Monthly Archives: June 2020

There will no extension of the Brexit transition period beyond December 31, 2020, meaning that the European Union and the UK will have to strike a deal in just six months to avoid Britain crashing out of the bloc without one.

Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed on Monday not to extend the transition, which currently preserves much of the UK-EU relationship from before the UK left in January.

This despite the fact that talks have all but stalled between Europe and the UK, both due to failure to agree on key issues - such as fisheries - and the coronavirus pandemic, which has paralysed the UK and Europe since continent-wide lockdown began in March.

Under the agreement of the deal, the UK had until June to extend the transition period. But in a joint statement yesterday, Britain and the EU confirmed that the UK had declined to do so.

The EU and UK supported plans "to intensify the talks in July and to create the most conducive conditions for concluding and ratifying a deal before the end of 2020," leaders said in a statement.

"This should include, if possible, finding an early understanding on the principles underlying any agreement."

Johnson, speaking to the media after the meeting, said that the UK and the EU were not too far apart but also called for an acceleration in the negotiations.

He said he believed a deal could be agreed in July, adding that he didn't want talks to go on until autumn or winter.

Many politicians and business leaders in the UK and Europe have called for the negotiations to be prolonged, especially in the light of the coronavirus pandemic.

New research revealed that more than half of the nearly 2,000 British people surveyed by pollster Ipsos MORI said the UK should request an extension to the transition period so the government could focus on COVID-19.

The EU's chief Brexit negotiator Michel Barnier, regretting the deadlocked state of talks, has repeatedly accused the UK of failing to respect commitments made in the divorce deal.

The EU has insisted that the UK must respect the "level playing field" in future competition and that an agreement on fishing must form part of an overall deal. The EU wants to see rights to fish in UK waters retained under the deal, something the UK rejects.

Rejecting accusations that the EU is being intransigent, Barnier said last week that his mandate from the EU27 countries was "sufficiently flexible to find compromises" with the UK.

Sam Lowe, a senior research fellow at the Centre for European Reform think tank, said ahead of the talks on Friday that while "the route towards an agreeable compromise exists", neither side is likely "to commit to finding it until later in the year, when the economic, and political, consequences of the alternative become significantly more tangible."

Georgina Wright, a senior researcher at the Institute for Government, also said that a deal is possible but is unlikely to be reached anytime soon.

"[The] UK wants a deal by the summer (to allow businesses time to prepare), EU can afford to go until 31 October. Both options look ambitious at the moment, she wrote.

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Brexit: UK and EU agree not to extend transition period beyond December 2020 - Euronews

The U.K. reiterated Friday, two weeks before the expiration of a deadline upon which it had to make its intentions clear, that it would not seek an extension of the current extension period that binds the country to the European Union until Dec. 31.

We have informed the EU today that we will not extend the transition period, U.K. Cabinet Office Minister Michael Gove tweeted. The moment for extension has now passed.

The government separately said that it would delay implementing full-scale border controls for goods entering Great Britain from Europe, originally scheduled to start Jan. 1, until July. Controls will instead be gradually introduced in three phases in January, April and July to take into account the pressures on businesses triggered by the COVID-19 pandemic.

The U.K.s final decision not to request an extension is in line with the consistent position of the prime minister, Boris Johnson, who had Parliament translate his electoral promise into law last year after the December general election.

The U.K. legally left the EU on Jan. 31 but has been since then in a transition period with the same rights and obligations of any member state save for a presence in institutions where decisions are being made.

Before Goves announcement, the Welsh and Scottish first ministers had written to Johnson demanding an extension, which the European Union has said it is open to.

Opinion: No-deal Brexit raises its ugly head again

The EU and U.K. are currently negotiating a treaty on their future relationship, with talks seemingly at a dead end. Major disagreements persist on future access to the U.K.s fishing waters and on the level playing field requested by EU negotiators in areas such as state aid, competition law, and labor and environmental regulations.

The U.K. separately began negotiating a free-trade agreement with the U.S. on May 5.

