionship, but they can accentuate the harsh side of human nature, John Gapper writes.

We must face facts — even ones we don’t like The unsettling footage of England’s chief medical officer Chris Whitty being harassed in a central London park reminded Tim Harford of the abuse of BBC journalist Nicholas Watt at a protest in Westminster and the murder of the MP Jo Cox. Society must protect its truth-tellers, he writes.

Branson vs Bezos in space It has been a decade since Richard Branson had hoped to escape the bonds of Earth’s gravity on a Virgin Galactic spacecraft. But with the Virgin founder due to board a rocket this weekend and billionaire Jeff Bezos aiming for the heavens nine days later, the space tourism industry could finally be getting close to lift-off.

Tell me lies, tell me sweet little VIEs Back in the halcyon days of October 2019, Alphaville performed a thought experiment: given the legal grey area in which variable interest entities (which allows Chinese businesses to list on US exchanges) operate, what would happen if Beijing decided to ban them? It was a mad idea — until this week.

Beauty

Luxury brands are diversifying from couture to cosmetics to attract new, often younger, consumers who cannot necessarily afford a €3,000 handbag. But the roots stretch back a century to the launch of Coco Chanel’s N°5 perfume.

© Pierpaolo Piccioli

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