Global Themes

The next Brexit layer revealed

  • European Economic Area the next question for UK lawmakers   
  • Zuma's Cabinet reshuffle shocks the South African Rand again

EEA and Brexit

European Economic Area the next question for UK lawmakers
As debate continues over the most appropriate Brexit strategy, attention is now being drawn to which economic relationship model the UK can potentially adopt with the EU to ensure the strongest possible outcome – with potential involvement in the European Economic Area being highlighted in Parliament yesterday.

The European Economic Area, which stands aside from the European Union itself, has been utilized by several non-EU member states (namely Norway, Liechtenstein and Iceland) to maintain access to the single market. The EEA was brought into the spotlight yesterday by Brexit Secretary David Davis, who made mention of a potential Parliamentary vote to determine the UK’s future involvement, stating “Depending on what the policy was, I think it would be quite likely to come to Parliament.”. Cold water was later poured on Davis’s statement by his own department, playing down the significance of his remarks and signaling that the EEA would become irrelevant for the UK after Brexit has run its course. Swift opposition from Labour lawmakers in favour of a vote, aimed at avoiding a “stampede towards a hard Brexit”, added fuel to a debate that had thus far been very much in the background. The events of yesterday only add to previous signals that the Brexit process has many layers, and will be a difficult prospect to see holistically for some time to come.

ZAR

Zuma's Cabinet reshuffle shocks the South African Rand again
The South African Rand is on course for its worst week in a year as President Jacob Zuma swung the axe in a late night display of power yesterday, firing a number of Cabinet Ministers.

In a move that will only intensify divisions in his African National Congress (ANC) party, Zuma replaced Finance Minister Pravin Gordhan with Home Affairs Minister Malusi Gigaba - a man with no prior financial or business experience. Gordhan and Zuma had clashed on state finances regularly since being instated in December 2015, though a reaction of this kind is seen as fairly extreme and opens up the possibility of a revolt against the President by factions within the Government. The South African Rand was sold heavily in the aftermath, with diminishing confidence in the country’s financial stability and investment grade credit rating. The months ahead loom as a very volatile period ahead of the ANC party elections in December this year, when Zuma will look to announce his successor, and detractors would surely look to capitalize on this latest move.  




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