Chief EU negotiator Michel Barnier wrote in May to indicate that the European Union was open to extending negotiations, but said on Twitter on Friday that the commission took note of U.K.s decision not to extend.

To give every chance to the negotiations, we agreed to intensify talks in the next weeks and months, he added.

Read:Pound slips as lead U.K. negotiator says little progress made in Brexit talks

Fridays announcement increases the likelihood of the transition period ending with a no-deal Brexit, meaning an exit from the European Union without an agreement in place.

By ruling out any extension decision now, the U.K. is basically saying that transition ends this year, Michael Dougan, professor of European law at the University of Liverpool, told MarketWatch.

The chances of reaching a meaningful deal, ready to enter into force by 1 January 2021, appear very slim, i.e. given the fundamental differences between the EU and U.K. positions and bearing in mind the unprecedented nature of the task at hand as well as the time scale available, he said.

Johnson is expected to meet European Commission President Ursula von der Leyen and other EU leaders on Monday to discuss the disagreements and try to jump-start Brexit talks.

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Its official: U.K. wont require an extension of Brexit talks, even as negotiations with EU hit gridlock - MarketWatch

Brexit has squeezed the political middle ground in Northern Ireland and pushed more people into their unionist and nationalist trenches.

A post-Brexit opinion poll has found that those in the region deeming themselves neither unionist or nationalist has fallen to 39%. The Northern Ireland Life and Times (NILT) survey revealed that this figure was the lowest in 15 years. As late as 2017, 50% surveyed said they were neither.

The poll of 1,200 people taken from September 2019 to February this year also reveals that more Catholics now describe themselves as nationalist since Brexit. Just under 60% of Catholics in Northern Ireland now categorise themselves as nationalist compared with 50% two years ago.

At the same time, the researchers from Queens University Belfasts Ark project found 67% of Protestants now classified themselves as unionist compared with 55% in 2018.

The Brexit effect however has not created any real sense of existential threat to the union among unionists, according to the NILT.

Among unionists, 62% think a united Ireland is unlikely within the next 20 years. Significantly, 37% of nationalists also think there will not be Irish unity within the next two decades.

The report concludes: we are seeing a retrenchment of identity positions in relation to traditional political allegiances.

Brexit has not dramatically affected unionists thinking, even among those who were pro-EU in the 2016 referendum. While there was a slight increase of 7% among unionists who said dont know to the prospect of a united Ireland, Brexit made no difference to the overwhelming majority of those in favour of remaining British.

Yet all three political categories unionist, nationalist and neither appear to continue to support the devolved institutions at Stormont.

Just under 70% of the population still support the Good Friday agreement and power-sharing government. The poll showed that 35% were happy with the agreement and did not want it changed; 33% were positive about the peace accord but wanted minor changes.

The authors of the report found this robust backing for devolution surprising given that for three years the local assembly was deadlocked with the main parties, Sinn Fin and the Democratic Unionists, unable to form a government.

Despite widespread cross-community anger over the three years of deadlock at Stormont, only 10% of those surveyed said they would like to see the UK parliament in London make all the decisions for Northern Ireland.

Among the overall population, only 30% said a united Ireland was likely within the next 20 years, while 46% said Irish unity was unlikely in the same time frame.

Dr Paula Devine, the co-director of Ark from the school of social sciences, education and social work at Queens, said: From this data, we can see that support for the Good Friday/Belfast agreement and the devolved institutions has been maintained among people of all backgrounds.

However, it is striking that 2019 also saw a strengthening of unionist and nationalist identities and growing pressure on the so-called middle ground.

The Ark NILT survey has been running since 1998 and provides an important source of data on how opinions in Northern Ireland have changed over the past 21 years.

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Brexit revives unionist and nationalist divide in Northern Ireland - The Guardian

Both Labour and Conservative strategists will be carefully analysing the views of voters in the Red Wall seats as their votes could determine the result of the next general election. What is absolutely clear - from the EU referendum in 2016, the European Parliament elections in 2019 and the General Election in 2019 - is that Red Wall voters wanted to leave the EU and want to, in line with the Conservative slogan, "Get Brexit Done".

