To solve the Brexit riddle that has paralyzed British politics for three years, Prime Minister Boris Johnson has just three main options: an election, a new deal or a no-deal Brexit, Reuters reported. Johnson has vowed to reach a new divorce deal so that Britain can leave the European Union by Oct. 31, though he said that in the “remote possibility” that the EU refuses to negotiate then he will reluctantly go for a no-deal exit. The article outlines five possible scenarios.
Congressional and White House negotiators reached a deal to increase federal spending and raise the government’s borrowing limit, securing a bipartisan compromise to avoid a looming fiscal crisis and pushing the next budget debate past the 2020 election, The Wall Street Journal reported. The deal for more than $2.7 trillion in spending over two years, which must still pass both chambers of Congress and needs President Trump’s signature, would suspend the debt ceiling until the end of July 2021. It also raises spending by nearly $50 billion next fiscal year above current levels. The agreement forgoes the steep spending cuts initially sought by the administration, providing for about $320 billion in spending over two years above limits set in a 2011 budget law that established automatic spending cuts, known as the sequester. President Trump announced the deal on Twitter late Monday, citing all four congressional leaders. He added: “This was a real compromise in order to give another big victory to our Great Military and Vets!” House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin negotiated the agreement for weeks, hoping to complete a deal before the House leaves Washington at the end of the week for August recess. Mnuchin had warned that the government could exceed its borrowing limit as soon as early September, before lawmakers return from recess. In a joint statement Pelosi and Sen. Chuck Schumer pledged that the House would bring the deal quickly to the floor. They stressed that the agreement increases both defense and domestic spending and said they had agreed to spending offsets that were part of an earlier bipartisan agreement. Senate Majority Leader Mitch McConnell said he was encouraged by the deal, adding that it “secures the resources we need to keep rebuilding our armed forces.” He said he intended to have the Senate vote on it before the chamber departs for recess. The deal marked a victory for congressional leaders and Mnuchin, who had stressed that without action, the government could exhaust its ability to keep paying its bills in early September.
With Boris Johnson confirmed as the next leader of the Conservative Party and British prime minister, the outlook for the British economy has certainly become murkier — and potentially more perilous, the Associated Press reported. His comprehensive victory over Jeremy Hunt has made it more likely that Britain could leave the European Union on Halloween without a withdrawal agreement, a prospect that even the most ardent Brexit believers concede would be disruptive in the short-term before any benefits start to manifest. Most economists think a so-called “no-deal” Brexit will be a lot worse than that. A deep recession is widely predicted for that scenario. Whether it would be as deep as the one that followed the global financial crisis — more than 6 percent — no one knows, but almost all economists agree that jobs will be lost and that public finances will get stretched. A “no-deal” Brexit effectively means that on Nov. 1, tariffs will be slapped on traded goods between the U.K. and the remaining 27 EU countries. Other impediments to trade will have to be imposed, and Britain would also face the prospect of losing the trade deals the EU has struck over the years. Though both sides of the English Channel will suffer in a “no-deal” scenario, Britain would suffer relatively more given that British exports to the EU account for around 13 percent of the country’s annual GDP, versus 2.5 percent of the EU’s.