On Friday, Michael Gove formally confirmed that the Government will not extend the transition period - a very welcome move. Meanwhile, Labour's new leader, Sir Keir Starmer,recently set out party policy on the transition period. Labour supports leaving the EU at the end of the year and would not seek any extension to that: "I would seek to ensure that the negotiations were completed as quickly as possible. I've not called for a pause because the Government says it's going to get it done by the end of the year".

A new report - Do Not Delay Brexit: The View from the Red Wall - published by the cross-party Centre for Brexit Policy (CBP), demonstrates that both the Government and the opposition policy of not extending the transition period beyond the end of 2020 is a deeply popular move amongst voters in the Red Wall. Extending the transition, something the Remain campaign continues to push for, would be a calamitous move.

This month, the CBP commissioned a poll of Red Wall seats. This was carried out by Savanta ComRes and found that overall, 51 per cent of Red Wall voters believe that the transition period should either remain as it is or be shortened, in comparison to just 42 per cent who want an extension.

What is most telling is the response when asked whether extending the transition period would make them more or less favourable to the Conservative Party. The results are clear that neither the Conservatives nor Labour would have had anything to gain and everything to lose from an extension.

The other striking element of the polling was the positivity people feel about life outside of the EU. When asked what would be better or worse as a result of an extension of the transition period, voters said everything would be worse off, including the cost of living, level of taxes, price of food, price of non-consumer good, waiting times for social housing, average wage. The only thing they thought would be marginally better was the NHS (by just 1 per cent).

It is not just the Red Wall voters who wanted to stick to the current timetable. A previous poll demonstrated that 44 per cent of the electorate were in favour of ending the transition period at the end of this year or quicker, while only 40 per cent wanted it extended into 2021 or beyond.

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Sticking to our current timetable and not delaying Brexit is the right thing to do - Telegraph.co.uk

The European Union accused the United Kingdom Wednesday of seeking to maintain a relationship with the bloc similar to that of an EU member after Brexit. The EU said they found this idea unacceptable.

"Britain is demanding a lot more from the EU than Canada, Japan or other partners," the EU's chief Brexit negotiator Michel Barnier told a forum in Brussels. "We cannot and we will not allow this cherry picking."

He also said that the UK "cannot have the best of both worlds" and stressed the point that "we will never compromise on our European values or on our economic and trade interests to the benefit of the British economy."

"In many areas it is looking to maintain the benefits of being a member state without the constraints," Barnier said. "It is looking to pick and choose the most attractive elements of the [EU]single market without the obligations."

UK pandemic recession will hit hard

Barnier also expressed bewilderment that the UK remained inflexible despite the predicted economic fallout from coronavirus pandemic.

The UK has seen the most deaths in Europe andone of the longest lockdowns and is expected to see its economy hit harder than most other European countries, according to the Organization for Security and Cooperation in Europe.

The forum comes ahead of high-level talks on Friday when the European Parliament will urge the UK to "urgently revise its negotiating position" after months of talks have yielded little consensus.

'No real progress' so far

The UK officially left the EU in January 2020 and is currently in a transition period due to expire at the end of the year. The EU is open to an extension of this period if trade deals cannot be agreed; UK Prime Minister Boris Johnson has repeatedly dismissed the idea of an extension.

Johnson is set to hold a video conference with European Commission President Ursula von der Leyen later in the month to review talks.

Speaking last week, Barnier said he "regrets that, following four round of negotiations, no real progress has been achieved" and accused the UK of "not engaging in detailed on the level playing field."

Key sticking points in negotiations are fisheries and the issue of the land border the UK shares with the EU between Northern Ireland and the Republic of Ireland.

Barnier also said he hoped that the next round of talks could take place face-to-face as Europe re-opens borders closed owing to the coronavirus pandemic. This has yet to be confirmed.

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It's essentially a choice of a harder or softer Brexit. Harder prioritizes border control over trade. UK firms would pay tariffs to do business in the EU, and vice versa. The softest Brexit would see access to the single market, or at least a customs union, maintained. That would require concessions including the payment of a hefty "divorce bill" to which the UK has provisionally agreed.

Businesses have expressed concern about a "cliff edge" scenario, where Britain leaves the EU with no deal. Even if an agreement is reached at the EU bloc level, the worry is that it could be rejected at the last minute. Each of the 27 remaining countries must ratify the arrangements, and any might reject them. That could mean chaos for businesses and individuals.

If there is no agreement at all, a fully sovereign UK would be free to strike new trade deals and need not make concessions on the rights of EU citizens living in the UK or pay the financial settlement of outstanding liabilities. However, trade would be crippled. UK citizens in other parts of the EU would be at the mercy of host governments. There would also be a hard EU-UK border in Ireland.

The EU and the UK could reach a deal on Britain's exiting the bloc without an agreement on future relations. This scenario would still be a very hard Brexit, but would at least demonstrate a degree of mutual understanding. Trade agreements would be conducted, on an interim basis, on World Trade Organization rules.

Most trade tariffs on exported goods are lifted, except for "sensitive" food items like eggs and poultry. However, exporters would have to show their products are genuinely "made in Britain" so the UK does not become a "back door" for global goods to enter the EU. Services could be hit more. The City of London would lose access to the passporting system its lucrative financial business relies on.

Under the Swiss model, the UK would have single market access for goods and services while retaining most aspects of national sovereignty. Switzerland, unlike other members of the European Free Trade Area (EFTA), did not join the European Economic Area (EEA) and was not automatically obliged to adopt freedom of movement. Under a bilateral deal, it agreed to do so but is still dragging its feet.

As part of the European Economic Area, Norway has accepted freedom of movement something that no Brexit-supporting UK government would be likely to do. Norway still has to obey many EU rules and is obliged to make a financial contribution to the bloc while having no voting rights. Some see this as the worst of both worlds.

Turkey is the only major country to have a customs union with the EU, as part of a bilateral agreement. Under such an arrangement, the UK would not be allowed to negotiate trade deals outside the EU, instead having the bloc negotiate on its behalf. Many Brexiteers would be unwilling to accept this. It would, however, help minimize disruption at ports and, crucially, at the Irish border.

Author: Richard Connor

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Brexit: EU accuses UK of trying to maintain economic benefits amid coronavirus recession - DW (English)

A military plane used by the Prime Minister and members of the royal family is being repainted in the colours of the Union flag.

The grey RAF Voyager jet is expected to get a red, white and blue makeover at an airport in Cambridge as part of a pre-planned overhaul.

Boris Johnson has previously questioned why the plane is grey.

As foreign secretary he said would like to have a Brexit plane to help him travel the world and promote the Governments vision of global Britain.

He complained in 2018 that the RAF Voyager jet, which is shared by the Prime Minister, senior Cabinet members and the royal family, never seems to be available.

An RAF source said speculation that such a plane would have an appropriate paint scheme based on the Union flag would not be incorrect.

A spokesman for the Royal Air Force said: An RAF Voyager is currently in Cambridgeshire for pre-planned works.

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Boris Johnson's 'Brexit plane' gets a red, white and blue makeover - ITV News

The car workers would pay a heavy price. The City would be muscled out of crucial markets. The Treasury would be sinking in red ink as tax receipts went into freefall, and farmers would lose their subsidies. During the long, painful debate about the UKs departure from the EU there were lots of different groups which, we heard repeatedly, would pay a price for that. But now that we are out, we are finally getting a definitive answer. There will be a price to be paid. But it will be German tax-payers who will be picking up the tab, not anyone in Britain. And that could hardly come at a worse time.

EU leaders are due to meet on Friday to discuss the Budget for the next seven years. Boris Johnson doesnt have a lot to be thankful for right now, but at least he doesnt have to go through the ritual humiliation of trying to hammer out a compromise in Brussels in the middle of the night and facing furious headlines whatever deal he brings home. Instead, he can leave that dubious pleasure to Angela Merkel.

According to a report in Die Welt today, the Commission is planning a 13 billion euro (11.7bn), or 42 per cent, increase in the German contribution to the EU. It currently pays in 31 billion euros (27bn) to the EU Budget, but over the next seven year the annual amount will go up to 44 billion euros (39bn). That will make it by far the biggest contributor to the EU on both a net and gross basis. That may be about to get worse. The EU is about to borrow 750bn euros (672bn) for its Coronavirus Recovery Fund. It remains to be seen exactly how that will be dished out there will be another fierce struggle about that but because Germany has been relatively lightly hit by Covid-19 it should receive less money than Italy, Spain and France, but as the biggest economy it will still pay in more than anyone else.

In effect, Germany in paying the price for Britains departure. Ironically, the 13bn euros increase in its subs almost matches the UKs gross contribution (14.6 billion euros (13bn) in 2018), although the net figure was significantly less.

Maybe the average German wont mind about that, although you wouldnt want to bet your last Bratwurst on it. But it could not have come at a worse time. Germanys once mighty economic engine was already looking to like it was about to run out of steam. Its car industry, by far the largest sector of the economy, is stuck with a range of big diesel SUVs at a moment when they are about as popular as a sneeze at the supermarket check-out (the electric vehicle manufacturer Tesla is now worth more than BMW and Mercedes combined), and its export-orientated, manufacturing based economic model looks uniquely vulnerable in a world where trade has ground to a halt.

The government is spending billions to prop up its economy, but it may need to re-invent itself as well, and that is not going to be easy. Germany, for historical reasons, has always been remarkably relaxed about funding the EU, in a way the British never were. Its tolerance is now about to be pushed to the limit and quite possibly beyond it.

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Germany is picking up the tab for Brexit - Spectator.co.uk

LONDON(Reuters) - Sterling steadied near two-week lows against the dollar and euro on Monday as fears of a second wave of coronavirus hit risk sentiment and global markets, with investors also nervous ahead of a key meeting on Brexit negotiations.

FILE PHOTO: UK pound coin plunges into water in this illustration picture, October 26, 2017. Picture taken October 26, 2017. REUTERS/Dado Ruvic

A fresh coronavirus outbreak in China and rising infection numbers in the United States even as major economies have begun lifting lockdowns put financial markets on the back foot at the start of the week, with selling of stocks and risk currencies across the board.

The pound also took a beating, falling for a third straight session to as low as $1.2455 its lowest since June 1 in Asian trading hours. It last steadied against the dollar at $1.2548 by 1604 GMT, up 0.1%.

It also rose 0.1% to the euro, at 89.80 pence.

The pound remains highly sensitive to changes in the external risk environment and is likely to continue trading on a corrective path lower, in line with cross-asset markets, said Viraj Patel, FX and global macro strategist at Arkera.

The curveball provided by intensified Brexit talks today is unlikely to offset the gloomy outlook however, we expect the pound to remain sensitive to any headline Brexit risks over the coming weeks.

Leaders from Britain and the European Union agreed on Monday that talks on their future relationship should be stepped up to clinch a deal, with Prime Minister Boris Johnson suggesting an agreement could be reached in July with a bit of oomph.

Earlier, after a video conference between Johnson, European Commission President Ursula von der Leyen and the leaders of the European Council and European Parliament, the two sides said they agreed ... that new momentum was required.

With a status-quo transition deal set to run out at the end of the year, Britain is seeking a free trade agreement with the EU, which it left on Jan. 31, but negotiators have so far made little progress.

We are sceptical that the two sides will find a breakthrough in the deadlocked negotiations especially on a possible extension of the transition period, which expires at the end of the year, said Lars Sparres Merklin, senior analyst, FX strategy in a note to clients.

This extension needs to be agreed upon before 1 July if the two sides should be able to extend the transition period at a later stage in the fall.

Speculators reduced their net short position on the pound in the week to last Tuesday, data from the Commodity Futures Trading Commission showed. [IMM/FX] [CFTC/]

This week, investors also will look ahead to the Bank of Englands meeting on Thursday, where it is expected to announce a fresh increase of at least 100 billion pounds ($126 billion) in its bond-buying firepower.

Bank of England Governor Andrew Bailey said the British central bank had to be ready to do more to help the countrys economy because of the risk of long-term damage caused by the coronavirus shutdown.

Reporting by Ritvik Carvalho; Editing by Catherine Evans

Excerpt from:

Pound near two-week lows on fears of second virus wave, Brexit meeting eyed - Reuters

Photo credit: Adobe stock

EPP deputy Christophe Hansen is, alongside Kati Piri, co-rapporteur of a report on Brexit that will be debated in plenary on Wednesday and voted on by MEPs the following day. Brexit is also on the agenda of Friday's EU summit.

Speaking to The Parliament Magazine ahead of the vote and summit, Hansen also suggested that a new method should be found for the remaining rounds of negotiations between the two sides.

He says the current methodology has so far failed to bring about any success in breaking the deadlock on thorny issues like fisheries.

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Another key problematic area is the so-called level playing field on trade, which Hansen says is not some ideological concept but, rather, a pre-requisite for any eventual deal.

I think we need to be explicit about what level playing field actually means because there seems to be a lot of misunderstanding about it at the moment, he said.

The discussions so far have not been very constructive and everyone knows that. But that could be because there have not really been what I would call real talks. All we have had are the two sides camping on their original positions

The EU was seeking, in the talks, similar standards from the UK in areas such as environmental protection, financial affairs and labour rights.

But similar does not mean identical. It just means having a similar level of ambition.

He continued, The discussions so far have not been very constructive and everyone knows that. But that could be because there have not really been what I would call real talks. All we have had are the two sides camping on their original positions.

Mondays high-level conference between Boris Johnson and Ursula von der Leyen was, he said, a chance to take stock of the talks so far but he admitted, It is clear that, so far, there has been no significant progress.

The video conference agreed that new momentum needs to be injected into the discussions if a deal is to be agreed.

But Hansen questioned if the current way the talks are conducted was efficient.

It seems there are 11 or 12 parallel talks going on at the same time so, given the lack of progress, you have to ask if this is the right way to do things. I think we should consider a new modus of negotiating so that there are not 11 or 12 blocks of talks.

Hansen says the Parliament has to be at the centre of the talks because it must give the green light to any deal.

We do not want to be asked to merely sign a blank cheque.

It seems there are 11 or 12 parallel talks going on at the same time so, given the lack of progress, you have to ask if this is the right way to do things. I think we should consider a new modus of negotiating

He also says the details of any deal have to be agreed by the end of October so that there is time for the agreement to pass through the parliamentary legislative process.

It is clear, therefore, that there is still a lot of work to do.

He also believes EU chief Brexit negotiator Michel Barnier is the right man in the right place and adds, Remember, it takes two to tango - you cannot do this without the other side.

Calling for constructive discussions in the remaining rounds of talks over the summer, he wants both sides to find common ground.

But he warns, Lets be clear: our economies will suffer and there will be disruption, not least because of the Coronavirus pandemic, with or without a deal.

He also believes it would have been common sense and wise for the talks to be extended beyond 31 December, something the UK has now finally ruled out.

Hansen, one of 12 MEPs on the UK Coordination Group (UKCG), said, Now is not the time for blame games. The UK does not want an extension so we must now deal with the timeframe we have.

In the draft resolution going to plenary, MEPs regret that no real progress has been achieved so far and that the divergences remain substantial.

They warn against the UK governments current piecemeal approach and emphasise that a comprehensive agreement is in the interest of both parties. Having the UK cherry-pick certain policies and its access to the single market after Brexit is unacceptable for the EU, says the text.

Now is not the time for blame games. The UK does not want an extension so we must now deal with the timeframe we have

The draft resolution also reiterates Parliaments full support for the EUs chief Brexit negotiator Michel Barnier in his talks with the UK, based on the political mandate given to him by the EU Member States and Parliament resolutions.

The faithful implementation of the Withdrawal Agreement, including on citizens rights is a precondition to ensure the trust needed to conclude a deal on the future relationship, notes the text.

The text emphasises that Parliaments consent to any future trade agreement with the UK is conditional on the British government agreeing to a level playing field (common rules and standards) in the area of, among others, environmental protection, labour standards, and state aid, and on the conclusion of an agreement on fisheries.

The UK has so far not engaged in negotiations on the provisions ensuring equal competition, the draft notes.

The draft resolution, involving input from 17 specialised committees and Parliaments UKCG, was passed last Friday by 85 votes in favour, six against and 17 abstentions.

The six who voted against were Manu Pineda (GUE), Roman Haider, Lars Patrick Berg, Maximilian Krah, Harald Vilimsky (all four ID) and Demetris Papadakis (NI).

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EU and UK urged not to 'indulge in a blame game' over deadlocked Brexit talks - The Parliament Magazine

As we all know, the risks of a hard Brexit are extremely high. But it doesnt mean that investors should avoid Footsie shares. Instead, they should add purely domestic stocks to their portfolios.

It looks like the UKs government has taken a hard stance towards negotiations with the EU. There are certain points that the UK and the EU simply cannot agree on. For example, they cannot reach a compromise on fishing rights. It seems that the negotiations might go on for a long time. But the most serious problem is the December deadline, I think. The British government and Parliament simply do not want to extend it. So, I think the chances of a hard Brexit are quite high. But dont worry! You can hedge against this risk by buying some purely domestic companies shares. What do I mean by this? Well, these companies rely on the UKs consumers and not the EUs markets.

As my colleague Jonathan Smith pointed out, purely domestic shares should be bought as a hedge against a hard Brexit. I agree with him. Some of the stocks Jonathan mentioned seem to be less risky than others.

Taylor Wimpey is a housebuilding firm. Since it has little to do with the EU, it could look like it is less of a risk than many Footsie companies. However, there is a rather indirect link between the company and the Brexit. Many economists argue that a hard Brexit would lead to a long-lasting recession. If they are right, then a recession would lead to a dramatic fall in peoples incomes and savings. As a result, they would have much less cash available to spend on houses and flats. So, the demand for Taylor Wimpeys services would decline, leading to a significant reduction in the firms revenue and profits.

In my view, supermarkets are by far a much better alternative to housebuilders if a hard Brexit takes place. This is because supermarkets sell groceries and other essentials. Obviously, consumers have to eat and buy hygiene items regardless of their incomes. Moreover, this type of goods also takes a relatively small proportion of peoples incomes. So, they will not significantly reduce their spending on the goods sold by largest UK supermarkets. Finally, supermarkets like Tesco and J Sainsburyare not overexposed to the EUs markets either. All this makes this sector a rather risk-free bet in case of a hard Brexit. But the question is whether to choose Tescos or J Sainsburys shares.

I think that Tesco is a better alternative to Sainsbury. First of all, the former is much larger. Sainsburys sales revenue in 2019 was a little bit above 28bn as opposed to Tescos sales of over 63bn. Moreover, Tescos net profit margin, a key efficiency indicator, is 1.5% compared to Sainsburys net profit margin of 0.5%. Then, Sainsburys price-to-earnings-before special-items ratio is 33 as opposed to Tescos 23. This means that Sainsbury is more overvalued than Tesco.

So, my choice among these British shares is definitely Tesco. However, I dont think that an investor should only focus on purely British shares. There are many other FTSE 100 companies that can surely survive and flourish even during a tough recession.

The post Top British stocks to load up on before and after Brexit appeared first on The Motley Fool UK.

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Anna Sokolidou has no position in any of the shares mentioned in this article. The Motley Fool UK has recommended Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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Top British stocks to load up on before and after Brexit - Yahoo Finance UK